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Article: GameStop, The Second Surge: Anatomy Of A ‘Gamma Swarm’

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GameStop, The Second Surge: Anatomy Of A ‘Gamma Swarm’

George Calhoun, 10 March 2021

GameStop GME -0.7% is not following the script. Despite the confident predictions by almost all the sideline observers (including myself) that the January frenzy in GME shares would end predictably, and badly… this “Stonk” has suddenly surged a second time, embarrassing the conventional wisdom once again.

When GME first erupted in January, I thought it looked like just a clever way to accelerate a conventional short squeeze. (The mechanics of a short squeeze, and the “gamma” accelerant using call options, are described in my previous column.) On that basis, I expected that it would soon deflate and “return to normal.” The battlefield would be littered with the carcasses of small investors who bought at the top. We’d hear the distant sound of champagne popping in the proud towers of Wall Street and Chicago, and the scolds in the press would treat us to another round of lectures on thrift and the Madness of Crowds.

That’s not what happened. The stock did come down as low as $38, but the deflation didn’t stick. As of this moment mid-day (March 10), GME is again trading above $300 a share. [Things are moving fast. See the Update at the end of this piece.]

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Article: Biggest Players In The Short-Selling Game Are Getting A Pass

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Biggest Players In The Short-Selling Game Are Getting A Pass

ERIK SCHATZKER, BRANDON KOCHKODIN, 10 March 2021

It’s in the air again, on Reddit, in Congress, in the C-suite: Hedge funds that get rich off short-selling are the enemy. The odd thing is, the biggest players in the game are getting a pass.

Those would be the asset managers, pension plans and sovereign wealth funds that provide the vast majority of securities used to take bearish positions. Without the likes of BlackRock Inc. and State Street Corp., the California Public Employees’ Retirement System and the Kuwait Investment Authority filling such an elemental role, investors such as Gabe Plotkin, whose Melvin Capital Management became a piñata for day traders in the GameStop Corp. saga, wouldn’t have shares to sell short.

“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.

“Anytime we short a stock, we locate a borrow,” Plotkin said Feb. 18 at the House Financial Services Committee hearing on the GameStop short squeeze.

There’s plenty to choose from. As of mid-2020, some $24 trillion of stocks and bonds were available for such borrowing, with $1.2 trillion in shares—equal to a third of all hedge-fund assets—actually out on loan, according to the International Securities Lending Association.

It’s a situation that on the surface defies logic. Given the popular belief that short sellers create unjustified losses in some stocks, why would shareholders want to supply the ammunition for attacks against their investments? The explanation is fairly straight forward: By loaning out securities for a small fee plus interest, they can generate extra income that boosts returns. That’s key in an industry where fund managers are paid to beat benchmarks and especially valuable in a world of low yields.

The trade-off is simple: For investors with large, diversified portfolios, a single stock plummeting under the weight of a short-selling campaign has little impact over the long run. And in the nearer term, the greater the number of aggregate bets against a stock—the so-called short interest—the higher the fee a lender can charge.

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Article: Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss

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Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss

TYLER DURDEN, 10 March 2021

After a court battle that dragged on for more than a year, a New York judge shocked the investment banking community last month when they ruled that a group of Revlon creditors could keep some $500MM that they refused to return to Citi after some $900MM was accidentally transferred in what appeared to be a “fat finger”.

At the time, legal experts posited that the judge’s decision, which was based on quirks in New York State law, would force investment banks to reevaluate the wording of their bond covenants in all future deals, as the ruling created new risks that needed to be addressed. Continue reading “Article: Banks Tweak Bond Covenant Language To Protect Against Repeat Of Citi’s $500M “Fat Finger” Loss”

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Article: Russian central bank blocks effort by private investors to coordinate on stocks via Telegram

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Russian central bank blocks effort by private investors to coordinate on stocks via Telegram

Alexander Marrow, 10 March 2021

MOSCOW (Reuters) – Russia’s central bank said on Wednesday it had ordered brokers to block the accounts of more than 60 private investors it suspected of coordinating in a Telegram channel to try to raise the share price of an electric utilities firm.

In a development reminiscent of lurches in U.S. video game retailer GameStop’s stock price in January, the regulator said it had detected non-market pricing on Friday in shares in MRSK Yuga, a Rosseti portfolio company.

