ANALYSIS: Beyond GameStop—10 Takeaways From Gensler’s Testimony
Preston Brewer, 10 May 2021
In testimony Thursday before the House Financial Services Committee, newly appointed SEC Chairman Gary Gensler signaled that he is prepared to change existing rules to better adapt to the challenges of today’s market environment, and to ask Congress for more authority where needed.
Gensler was there ostensibly to speak about the speculative trading in GameStop shares that occurred in late January. But the hearing went beyond GameStop and Robinhood to include a discussion of the Securities and Exchange Commission’s regulatory response about a wide range of topics. Continue reading “Article: ANALYSIS: Beyond GameStop—10 Takeaways From Gensler’s Testimony”
Robinhood’s Big Gamble
Sheelah Kolhatkar, 10 May 2021
Early on the morning of January 19th, Cody Herdman woke to the vibration of his smartphone alarm under his pillow. He immediately checked the finance app Robinhood for the trading price of a company called GameStop. Herdman, who is nineteen, is a freshman computer-science major at Dakota State University, where until recently he played center for the Dakota State Trojans football team, and he had been investing in the stock market for a month.
Robinhood, which offers zero-commission trading in stocks and cryptocurrencies, pitches itself as an enlightened version of Wall Street; its stated mission is to “democratize finance for all.” Herdman’s friend Chase Bradshaw had introduced him to trading on the app, which now consumed much of the time that he used to spend playing video games. Continue reading “Article: Robinhood’s Big Gamble”
House Democrats Urge Funding Boost for Wall Street’s ‘Cop on the Beat’
Kevin Edgar, 10 May 2021
House Financial Services Committee Chairwoman Maxine Waters is calling on Congress to increase funding for Securities and Exchange Commission (SEC) oversight of Wall Street’s “regulatory and market structure weak points.”
With SEC Chairman Gary Gensler signaling stepped-up enforcement of public companies and other SEC registrants, Democrats on Capitol Hill are leveraging their majority status to ensure the agency has the resources to meet its new chairman’s aggressive oversight mandate.
Rep. Brad Sherman, D-Calif., co-signed Waters’ letter to the leaders of the House Appropriations Committee calling for more SEC funding. Sherman is chairman of the Financial Services Committee’s Investor Protection, Entrepreneurship and Capital Markets Subcommittee. Continue reading “Article: House Democrats Urge Funding Boost for Wall Street’s ‘Cop on the Beat’”
Feds reportedly probing traders behind GameStop frenzy
Donna Miller, 09 May 2021
Federal regulation enforcement authorities are investigating whether or not market manipulation or different monetary felony exercise fueled the meteoric rise of shares corresponding to GameStop and AMC Leisure final month, a report mentioned Thursday.
Investigators from the Justice Division’s fraud part and the US Lawyer’s workplace in San Francisco have requested data from stockbrokers and social media firms that helped spark the buying and selling hysteria that lasted for about two weeks on the finish of January, the Wall Avenue Journal reported, citing unnamed sources. Continue reading “Article: Feds reportedly probing traders behind GameStop frenzy”
What were the biggest short squeezes in history?
IG Analyst, 07 May 2021
From Piggly Wiggly to GameStop, short squeezes have been causing drama on the stock markets for more than a century. Read on to learn about the biggest short squeezes in history and how to take part in the next one.
What are short squeezes?
Short squeezes are market events where traders push up the value of a stock, forcing short sellers to buy (go long) to minimise their losses.
As the short sellers buy stock, the share value rises even higher, increasing the profits of the short-squeezing traders.
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Dummy WallStreetBets Crypto Pumps Telegram Group Dupe Investors In $2 Million Scam
Bhushan Akolkar, 05 May 2021
The altcoins market is bustling with new all-time highs and crypto scammers are once again round the corner. Members of the popular WallStreetBets Reddit forum were recently targeted by a spammy and dummy Telegram group duping investors of $2 million in losses.
