Is WSB's impact on GME overblown?
Just wanted to share this interesting video about what might be happening with WSB and GME. I was always on the side that institutional investors had greatly amplified the trend that WSB started, but this video makes interesting points and implies that WSB itself does not have the kind of influence that everybody has said it had (according to the NASDAQ, institutional ownership of GME is 111%) and that HFT was the most likely reason for what we've observed over the past few days.
So, is the rise of the retail investor overblown? Does this mean that everybody is getting way too excited about something insignificant? And most importantly, since HFT is inherently better at timing trades than retail traders, and since GME is a fundamentally weak stock, does this mean that the WSB crowd and the retail traders are the only ones (save Melvin) who are going to be screwed over? In short, is this all fueled by stupidity on all sides (WSB, the media, this forum, etc)?
Link to the video:
I've been saying this to people all week! WSB and retail investors may have gotten the ball rolling but institutional money is driving the bus and at the end of the day the institutional money knows how to play the game, they'll walk away with them tendies while retail investors are left holding the bag. These people on WSB think they are part of some movement to screw over hedge funds, while some are getting bent over right now the reality is these retail investors are just going to end up screwing over each other. They'll keep encouraging each other to HODL and "diamond hands" all day but once the institutional money starts to dump it's going to be a free fall.
Nailed it
Yeah they're all about diamond hands now but when it starts dumping you can be sure that "when the chips are down, these 'civilized people' they'll eat eachother"
This x100, the momentum fund buying was in over the past two weeks and has been making its way for the exit
+1
What kind of PM at a institutional investor would have the balls to propose buying into GME with so much hype/risk right now? Fundamentals are obviously super weak, so no rationale there. This is a movement, not actual investing.
Furthermore, hi-fi trading is good for liquidity, but it's more about volume than spread.
And why is Robinhood limiting buyers to 1 share if institutions are the ones moving the needle?
All good points - would like to hear the counter
On your last point, I think the discussion and points being made are mostly regarding everything that has led up to where we are now, prior to RH and all the other brokerages limiting orders on GME.
I really think very few people have the full picture at this point and I'm sure it's a mix of both WSB hype and institutional money pushing things along but for anyone to think a handful of retail investors can move $25B in value is little farfetched. People on WSB want to feel like they matter and are doing something meaningful but we really don't know how much influence they are actually having and news outlets are obviously jumping on the story (without all the facts) making it seem like WSB is running the show here furthering the notion that a handful of retail investors are "fighting back" and bringing down hedge funds. It's a good story and headline grabber so why not. People will dig into the data and eventually get the real story but by then it will have blown over, RH will have to pay a fine and no one will care anymore.
Disagree. When you have millions of retail investors from around the world, buying and holding a heavily shorted stock at the same time, it absolutely moves the needle. Like I said before, not a single institutional investor can justify buying into GME right now. The losses on the way down would be excruciatingly painful and embarrassing. And GME doesn't fit any investment strategies, because at this point, it's purely only emotional and not rational.
CNBC and hedge funds are of course saying that institutional money is involved to downplay the power of a bunch of amateur retail traders on Reddit; the tables have turned and it's the hedge funds that are looking like a bunch of retards.
FWIW, I've bought into GME/AMC and have several friends (fellow ibankers (including my own MD), doctors/nurses, and lawyers) that own "Reddit stocks". Based on this, I think it's inaccurate the media is generalizing all retail investors as "dumb kids with a few bucks/stimmy checks". Can't speak for my friends, but I have $150K in GME stock alone, including gains.
Like everyone else, I monitoring what's going on closely, but at this time, I have no plans to sell. After all, GME has already touched nearly $500 (it's $325 as of this post). Keep in mind that an artificial drop was engineered this week, and Robinhood is still allowing only 1 fucking share to be purchased. Should also be an interesting next week since January options were mostly in the money.
Yes.
I didnt buy GME out of solidarity with Wall Street.....can I get a job?
