OT: WSB Stocks Next Move & BCRX
I have been fascinated with the WallStreetBets movement and how retail investors, who normally lose, were able to band together and beat hedge fund shorts at Gamestop, and then AMC. Like casinos though, I kept wondering what the end game would (could) be. This is because as a whole, Gamestop is NOT worth even $50 a share, so eventually the stock should drop and regress to the single digits. So eventually the hedge funds will win by crushing everyone who buys high, whether the top is $450 or $1,500.
What I love about this movement is that it finally places a checks and balances for hedge funds/MM to control and manipulate stock prices to their liking. As a major small to mid market cap bio pharmaceutical investor, I have seen how sometimes a long-term high potential (but still 1 year+ away from FDA approval) stock is purposefully shorted and taken lower by hedge funds, and then they buy the bottom to take a large position before it goes back up, generally ending with a buy out.
Then today happened, and WallStreetBets backed a few actually strong, potentially successful companies, including naming BCRX ‘the most undervalued stock in the market.’ I should add that BCRX is one of my two favorite biopharma companies, and I have been in since about $2 a share. This is when I realized what their end game can be, and how WSB could become a very powerful market mover. If they actually start to target highly shorted companies being manipulated so hedge funds can actually buy more, it could quickly turn shorts into buyers, and give good real companies a chance to raise money at their true value, without having to sell a majority interest at a discount.
BCRX is up 38% to $11.80 today, which I still think is a discount. WSM might be able to get their investors to buy stocks that have true value, and slowly move their crazy gains from GME and AMC, to more sustainable "stonks" that can skyrocket short-term, but with a long-term future. I find this fascinating, and think this will continue to change the way hedge funds/MMs short stocks.
February 1st, 2021 at 2:40 PM ^
All I know is keep holding GME
???????
February 1st, 2021 at 3:40 PM ^
I have a few shares, I enjoy it. But basically just playing with them since 2 weeks ago. Sold about 20% of my shares so the rest are free.
February 1st, 2021 at 8:15 PM ^
I LIKE THE STOCK
February 2nd, 2021 at 2:21 PM ^
HOW DO YOU LIKE ME NOW??
February 1st, 2021 at 2:42 PM ^
It is an interesting situation to say the least and they demonstrated their power last week. Can they do it again in the future? That remains to be seen. I would imagine that all those people who bought bad stock aren't looking to increase their position on more bad stock in the future. You can only stretch yourself so far before you break.
February 1st, 2021 at 3:43 PM ^
Agree completely, that's what I think is so interesting. What if they start getting a few people to do strong due diligence and then only go after highly shorted, undervalued, solid stocks? Then the hedge funds could actually go from shorting (just so they can drive the price down and buy retail investors shares at a discount - I can name LOTS of examples of this in biopharmas) to buying as they realize they can't overcome WSB. It will make them have to cover and buy if they still want a larger piece of the company
February 1st, 2021 at 4:37 PM ^
I wonder when that power gets abused. There's a big financial incentive in getting people to buy the stuff you tell them to en masse. There's already this astro-turfed campaign to buy silver that was falsely attributed to WSBs today. As much as I cheer for retail traders over hedge funds, I think the larger issue here is how ridiculous the system itself is where people brigading a stock can effect it's price in such a crazy way without any change in the fundamentals of the companies.
February 1st, 2021 at 4:40 PM ^
As of market close today (2/1/2021), $GME is still being shorted by 226.42%. Source:
The realistic play the big firms have to essentially hope that interest and the attention spans of the daytraders dies out. They're using nearly every media outlet to lie about retail investor's positions in other stocks that are held primarily by those same firms. They're using bots to illegally buy and sell fractional $GME shares to try and drive the price down.
Of course the problem is that none of the retail traders are selling it. Volume on the stock is incredibly low. Last Wednesday's (could be Thursday's) buy/sell volume on $GME was 177 million. Today it was 30 million.
The retail traders don't need to "do" anything or really take much action besides hold their current leveraged position. The hedge funds are spending tens of millions a day with the ladder attacks, bleeding millions in interest daily, and owe billions of dollars. As evidenced by FINRA, they are still stuck in their short positions, and are basically completely fucked if everyone simply holds on.
Unfortunately for Melvin Capital, Point72, and Citadel, they don't own anything that they bet against.
February 1st, 2021 at 4:47 PM ^
How the fuck is 226% short interest even allowed? Just shows how much of the market is completely imaginary.
EDIT: Also short interest in GME has been reported all over the map, as low as 39%. Either people don't really know what's going on, or are straight up lying. Hard to tell who though.