In the latest crypto scam, a dummy Telegram account dubbed ‘WallStreetBets Crypto Pumps’ swayed investors on buying the new token called WSB Finance even before its listing on the exchange. This Telegram account is in no way linked to the infamous Reddit stock board WallStreetBets responsible for the GameStop (NYSE: GME) earlier this year on Wall Street. Continue reading “Article: Dummy WallStreetBets Crypto Pumps Telegram Group Dupe Investors In $2 Million Scam”
Short Seller Soren Aandahl Chases Targets With New Hedge Fund
Sofia Horta e Costa, 03 May 2021
Activist short seller Soren Aandahl is launching his first hedge fund, with a mandate to find accounting malpractice and overvalued stocks all over the world.
The Blue Orca Global Activism Fund starts trading Monday with $25 million in assets under management, according to Aandahl, who founded Blue Orca Capital three years ago in Austin, Texas. He says he’s lining up another potential $30 million in committed capital. The fund will pursue targets globally, using a market-neutral strategy to seek profits regardless of whether global stocks are in a downturn or uptrend, said Aandahl. Continue reading “Article: Short Seller Soren Aandahl Chases Targets With New Hedge Fund”
After WallStreetBets, Australia’s securities regulator warns share trading forums
Byron Kaye, 27 April 2021
SYDNEY (Reuters) – Australia’s securities regulator has contacted internet share trading forums to question them about policing of “pump and dump” scams on their platforms, a sign of growing scrutiny of an investment subculture that soared during pandemic lockdowns.
The Australian Securities and Investments Commission (ASIC) told Reuters it has boosted surveillance of local retail trading internet chatrooms that have sprung up since the “WallStreetBets” Reddit chatroom was linked to wild U.S. stock fluctuations this year.
That has led to discussions between the regulator several operators of the profanity, irony and meme-laden chat forums – who often operate anonymously – about their liability if they allow share inflation schemes to flourish. Continue reading “Article: After WallStreetBets, Australia’s securities regulator warns share trading forums”
Departing GameStop Executives Eyeing Lottery-Winning Paydays
ERIK GRUENWEDEL, 26 April 2021
July 31 can’t come soon enough for several GameStop executives, including CEO George Sherman, who are slated to exit the videogame retailer at that time in a management reorganization driven by incoming chairman of the board Ryan Cohen, co-founder/CEO of online pet supply service Chewy.com.
Sherman, CFO James Bell, chief customer officer Frank Hamlin and Chris Homeister, chief merchandising officer, all have provisions in their contracts that call for expedited vesting of stock options, the latter Wall Street-based restricted shares that can drive executive compensation into the stratosphere — with no tax liability for the company. Continue reading “Article: Departing GameStop Executives Eyeing Lottery-Winning Paydays”
GameStop’s CEO Goes Out on Top
Matt Levine, 26 April 2021
Is George Sherman one of the greatest public-company chief executive officers in American history? He became CEO of GameStop Corp. on April 15, 2019. The stock closed at $8.94 per share that day. On April 19, 2021 — almost exactly two years later — GameStop announced that he will be stepping down by July. The stock closed at $164.37 that day. That’s a 1,739% return over his two-year term, or about 325% annualized. (The S&P 500 index was up 43%, or about 20% a year, over those two years.) GameStop’s market capitalization went from about $900 million to about $11.5 billion; Sherman added about $10.5 billion of shareholder value in two years. 1
How much should he get paid, for doing this amazing work for shareholders? A billion dollars? Two billion? If GameStop’s shareholders had only gotten the S&P 500 return over the last few years, they’d have missed out on more than $10 billion in value; I suppose you could make a case that they should be willing to pay Sherman up to $10 billion for his magic touch. Continue reading “Article: GameStop’s CEO Goes Out on Top”
The Short, The Index, And The Private Markets
CFA Institute Contributors, 25 April 2021
The GameStop story returned short-sellers to the front pages of the global financial press. The Reddit crowd’s “Main Street Takes Revenge on Wall Street” narrative cast these short sellers as the villains of the financial markets. It also created enough consensus buying pressure to squeeze their positions into margin calls and realized losses.