I guarantee a conglomerate of HF’s are behind this. Reddit is anonymous and L/S funds know what their competitors trade, so I’d imagine these guys are targeting names with heavy short interest, convincing a bunch of retail traders to pile on and then VERY inconspicuously signaling other funds to pile on at which shorts are forced to cover or they’ll lose their shirts and the name goes to the moon. I was looking at order flow with my desk analyst on Thursday and there is NO WAY retail is driving this, it’s legitimate institutional market manipulation
Right!!
Just for those of us that don’t understand order flow, does that mean you can see who is buying gme and you can tell it’s not retail because it’s coming from hedge fund xyz?
If you have Bloomberg you can see order books, and just looking at the size of a lot of the trades very unlikely retail is driving the moves
What are the chances L/S/Momentum funds saw a black swan event building (ie. 143% short interest) and thought to themselves, "hmm seems a bit risky, I'll sit this one out"?
ZERO
Hopefully everyone makes it out okay
Are you referring to L2 data or options order flow
Completely agree. Saying that Reddit users are driving this makes great news headlines but isn’t the actual case. The institutional guys are running this show and my guess is are playing each other for a huge cash out. In the end though, the retail investors will be holding the bag.
To follow, I think a big thing that points to this is the volume that GME traded at this week compared to how high it’s price was. That price is way way too high for ordinary retail clients to make anything close to a difference with the 7 shares they buy.
"Retail" doesn't have to mean some unemployed kid sitting in his parents' basement gambling his stimulus check. My friend bought ~$2mm worth of GME when it was $40 and is now sitting on an ~$18mm gain. He's technically "retail" as well since he didn't buy it on behalf of an institution. Lots of others like him. Not downplaying the effect of institutions/HFTs in the run-up, but "retail" isn't strictly comprised of average Joes buying a few shares here and there.
Classic Reddit self importance complex. Nothing new here.
100% yes there is institutional money driving this. Everyone is just scapegoating WSB. There are actual fundamental reasons that long-only firms like Fidelity and Blackrock own some GameStop, in some cases having increased their holdings substantially. Ryan Cohen is no joke. Then sprinkle on top some retail enthusiasm and one of your competitors who left their flank wide open to a brutal short squeeze? This has hedge fund competition written all over it. Who wouldn't love an opportunity to snipe out one of the guys who have been on top the last few years?
Of course... And as we speak, shorts that got hurt are unwinding against other hedge funds who were long (and are not ideologues) while retail think they are the heroes that will "name their price" and keep holding to infinity. I am afraid that when all the dust settles, aside from the dozen of early big hitters that are currently exiting (DFV has already taken out 18m$ out of 50), retail, once again will be left holding the bag.
Short interest might not drop but that's just due to new shorts who entered at 400 and are not in a rush to cover.
Anyone who bothers reading the posts in WSB knows the risk. It's a running joke in almost every thread that "sir this is a casino" so if someone decides to remortgage their house to buy GME at >$200 then I'll feel roughly as sorry for them as I did the guy who did the same thing to buy bitcoin the first time it hit 20k. No one (who has the slightest clue what's going on) is buying this thinking it's a sound long-term investment. People are buying it because they get however many dollars of enjoyment out of the idea they're sticking it to some big bad hedge fund guy. Let them have their fun, they'll learn from the consequences afterwards just like Melvin is learning about the dangers shorting right now.
The inflows this week are absolutely staggering. I know there's 7M or so people on WSB at this point, but I really doubt a coordinated retail push could account for more than a fraction of that money. There a lot of funds in Asia that understand technicals/flow probably better than anyone in the domestic market, obviously aren't bound by the same disclosure/risk management requirements here and are masters of fucking with stock prices (esp. AH which has happened here). My best guess is overseas funds playing the vol. + some domestic shops too and HFTs amplifying the moves because their algos aren't used to processing something this stupid.
No idea when it ends, but obviously the longer this drags on..... the more retail inflows, more people sucked into this scheme and everyday joes averaging their position higher. Of course when the music stops the pros will be out while my mechanic, barber and retarded unemployed friends end up holding the bag.
On the other side... not sure if the media is sympathetic with the elites "picking on the little guy" narrative or there is no sympathy for people participating in a crowd-sourced pump and dump. In any case, lots of anger and people losing money - doubt this ends well. The media cheering this on will have some egg on their face in a few weeks, but of course they never take responsibility themselves.
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