The central bank said it had sent instructions to Sberbank, VTB, Tinkoff, Alfa Bank, Otkritie Broker, BCS and Aton to suspend deals and operations on organised trading for individual clients. Continue reading “Article: Russian central bank blocks effort by private investors to coordinate on stocks via Telegram”

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Article: Losing LIBOR in the Capital Markets — A Reprieve?

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Losing LIBOR in the Capital Markets — A Reprieve?

Dawn Holicky Pruitt, 10 March 2021

As reported in our previous alert “Losing LIBOR in the Capital Markets — Are You Ready?,” the anticipated date for discontinuation of the London Interbank Offered Rate (LIBOR) is approaching. While LIBOR is a widely used benchmark rate for U.S. dollar-denominated floating-rate debt securities and other financial products, LIBOR was the subject of widespread market manipulation and ineffective regulation. In 2017, the Chief Executive of the United Kingdom Financial Conduct Authority (FCA) announced its intention to stop persuading or compelling banks to submit rates for the calculation of LIBOR to its administrator after 2021. This announcement strengthened the objective of the Alternative Reference Rates Committee (ARRC), a committee convened by U.S. regulators to identify LIBOR alternatives in the U.S. market.

While market participants were warned that LIBOR may cease to exist after 2021, the ICE Benchmark Administration Limited (IBA), as the administrator of LIBOR, recently announced the results of a November 2020 consultation regarding the upcoming discontinuation. Although certain lesser-utilized U.S. dollar-denominated LIBOR tenors will cease to be published after December 31, 2021, the IBA announced it will continue publishing widely used tenors (such as one-month LIBOR and three-month LIBOR) until June 30, 2023. The FCA’s support for the extension provides confidence regarding the ongoing representativeness of the continuing U.S. dollar-denominated LIBOR tenors until June 30, 2023.

The extension of widely used U.S. dollar-denominated LIBOR tenors provides issuers of LIBOR-linked debt securities with additional time to prepare for LIBOR discontinuance. In particular, the extension may, in many cases, allow for a natural end to LIBOR-linked debt securities through maturation or the exercise by issuers of redemption rights.

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Article: Luckin Coffee Investors Work Toward Stock Suit Settlement

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Luckin Coffee Investors Work Toward Stock Suit Settlement

Dean Seal, 08 March 2021

Luckin Coffee and a proposed class of its investors told a New York federal judge that they are working toward a potential resolution of claims that the Chinese coffee chain used “sham transactions” to fake hundreds of millions of dollars in sales.

The parties received approval on Friday from U.S. District Judge John P. Cronan for certification of a settlement class of investors who acquired Luckin securities between its initial public offering in May 2019 and July 2020, when a Cayman Islands court appointed joint provisional liquidators to oversee Luckin’s operations and negotiate with its creditors. Continue reading “Article: Luckin Coffee Investors Work Toward Stock Suit Settlement”

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Article: China cracks down on fraud and tries to clean up image with Luckin probe

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China cracks down on fraud and tries to clean up image with Luckin probe

Evelyn Cheng, 25 February 2021

In a period fraught with tensions with the U.S., China is trying to show it’s being serious about tackling fraud. Nasdaq-listed Luckin Coffee said Monday it was cooperating with regulators, following reports of government investigation into the company over recently disclosed financial fraud.

The rare crackdown comes after an update to China’s securities law took effect in March. A new clause said the Chinese government will take legal action against overseas securities issuance and trading activity that hurts domestic investors. Continue reading “Article: China cracks down on fraud and tries to clean up image with Luckin probe”

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Article: Millions vanish into crypto world in high-yield bond scam

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Millions vanish into crypto world in high-yield bond scam

Michael Roddan and Jonathan Shapiro, 08 March 2021

Sophisticated British criminals exploited vulnerabilities in Australia’s search engine and cryptocurrency infrastructure to dupe small investors, lured by the promise of high-yield funds badged by some of the finance world’s most trusted brands.

The complex scheme involved stolen identities and fraudulent prospectuses that claimed to represent high-yield investment funds run by global managers Citibank, Nomura, and IFM Investors. It has ensnared millions from unsuspecting victims who sought better returns as interest rates collapsed during the COVID-19 crisis. Continue reading “Article: Millions vanish into crypto world in high-yield bond scam”

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Article: Form S-1/A Glass Houses Acquisition Corp.