But my focus here is not the GameStop story. Rather, it is the necessity of both short positions and representative, investable benchmarks for private market investments. Continue reading “Article: The Short, The Index, And The Private Markets”
South Korea’s retail investor army declares war on short-sellers
Song Jung-a, 25 April 2021
Jung Eui-Jung, a former South Korean bank employee, recalls his bitter experience as a novice stock trader more than a decade ago, when he lost Won25m ($22,000) after the small metal group he invested in was delisted.
“It is the past that I want to forget. Back then, I didn’t have much access to information. I was bound to lose in an environment tilted against amateur traders,” said the 62-year-old head of the Korean Stockholders’ Alliance, an advocacy group that represents about 44,000 retail investors.
But the tables have turned over the past year as retail investors have emerged as the dominant force in South Korea’s $2tn stock market, accounting for almost 60 per cent of daily turnover. With that heft, amateur traders have become a political force, seeking to even the odds against professional investors.
Mom-and-pop investors bought a net Won63.9tn of Korean shares last year, compared with a net sale of Won5.5tn in 2019. That helped propel the benchmark Kospi index up 118 per cent following a coronavirus-driven sell-off last March, making it one of the best-performing markets globally.
Almost one-fifth of Korea’s population of 52m dabbles in stocks, and data showed local brokerages have amassed Won76tn in cash deposits.
“The market dynamic is changing fast with individual investors becoming a powerful force that even hedge funds should be afraid of,” said Albert Yong, managing director at Petra Capital Management, a Seoul-based investment firm.
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Occupy Wall Street 2.0
Anonymous, 21 April 2021
It’s going on right now. Here’s your chance to get back at those Wall Street fucks who recklessly crash the economy again and again because you guessed it, they’re going to crash it again. Imminently. Except this time people on the internet caught on and the SEC is passing regulations to control the crash to make sure the hedge funds are the ones left holding the bag.
Create a trading account on Fidelity or something (but NOT Robinhood) and buy a share of Game Stop (GME) and hold it. Hold it while market crashes, except the price GME will go up. Supply and demand; you will be holding a precious share that a hedge fund will need to buy back from you. See, they created millions of “naked short” shares and traded them back and forth in an attempt to bankrupt GameStop so they could keep the money for themselves, tax free. But for the first time ever retail investors, (i.e. you) spoiled their plan by buying them up and holding them. The apes on r/Superstonk can explain it better than I can so do yourself a favor and learn. One share is hovering around $150 before takeoff. Then one share could quite possibly sell for millions and they will HAVE to buy it from you.
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14 Critical Lessons Investors Can Learn From The GameStop Story
Forbes Finance Council, 20 April 2021
Investing in the stock market comes with risks, especially in the age of social media. Valuable information that every investor should be aware of—including the occasional volatility of the stock market as well as investment nuances such as short selling—came into the spotlight recently when Redditors banded together to inflate the prices of retailer GameStop’s (GME) stock.
As well as serving as a refresher on stock market basics, the GameStop situation is also a signpost pointing to emerging trends in investment and fintech. Current and would-be stock market investors can take away some important lessons from this story. Below, 14 members of Forbes Finance Council share what every investor should learn from the GameStop stock saga.
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David Einhorn calls out Elon Musk and Chamath Palihapitiya, defends GameStop champion Roaring Kitty, and blasts market regulators in a new letter. Here are the 11 best quotes.
Theron Mohamed, 16 April 2021
The elite investor David Einhorn blasted market regulators, accused Elon Musk and Chamath Palihapitiya of juicing assets, and praised the GameStop champion Keith Gill in a letter to Greenlight Capital investors this week.
The Greenlight president also highlighted the “Big Short” investor Michael Burry’s exit from Twitter and pushed for greater scrutiny of Archegos Capital, the family office that blew up in March. Einhorn’s latest letter was obtained by ValueWalk. Continue reading “Article: David Einhorn calls out Elon Musk and Chamath Palihapitiya, defends GameStop champion Roaring Kitty, and blasts market regulators in a new letter. Here are the 11 best quotes.”