Shares of Bed Bath & Beyond (NASDAQ:BBBY) were: down -5.04% in the past trading week.
On social media, shareholders of the so called ‘meme stock’ continue to buy the stock despite talks of bankruptcy.
The company edged closer to a bankruptcy filing in late January after the retailer said it had received a default notice from JPMorgan Chase & Co., its loan agent, and warned it didn’t have enough funds to make payments.
Creditors are demanding immediate repayment of the company’s debt after it breached the terms of a credit line, according to a regulatory filing Thursday, per Bloomberg.
“Generally, in situations like this where a company defaults on their loan agreement our experience is, if they don’t come to an agreement with their lenders, the likelihood of a bankruptcy filing within the next 30 days is relatively high,” said Dennis Cantalupo, chief executive officer of Pulse Ratings, a credit-rating and consulting firm.
BBBY stock is up +1.73% this year-to-date.
#5. Hycroft Mining Holding Corporation
Shares of Hycroft Mining (NASDAQ:HYMC): rose +0.86% in the past week.
The mining company’s stock is down more than -28% this year-to-date.
Shares rose to $0.57 from a previous low of $0.44.
AMC CEO Adam Aron made the exciting announcement on Twitter stating, “so far ALL 20 of the newly drilled bores contained gold/silver, and 14 of the 20 showed higher grades than previously known to Hycroft.
AMC acquired a 22% stake in the silver and gold mining company in 2022 when they received 23.4 million warrants in Hycroft at $1.07 per share.
The stock at the time surged to $1.70 after trading at $0.60 earlier that same year.
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Cohen and his team scooped up 606,000 shares of the video-game retailer, a stake worth $11 million as of December 31.
In 2021, the New York Mets owner deactivated his Twitter account after receiving several threats from users during the ‘meme stock’ rally.
“I’ve really enjoyed the back and forth with Mets fans on Twitter which was unfortunately overtaken this week by misinformation unrelated to the Mets that led to our family getting personal threats,” Cohen said in a statement.
Cohen’s hedge fund, which managed nearly $19 billion in assets at the time, lost nearly 15% after retail investors caused shares of videogame retailer GameStop to surge in 2021.
The losses at Point72 are mainly due to the company’s investment in hedge fund Melvin Capital, which bet against GameStop and had to receive nearly $3 billion in emergency cash from two outside investors, one of which was Point72.
AMC and GameStop have had an incredible amount of FTDs, or failure-to-delivers.
These are orders that have not been executed in options, and are usually a result of a ‘short party’ not owning or not having all of the underlying asset.
This has led retail investors to the educated assessment that synthetic shares are floating in the market; shares known as naked shares used to short a stock.
According to Investopedia, “Despite being made illegal after the 2008–09 financial crisis, naked shorting continues to happen because of loopholes in rules and discrepancies between paper and electronic trading systems.”
Goldman Sachs (NYSE:GS) is reporting hedge funds betting against stocks globally abandoned those short positions last week at the fastest pace since 2015, surpassing the speed of exits during the ‘meme stock’ frenzy in 2021.
The latest short squeeze, implying that stock prices rose so much that bearish bets become too expensive to hold, saw hedge funds caught out by a sharp rally in equities on Feb. 2 after the U.S. Federal Reserve slowed the pace of interest rate hikes and markets anticipated that rates would peak soon, per Reuters.
According to the Goldman note, the speed at which hedge funds exited bearish positions surpassed that seen in January 2021 when retail traders managed to squeeze short sellers out of stocks such as videogame retailer Gamestop (NYSE:GME) and movie theatre operator AMC Entertainment Holdings (NYSE:AMC).
During the ‘meme stock’ frenzy in 2021, GameStop shares rose to nearly $500 per share, or +1,500% that year.
AMC shares rose from $2 early that year to an all-time high of $72 per share, more than +3,000%.
Today, both AMC and GameStop remain heavily shorted with AMC Entertainment having a higher-than-ever cost to borrow fee.
Experts say hedge funds remain bearish
Despite the massive short covering, hedge fund managers do not seem to be more upbeat about markets.
“Positioning isn’t ‘high’ and it doesn’t seem like many investors are bullish, per se,” JPMorgan’s Positioning Intelligence said in a note reviewed by Reuters, adding it has also seen hedge funds adding some shorts in highly shorted stocks.
It seems institutional investors are not entirely switching sides yet but are continuing to add to their short positions on already heavily shorted stocks.