February 1st, 2021 at 4:53 PM ^
It's obviously a reprehensible practice in general. Even more pronounced is that this episode is showing just how much misinformation the media lies to you about. Days ago we were all told that Melvin had "closed their short position."
Right. Shorting companies with hard-working employees and then illegally ladder-attacking that company to hopefully speed up it's demise with bots/algorithms because you played the wrong hand is despicable.
February 1st, 2021 at 5:40 PM ^
I said it in a longer reply earlier but short interest is not something that can be tracked in real time. Reporting of short positions is delayed by at least 2 weeks. Further, short % is based on float which is not total shares, it's shares available for trading. On WSB people are claiming they are asking brokers to remove their shares from the float (not sure if that's possible) but big institutions are definitely removing shares from float (no broker I'm aware of allows shorting GME right now). So, same number of shares shorted divided by a smaller float = higher float%. In short (pun intended), GME does not have a 200+% short interest.
February 1st, 2021 at 5:17 PM ^
I have a few issues with your comments. First, short interest is very difficult to track in real time. What you're seeing is the number of shares reported short from about two weeks ago. Here is what FINRA requires regarding short reporting: https://www.finra.org/filing-reporting/regulatory-filing-systems/short-interest. There are also ways to "cover" but not close a position that would get around this reporting making the numbers even less reliable. Further, the float has gone done as institutions pull shares from the float. So, we know the float was nearly 100% last Monday and there is no new reporting since then other than a reduction in float. Even if hedge funds took on new shorts, you wouldn't know it yet.
"They're using bots to illegally buy and sell fractional $GME shares" Really? You know that? 35 million shares were traded today which is much lower than last week (i believe every day was over 100 million). But with tens of millions of shares traded, you're claiming that bots trading fractional shares impacted the stock? Do you have the order flow showing fractional shares? Not the fact that 50 million buyers disappeared? I'm not even saying you're wrong, just seems odd that you would know this. Those ladder attacks only work if you have a lot of missing buyers and the actual buyers entering are using market orders instead of limit. I'm just not buying it. A stock will tank when a bunch of shareholders do nothing but sit on it. If they aren't buying then the bid falls and there is insufficient buyers to prop it up.
My theory is that it's really hard to continue finding new buyers to pump up a stock at astronomical heights. Combine that with any sane person who made life changing money to realize they have to exit at some point. Combine that with any ETF with trading goals that has to sell huge volumes of these stocks. XRT has been getting a lot of press today but why would any large institution that invested in GME thinking it could turn around stay in right now? BX, Fidelity, Vanguard, Susquehana, Ryan Cohen, etc all made billions unexpectedly. Why would they sit and hold? They don't give a shit about the hedge fund vs reddit battle.
I think this is a real thing that we're going to see again but it's a pyramid scheme. Those that got in early made a lot. Those getting in late are probably going to lose a lot. If you can't find new buyers then it all crumbles. The crazy part now is all the copycat attempts. There were under 2 million members of WSB last monday. One week later it's over 8M (plus millions more just reading without signing up, like me). There are a lot of people just looking for a quick dollar and it's going to implode at some point (probably very soon).
I'm going to keep watching but I think buying puts (or straddles) on the next hot stock is probably the smart move.
February 1st, 2021 at 5:37 PM ^
Couldn't agree more. It's already imploding. After hours trading has it at $175 and continuing to drop. Anyone that had any trading savvy exited their position last week when it was $400-$500. Only people left holding shares are the idealists that wanna "stick it to the man" and all those showing up late for the party. With declining volume 5 out of the last 6 days and a stock price giving back 65% off the high, it's hard to imagine why anyone would jump on the band wagon this late. What most don't understand is when you're losing money in a trade, you're not sticking it to the man, he's sticking it to you
February 1st, 2021 at 9:10 PM ^
Thanks for explaining about the short interest. I went to the Google Finance page for GME and they noted that the short interest % info was from 1/15. I definitely would not want to use information from 2 weeks ago to make an investment decision.
February 1st, 2021 at 10:59 PM ^
The short interest is essentially the same. It's well over 100%, no matter what any single person tries to sell you. The ladder attacks and hedge funds buying and selling ATM calls/puts to hedge the short interest (to make the percentage appear to decrease) means little. Two-week short interest is interesting when viewed in the $GME models.
Most of the retail trading sector is holding shares that mean little if it goes to $0, but is life-changing if it hits $1k. Those 100% diversified portfolios will eclipse the vast majority of "ordinary" funds.
