For years now retail investors have stated that short interest is much higher on most stocks than is being reported.
I’ve been sharing AMC’s, GME’s, and other ticker’s short interest daily for years now.
But something interesting happened post AMC’s approved proposals, short interest plunged heavily without any signs of shorts closing their positions.
And AMC is not the only retail favorite that has seen a significant drop.
AMC short interest is currently sitting at 11.54%, at least according to the latest Ortex data.
See, the thing is that according to FINRA, positions held overseas at a separate legal entity are not required to report short interest positions.
For this very reason, it means that there are several more short positions worldwide than meets the eye.
This also means that financial institutions may have subsidiaries as legal entities overseas without having to necessarily report their short selling activities.
This loophole is what has led many retail investors to believe that companies targeted by short sellers have fallen victim to possible fraudulent schemes.
Essentially, there are corners in the market that have hidden activity which take advantage of the average investor.
According to Science Direct, a big reason for hiding short positions is that disclosure could make them more costly or difficult to maintain and close.
“Such strategic disclosures can help activist short sellers reduce noise trader risk, making prices converge faster to their fundamental value (Kovbasyuk, Pagano, 2015, Ljungqvist, Qian, 2016, Zhao, 2018).
They also could be used as devices to coordinate predatory short selling and manipulate stock prices (Goldstein, Guembel, 2008, Brunnermeier, Oehmke, 2014).“
Are retail favorites being manipulated from accounts overseas? Most would say absolutely given the strange trading activity that persists even today.
But I would love to hear your thoughts — leave a comment down below.
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