Still, short interest in both AMC and GameStop has both risen and fluctuated, signaling few shorts closing.
AMC Entertainment stock is up more than +60% this year-to-date, GME stock more than +34%.
Hedge funds will need to determine whether it’s worth paying millions of dollars per month in fees just to short AMC stock.
A short squeeze may be triggered at any moment as this weight gets too heavy.
Industrials and Information Technology Companies
The largest short positions held by hedge funds were in industrials and information technology companies, the Goldman note said.
It added that hedge funds also exited many long positions in Asian developing markets and Chinese equities last week.
Resurgent risk appetite among some investors has also fueled rallies in the shares of so-called meme stocks since the start of this year, though many analysts are skeptical the recent moves will last, said Reuters.
But I disagree.
AMC Entertainment may havebottomed out as we see the stock price bounce and retest major levels of support.
The company’s high short interest and cost to borrow has grown substantially over the past two years.
Major price action may trigger short sellers to close their positions, initiating a chain reaction that will lead to a short squeeze.
The short thesis for AMC Entertainment is getting weaker as new developments surface in the entertainment industry.
Goldman Sachs is right, massive short squeezes are coming.
And the retail investor is about to put Wall Street upside down again, just like they did during the ‘meme stock’ frenzy of 2021.
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Franknez.com is the media blog that keeps retail investors informed.
Every retail investor holding a position in AMC wants to know, when will shorts close their positions?
And I don’t blame you.
This one is a little tricky.
See, it’s like saying, “when will retail investors sell their positions?”
Welcome to Franknez.com – the blog that fights for you, the retail investor. Today I want to discuss shorts closing.
Let’s get started!
Retail investors have been waiting patiently for AMC Entertainment stock to rip.
You’ve been holding through the ups and downs and even buying the dips.
And although we did see AMC’s share price surge in 2021, the short sellers are still here in 2023.
So, why aren’t shorts closing their positions yet?
What do retail investors need to do to squeeze hedge funds out of their money?
Let’s discuss it.
Are shorts obligated to close their positions?
Let’s start with the fundamental question.
Are shorts obligated to close their positions?
Now, there are currently no rules regarding how long a short can hold before closing out their position.
However, lenders do have the right to demand the seller closes their position with minimal notice.
This is rare and only occurs if the the seller isn’t paying the interest fee, or the interest fee is ridiculously high.
“A short position may be maintained as long as the investor is able to honor the margin requirements and pay the required interest and the broker lending the shares allows them to be borrowed.” – Investopedia
When an interest fee is extremely high, it makes a stock difficult to borrow which obligates the short seller to close their positions.
Short sellers are burning big money to keep these positions open in 2023 though.
You’ll want to keep an eye on this interest as it will determine just how much shorts are bleeding.
I update AMC’s short interest data (and others) here daily.
Why does the “Cost to Borrow” fee matter?
The cost to borrow fee is an interest that short sellers must pay for borrowing AMC shares to short the company stock.
These fees are currently at an all-time high.
Short sellers will hold in hopes to drive AMC’s share price right back down to the floor.
However, AMC is trending upwards now and has absolutely no intention of going back down.
Analysts data and AI predictions all point towards a high possibility of a short squeeze.
Even Fintel’s short squeeze score has been as high as 80-90% in recent weeks.
This short borrow fee is going to continue to go up as AMC stock becomes harder to borrow.
For short sellers, a low short borrow fee is in their favor.
Hedge funds much rather pay the fee and stubbornly continue to hold their positions against retail investors.
But, if the short borrow fee is high enough to hurt the borrower, they will be more inclined to close their positions before losing an excruciating amount of money.
AMC Entertainment (NYSE:AMC) stock continues to be one of the biggest ‘meme stocks’ even after its massive debut in 2021 when shares rose from $2.50 to $72 later that year.
The stock, at the publication of this article, is trading at $6.08, the same share price it was two years ago before gaining serious traction.
AMC Entertainment continues to improve its fundamentals and remains the #1 leader in the movie theatre industry.
While online streaming has grown to become quite popular, especially during the pandemic, experts are beginning to weigh in on AMC’s side in 2023.
CNBC stated, “Netflix has backtracked on its previous policies, including by introducing an ad-supported subscription option, leading many to wonder whether the company should rethink its resistance to the traditional Hollywood movie release model as it looks for new ways to grow revenue.“
Even Amazon associates who asked not to be identified, per Bloomberg News, are stating the company plans to invest $1 billion per year in the movie theatre industry.