Keep in mind there are people on this site that work for hedge funds, own hedge funds, or have a lot of money tied up in hedge funds. Whether you like it or not, and "win" or lose, r/wallstreetbets is now the world's largest hedge fund.
February 2nd, 2021 at 3:44 AM ^
"Keep in mind there are people on this site that work for hedge funds, own hedge funds, or have a lot of money tied up in hedge funds"
Now that's an interesting statement. I'm very curious to know what hedge fund billionaire has time to frequent and engage with a Michigan sports blog
February 2nd, 2021 at 7:52 AM ^
You don't have to be a billionaire to own a hedge fund, but yes, my post stands. There are massive hedge funds, smaller private hedge funds, and every size in between. In fact, many smaller firms are holding GME for various reasons.
I'm sure mods can easily confirm it, but there's no point in doing so.
February 2nd, 2021 at 8:44 AM ^
This isn't the WSB site. You should stop trying so hard to convince others that Game Stop is a good buy. It's trading at $133 premarket all the while the WSB site is claiming to have the hedge funds right where they want them. It's very good entertainment but terrible financial advice.
I'd love to continue this chat but when Game Stop hits $132, I'm gonna short 1000 shares. My broker has shares available
February 1st, 2021 at 2:45 PM ^
While it is fascinating, i trust my own DD. Formerly DQ and UCTT - (sold out of DQ and only own half my UCTT now).
I cleaned house last year. On my least expensive DQ shares, i did 8x in 8 months.
And COVID was not bad for everyone. I was all cash going into covid (not because of it, but because i felt the market was way overpriced and i felt a correction was coming so i went all cash). So i had a ton that i put in during the COVID correction. Airlines, Cruise and Mortgage stocks i gobbled up.
Right now, i just own a small amount of ABR that i bought from COVID crash (keeping it because i paid 4.39 a share and it pays great dividend) and i am short ENPH, which is an extremely overvalued solar play (they make inverters). I am currently down on my short position with ENPH.
February 1st, 2021 at 2:54 PM ^
DD down 10% today....you better go buy more. I own ENPH they are alot more than solar, glad to have you short more. Don't bet against EV.
btw, DQ up 17% today....good job selling.
February 1st, 2021 at 3:48 PM ^
Be careful with short positions. I just never do it personally, unless I have call options and it's just a short term hedge.
With that said, nicely done on being all cash pre-COVID. I just kept buying and used a good amount of my dry powder when that happened.
February 1st, 2021 at 2:47 PM ^
I find the whole movement both hilarious and potentially dangerous.
im a free market person, so I very much support what they’re doing. At the same time, the general idea of the stock market is to define the value of a given company through trading. Artificially altering the market-determined value of a company is not a good long term practice. However, if this all ends up acting as nothing more than a check on hedge funds using stocks to manipulate the market to their advantage, then I’m all for it. My worry is that this could develop into a mob-like situation where a particular stock is currently the most shorted stock out there, but is appropriately shorted because it is currently overvalued, but this group comes along and destroys that.
if this results in a large number of companies being improperly overvalued just to screw hedge fund managers, that’s a net negative. If it results in a check against them manipulating the market just to gain advantage and squeeze out the typical American, then I will support it. My fear is that it can spiral out of control.
February 1st, 2021 at 3:04 PM ^
As someone who's worked in tech for over a decade now, I've gotten pretty pessimistic about stocks being an accurate viewpoint of a company's actual value. So in that sense, I get why people are tired of the house rigging the game as much as it has for a couple of people.
That said, I do agree that this sets a weird precedent mostly because it feels like a Ponzi/MLM scheme where a couple of people at the top directing these retail investors make a bunch of money (plus all the hedge funds that get access to these traders's moves and the underlying stocks) and a lot of less sophisticated traders just fuel them in the hope of making a fortune. I just remember reading somewhere that (by far) the biggest winners of the GME rush are some billionaire investors and Citadel. Sure, you're fucking with a couple of Hedge Funds but they'll just be replaced by other ones that pick through the scraps. I also worry that we'll see some pensions and larger institutional investments get hurt because people are only human and you know some managers are going to make bad bets.
February 1st, 2021 at 4:23 PM ^
I see at least two very distinct categories of investors here: those who bought Gamestop to stick it to the hedge fund and those who are trying to make money. I'm sure there's some crossover, but I see the people who were willing lose money to make a point as being in a very different boat than those trying to ride the surge to profit.
