Melvin Capital, which bet against GameStop, lost more than 50% in January, report says

CNBC ^ | Sun, Jan 31 202111:01 AM EST | Pippa Stevens

[Nathan _in_Arkansas]

Sucks to suck, as they say.

[usurper]

The owners’ “Custodians” using the fine print of the custodial agreements?

Something I don't understand perhaps someone hear can help me out.

So now that GameStop has all this money, what can they do with it or is it really even theirs? I don't understand how the company is effected by a high or low stock price, other than perhaps the ability to apply for bank loans.

[Alberta's Child]

GameStop doesn’t have all this money. Their share price is being bid upward by people who are buying its stock on the open market. GameStop got the money when they originally issued the shares years ago. What happens after that probably doesn’t affect them much.

If you go out and buy a new set of tires for $150 apiece and then millions of people start collecting them and they are offering $1,000 for secondhand tires, does Goodyear or Michelin get any of that money?

[RockyTx]

only a moron would believe Melvin C when they claim
they have covered.

some arrangement is in place

[Zhang Fei]

[only a moron would believe Melvin C when they claim
they have covered.]

---

It’s a strong possibility. It may have been 1% of their portfolio that suddenly became 20%, as the stock rocketed from $20 to $400. Note that the fund was probably fully invested. So they had to sell large amounts of other assets to raise cash to meet margin calls. It’s also likely that the fund was leveraged. An individual investor can borrow $1 for every $1 of cash he brings to the table. A hedge fund can, in theory, borrow $10 for every $1 of investor capital, depending on what it’s buying. If it borrowed even $1 for every $1 of equity, that accounts almost completely for the 50% plunge, with the rest the result of the portfolio’s decline from liquidating big cap stocks at a discount to recent prices to meet margin calls.

[Paladin2]

They could sell new or Treasury stock to get some money.

[Texan]

Melvin Capital closed out its short position in GameStop on Tuesday afternoon” Then who is still holding short positions totaling >100% of the shares?

I for one, don't believe them. Where would they get the supply?

[RockyTx]

I think its possible the Melvin swapped their risk with some friends.

with the intension of getting the words,,
Melvin Capital
out of the headlines

there is still a huge problem

[Texan]

As a by product of the short squeeze and their need to raise capital, our stock portfolio took a fairly big hit this week.

If their short really hasn't been cleared as I suspect, I expect more collateral damage to the average investor.

[joma89]

As Conan famously said, “Crush your enemies, see them driven before you, and hear the lamentation of the women!”

[Zhang Fei]

[As Conan famously said, “Crush your enemies, see them driven before you, and hear the lamentation of the women!”]

---

Robert E Howard presumably heard about the original Genghis Khan quote (whether true or apocryphal):

---

[This conqueror once asked to noyan Bourgoudji, one of his first generals, what was, in his opinion, the delight of man. “It is, he said, to go to the hunt, a spring day, mounted on a beautiful horse, holding his fist on a hawk or a falcon, and see it cut down its prey.” The prince made the same question to General Bourgoul, and then to other officers, who all answered as Bourgoudji. “No,” said Chingiz Khan, “the greatest enjoyment of a man is to overcome his enemies, drive them before him, snatch what they have, to see the people to whom they are dear with their faces bathed in tears, to ride their horses, to squeeze in his arms their daughters and women.”]