The world’s largest online retailer aims to make between 12 and 15 movies annually that will get a theatrical release.
“While a $1 billion annual investment for film development is on the lower end of what major Hollywood studios spend each year, it’s a positive sign for the movie theater business, which has struggled in the wake of the pandemic”, said CNBC.
David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, and has a board seat at the DTCC.
The conflict of interest has raised big concerns amongst the retail investor community online as Citadel has been a leading and one of the biggest short sellers in the stock market.
On January 28th, 2021, The DTCC waived $9.7 billion of collateral deposit, limiting institutional losses and limiting retail profits during the ‘meme stock’ frenzy.
The organization allowed several naked shares to flood the market prior to the massive jump in share prices only to help financial institutions in the end.
Citadel and Melvin Capital who shut down last year, lost billions during the event.
Melvin was crippled throughout 2022 from its severe losses in GameStop the year prior.
Had the DTCC not stepped in, the hedge fund would have closed that same year.
“Anyone shorting AMC or GameStop is out of their mind. Wallstreetbets is too powerful, and trying to bet against them right now is just giving them more ammo”, said Jim Cramer.
Since the halt of ‘meme stocks’, the retail community has been uncovering a variety of conflicts of interest too big to ignore.
Who is David Inggs?
David Inggs is Global Head of Operations at Citadel and is responsible for all products across asset servicing, billing, cash management, clearing, Collateral Management, Reconciliation & Control and Settlements and is on the Board of Directors at the DTCC.
Prior to joining Citadel, David served as Chief Operations Officer of E*TRADE where he led operations globally across Trade Execution, Global Clearing, Middle Office and Shared Services, among other functions.
David spent most of his career at Goldman Sachs, where he was a Managing Director and held numerous leadership positions over the course of a decade, including Global Head of Clearing Operations and Head of Credit Default Swaps and Equity Derivative Operations.
David also worked at Morgan Stanley, where he served as an Executive Director and Head of Global Bank Loans, in addition to work in credit derivatives and collateral management.
The Global Head of Operations at Citadel has worked for every major criminal financial institution that has been too big to face serious consequences from fraud or market manipulation in the past.
Retail investors say this is market injustice and regulators are part of the problem.
Who is the DTCC?
The DTCC (Depositary Trust and Clearing Corporation) is an American post-trade financial services company providing clearing and settlement services to the financial markets.
The DTCC processes trillions of dollars of securities on a daily basis.
As the centralized clearinghouse for various exchanges and equity platforms, the DTCC settles transactions between buyers and sellers of securities.
The information is recorded by its subsidiary, the NSCC.
After the NSCC has processed and recorded a trade, they provide a report to the brokers and financial professionals involved.
This report includes their net securities positions after the trade and the money that is due to be settled between the two parties.
Clearing corporations such as the DTCC may receive cash from a buyer and securities or futures contracts from a seller.
The clearing corporation then manages the exchange and collects a fee for this service.
The size of the fee is dependent on the size of the transaction, the level of service required, and the type of security being traded.
Investors who make several transactions in a day can generate significant fees.
This means every naked share that has been created on the ‘short side’ has been recorded and bypassed by the DTCC/NSCC, all for a fee.
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SEC publishes Meme Stock Video
If you haven’t watched the SEC meme stock video, it’s embedded below.
The SEC published the video on their official YouTube channel where they restricted public commenting.
Former SEC Branch Chief Lisa Braganca said she was “very disappointed to see the SEC disparage investors in meme stocks as if they must have done it thoughtlessly – especially when the SEC permits most trading to take place in dark pools.”
She then tweeted, “how about a video on dark pools Gary Gensler?”
Lisa Braganca is an activist who fights for market transparency.
She’s talked on Matt Kohrs’ channel before and has done an AMA on Reddit’s r/Superstonk answering questions about self-regulatory regulations, SEC regulation, and SEC enforcement.
Gary Gensler admitted in a Bloomberg exclusive 90%-95% of retail orders don’t go through the lit exchange but failed to mention a solution to the problem.
In an interview with Jon Stewart, the SEC Chairman fails to deliver a quality and productive discussion on solving the problems in the market.
Jon Stewart described Gary Gensler as a sheriff in town that allows blatant corruption to occur.
For Gary, it’s clear it’s more about keeping the job rather than creating a legacy.
The SEC’s meme stock video might try to portray retail investors as young and clueless novice investors.