February 1st, 2021 at 3:14 PM ^
This has nothing to do with the value of GameStop. The Reddit group simply beat the shorts at their own game. It’s genius if you ask me. Easy money - move in, move out
February 1st, 2021 at 5:22 PM ^
You thinking something is ‘genius’ is a dead giveaway that it is, in fact, a terrible, terrible idea. Do us a favor and stick to your bread and butter - covid truther lies, misrepresentations and bullshit.
February 1st, 2021 at 2:48 PM ^
I am uncomfortable predicting stock activities.
February 1st, 2021 at 3:50 PM ^
But are you comfortable predicting your next election results?
February 1st, 2021 at 3:57 PM ^
Well, now that you mention it...
https://twitter.com/JRMcGrail/status/1355810398067417088?s=19
February 1st, 2021 at 6:47 PM ^
Thank you good sir, keep up the sick dangles in hockey!
February 1st, 2021 at 2:49 PM ^
Without ANY research, how can a company LOSING money be the most undervalued stock? I know, I know potential growth, but still, losing money is losing money.
Sometimes when I stock has high short interest it's because it is a crappy company, not just because hedge funds are being mean. Actually high short interest almost always means it's a crappy company. But I'm glad you made some money day trading. Take your money now because that is not a long term investment.
February 1st, 2021 at 3:54 PM ^
Amazon lost money for I believe their first 12 years as a publicly traded company...Heard of Tesla? Go look into them.
Sorry for being too sarcastic, but all small/mid-cap pharmas lose money their first several years...it takes that long to create a company with the goal of creating a new drug and get through FDA testing, and then even rolling out a new drug can be time consuming and expensive. That's why a lot of them sell their drug to a big pharma shortly before or after FDA approval. This is literally the entire space.
February 1st, 2021 at 9:10 PM ^
What path to growth does *Gamestop* have, though? That's the issue.
Amazon grew by being early into the public cloud market, by selling everything under the sun online and by allowing third party vendors to use their site. Tesla has advantages in battery technology and its self-driving software. Pharma companies typically have a drug they're trying to approve.
Gamestop, though, is a different story. Their brick and mortar stores are floundering. They've been trying to sell more games online, but they're a latecomer. Steam has been doing that for years now and companies like Epic have launched competitive platforms.
February 1st, 2021 at 2:50 PM ^
you're the person i really dread having to sit next to on a plane
February 1st, 2021 at 4:02 PM ^
Thanks, this made me laugh! I traveled for work a lot pre-COVID, so I have headphone as soon as I'm through security, even if I'm not listening to music or on a call. It lets everyone know that you do NOT want to talk.
February 1st, 2021 at 2:54 PM ^
Playing games with the big boy's wallets doesn't, at an intuitive level, seem like it's going to turn out well for the little guys. I admire the way it has become a platform to raise awareness of dirty dealing that fuels big money investing, though. I hope they don't end up losing more than they can afford to. I am also amazed that the movement is taking on precious metals (Silver for now). Stocks have, after all, an abstract value, but precious metal supply and demand would seem to be a more physically tangible thing.
February 1st, 2021 at 4:42 PM ^
I am also amazed that the movement is taking on precious metals (Silver for now).
They're not, WSB strongly slapped that down today. It was likely some astroturfing by someone with a stake in silver.
but precious metal supply and demand would seem to be a more physically tangible thing.
Physically being tangible doesn't mean a thing. There's hardly any real use for precious metals and their value is simply what a buyer is willing to pay for them. If anything, their value is even more abstract than stocks.
February 1st, 2021 at 5:06 PM ^
I hate the idea that people would elect to play around with gold or silver given its perceived place as being a hedge against inflation.
February 1st, 2021 at 7:51 PM ^
False, silver gold and platinum are all very good conductors and get a lot use in high end circuit boards. Further, platinum plays a key role in a number of industrials chemical processes.
February 1st, 2021 at 5:04 PM ^
People gonna die
February 1st, 2021 at 5:20 PM ^
Gon' go broke.
February 1st, 2021 at 2:56 PM ^
Dogecoin TO THE MOON
February 1st, 2021 at 4:07 PM ^
So silly, but has made me laugh
February 1st, 2021 at 5:22 PM ^
Obligatory.
February 1st, 2021 at 2:57 PM ^
I can't wait for the book and movie deal.
In the meantime....
February 1st, 2021 at 3:12 PM ^
And the whole country, left, right and center, are doing this to the Wall Street guys
February 1st, 2021 at 4:11 PM ^
My memory is a little sketchy. How'd that work out for them again?