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Form S-1/A Glass Houses Acquisition Corp.

EDGAR AGENTS LLC, 08 March 2021

Glass Houses Acquisition Corp. is a newly organized blank check company formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses, which we refer to throughout this prospectus as our initial business combination. We have not selected any specific business combination target, and we have not, nor has anyone on our behalf, initiated any substantive discussions, directly or indirectly, with any business combination target with respect to an initial business combination with us. While we will not be limited to a particular industry or geographic region in our identification and acquisition of a target company, we intend to focus our search for a target business that provides critical resources and/or services to the technologies powering the 21st century industrial economy.

This is an initial public offering of our securities. Each unit has an offering price of $10.00 and consists of one share of our Class A common stock and one-half of one warrant. Each whole warrant entitles the holder thereof to purchase one share of our Class A common stock at a price of $11.50 per share, subject to adjustment as described in this prospectus, and only whole warrants are exercisable. The warrants will become exercisable 30 days after the completion of our initial business combination, and will expire five years after the completion of our initial business combination or earlier upon redemption or liquidation, as described in this prospectus. No fractional warrants will be issued upon separation of the units and only whole warrants will trade. We have also granted the underwriter a 45-day option to purchase up to an additional 3,000,000 units to cover over-allotments, if any

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Article: Nasdaq Futures Tumble As Value Surge Makes Europe A Sea Of Green

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Nasdaq Futures Tumble As Value Surge Makes Europe A Sea Of Green

TYLER DURDEN, 08 March 2021

US equity futures and global markets jumped higher at the reopen of Asian trading late on Sunday following news of the Senate’s passage of the Biden $1.9TN stimulus plan and the spike higher in oil following the Houthi drone attack on Aramco facilities in the Gulf, but have since dipped amid renewed reflationary fears which pushed Treasury yields as high as 1.61% overnight hitting tech stocks with lofty valuations even as value stocks and European markets were broadly in the red. After rising above $71, Brent has since faded gains and was last trading near where it closed Friday at $69. Bitcoin soared as HK-based firm the latest institution to convert cash into Ethereum and Bitcoin.

At 7:10 a.m. ET, Dow e-minis were down 16 points, or 0.07%, S&P 500 e-minis were down 16.5 points, or 0.44%, and Nasdaq 100 e-minis were down 154.25 points, or 1.20%. Continue reading “Article: Nasdaq Futures Tumble As Value Surge Makes Europe A Sea Of Green”

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Article: Another Market Paradox: Wall Street Struggles To Explain Record Equity Inflows Amid Stock Turmoil

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Another Market Paradox: Wall Street Struggles To Explain Record Equity Inflows Amid Stock Turmoil

TYLER DURDEN, 08 March 2021

Something bizarre is happening in the stock market: for the past three weeks stocks – and especially tech – has gotten hammered, with the Nasdaq briefly sliding into a 10% correction while the S&P has also been hard hit (although one can’t say the same for reflation stocks such as energy which have soared in recent weeks). Some other notable casualties: Apple has tumbled 15% since late January. Tesla has lost more than a quarter-trillion dollars in market value in three weeks, and more than $1.5 trillion has been wiped off the Nasdaq in less than a month.

And yet, despite this hit to risk assets on the back of the recent in surge in interest rates, accompanied by a parallel spike in both the VIX, and its bond market equivalent, the MOVE index. Continue reading “Article: Another Market Paradox: Wall Street Struggles To Explain Record Equity Inflows Amid Stock Turmoil”

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Subject: Ihor Dusaniwsky

People, Subject of Interest

Ihor Dusaniwsky  Managing Director of S3 Partners from Sep 2003 -to Present in Greater New York City Area. He was a former Vice President of Commerzbank AG from 1999 to 2003. He was also the former Head of Agency Lending Des in Morgan Stanley from 1985 to 1999 in Greater New York City Area with a background in Equity Controller – NY and Tokyo, FX Controller – NY and Tokyo, Equity Special Projects – Hong Kong, World Wide Head FX Controller – NYSecurities Finance WW Collateral Manager – London International Securities Finance Trader – NY and London Domestic Securities Finance Trader – NY, ETF Securities, Finance Trader – NY, ADR Securities finance Trader – NY Head of Agency Lending – NY. Continue reading “Subject: Ihor Dusaniwsky”