But that’s far from who the retail community is.
Retail investors outsmarted hedge funds, exposed the corruption in the SEC, mainstream media, and are now attacking with this propaganda.
It’s a sign of weakness.
The retail community is made up of a very diversified group of people all fighting for the same cause.
And this is a threat to corporate media and powerful institutions.
Republicans and democrats getting together to fight for market transparency, what!?
But this isn’t just about the left and right getting together to combat corruption, it’s a global movement – and opps (opposers) don’t like this.
Trey made a great point when he stated why doesn’t the SEC tackle the problems that created meme stocks in the first place:
Off exchange trading
Retail investors must continue to raise awareness of these issues despite the propaganda.
How Does Citadel Securities Manipulate the Stock Market?
Citadel LLC was founded in 1990 while Citadel Securities was founded in 2002 by Ken Griffin.
Citadel Securities is a leading global market maker that provides liquidity to financial markets.
The company is known for its use of advanced technology and quantitative strategies to facilitate price discovery and drive market efficiency.
However, Citadel Securities has also been accused of manipulating financial markets in order to gain an unfair advantage.
Here are 5 ways Citadel Securities manipulates the stock market.
#1. High Frequency Trading (HFT)
One example of Citadel Securities’ alleged market manipulation is its use of high-frequency trading (HFT) algorithms.
HFT algorithms are designed to execute trades at extremely high speeds, often in fractions of a second.
This allows Citadel Securities to react to market movements faster than other traders and potentially gain an unfair advantage.
Critics argue that the use of HFT algorithms allows Citadel Securities to manipulate prices by quickly buying or selling large volumes of securities, which can create artificial demand or supply and move prices in their favor.
#2. Dark Pools
Another area where Citadel Securities has faced accusations of manipulation is in the realm of dark pools.
Dark pools are private stock exchanges that allow traders to buy and sell securities without revealing their identities or the details of their trades.
This can create a lack of transparency, making it difficult for regulators to monitor market activity and prevent manipulation.
Citadel Securities operates a number of dark pools and has been accused of using these platforms to engage in insider trading and other forms of market manipulation.
In addition to its use of HFT algorithms and dark pools, Citadel Securities has also been criticized for its role in the flash crash of 2010.
On May 6, 2010, the Dow Jones Industrial Average plunged nearly 1,000 points in a matter of minutes, before quickly recovering.
The cause of the flash crash was traced to a large sell order that was executed by Citadel Securities, which many believe was done intentionally to trigger a market panic.
Critics argue that Citadel Securities exploited the vulnerabilities of the market in order to profit from the flash crash.
Another tactic that Citadel has been accused of using is spoofing, which involves placing a large number of fake orders in the market with the intention of tricking other traders into thinking there is more demand or supply than there actually is.
This can cause prices to move in the desired direction, allowing Citadel to profit from the manipulation.
In 2015, Citadel was one of several firms that were fined by the U.S. Commodity Futures Trading Commission for engaging in spoofing.
In December of 2022, a Biotech company researching cancer has decided to sue Citadel Securities for spoofing their stock.
#4. “Front Running”
Citadel has also been accused of engaging in “front-running” – a practice in which traders use inside information to gain an unfair advantage in the market.
In 2013, the company was sued by the New York Attorney General for front-running, but the case was later settled out of court.
Despite these controversies, Citadel remains a major player in the financial world.
Its use of algorithms and high-frequency trading has made it incredibly successful, but it has also raised concerns about the potential for market manipulation.
One of the key reasons for Citadel’s success is its ability to manipulate the markets to its advantage.
This is done through a variety of strategies, including high-frequency trading, where the firm uses powerful computer algorithms to make trades at incredibly fast speeds.
This allows Citadel to take advantage of even the slightest market movements and make a profit.
Another way in which Citadel manipulates the markets is through the use of complex financial instruments known as derivatives.
These are financial contracts that derive their value from an underlying asset, such as a stock or a bond.
Citadel uses derivatives to speculate on the future value of these assets, and to hedge against potential losses.
This allows the firm to make huge profits even in volatile market conditions.
Despite its impressive track record and reputation, Citadel Securities has faced allegations of manipulation in recent years.
In particular, the company has been accused of using its dominant market position to manipulate prices and engage in other forms of misconduct.
These allegations have led to significant scrutiny from regulators, authorities, but primarily by retail investors who are concerned about the impact of such practices on the integrity of financial markets.
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