Tag: Short Selling (Page 1 of 2)

The White House Vows to Monitor Illegal Short Selling

Market News Daily - The White House Vows to Monitor Illegal Short Selling.
Market News Daily – The White House Vows to Monitor Illegal Short Selling.

The White House has vowed to monitor illegal short selling activity after bank stocks have taken a massive plunge.

Shares of PacWest Bancorp (NASDAQ:PACW) fell more than -50% on Thursday and are down more than -70% in the past week alone.

Volume surged to 106.9 million, six times its average trading volume of only 17 million.

(Reuters) U.S. federal and state officials are assessing the possibility of “market manipulation” behind big moves in banking share prices in recent days, a source familiar with the matter said on Thursday, as the White House vowed to monitor “short-selling pressures on healthy banks.”

Shares of regional banks continued to fall this week after the collapse of First Republic Bank, the third U.S. mid-sized lender to fail in two months.

Short sellers made $378.9 million in paper profits on Thursday alone from betting against certain regional banks, according to Ortex.

Increased short-selling activity and volatility in shares have drawn increasing scrutiny by federal and state officials and regulators in recent days, given strong fundamentals in the sector and sufficient capital levels, said the source, who was not authorized to speak publicly.

“State and federal regulators and officials are increasingly attentive to the possibility of market manipulation regarding banking equities,” the source said.

White House press secretary Karine Jean-Pierre said the Biden administration was closely watching on the situation.

Temporary Short Selling Ban

Temporary Short Selling Ban

“This volatility is being fueled by emotion and misinformation that does not reflect the strong underlying fundamentals of our banks,” Johnson said in a statement.

“These institutions remain resilient and well-capitalized, and Americans can rest assured their deposits are safe.”

The S&P 600 bank index dropped over 3% on Thursday.

PacWest Bancorp shares tumbled over 50% after it confirmed it was exploring strategic options.

Western Alliance Bancorp denied a report from the Financial Times that said it was exploring a potential sale, and said it was exploring legal options.

Its shares plummeted more than 38%, with trading in the stock halted multiple times.

The increased short-selling activity has triggered some calls for a temporary ban, but an SEC official told Reuters on Wednesday the agency was “not currently contemplating” such a move.

The SEC first warned investors in March, during a previous period of high market volatility surrounding the collapse of Silicon Valley Bank and Signature Bank, that it was carefully monitoring market stability and would prosecute any form of misconduct.

Related: Congress Now Investigating Naked Short Selling Fraud

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Market News Today - The White House Vows to Monitor illegal Short Selling.
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Short Sellers Are Down $81 Billion This Year

short sellers are down $81 billion this year
Market News: Short seller losses amount to $81 billion this year as stock market rallies.

Short sellers feel the pain in the stock market’s 2023 rally, says the Wall Street Journal.

The market’s comeback in 2023 has been difficult news for one group of investors: short sellers.

Short sellers profit from the declines in the market, which we saw much of in 2022.

However, the stock market has been performing surprisingly well this year despite talks of a looming recession.

The Wall Street Journal reports that short sellers are down $81 billion this year alone as the markets begin to bounce back.

“Short sellers who have incurred hefty losses are actively trimming their positions”, said Ihor Dusaniwsky, managing director of predictive analytics at S3 Partners.

“Investors betting against stocks have racked up $81 billion of mark-to-market losses on short positions this month through Thursday after accumulating $300 billion in gains in 2022”, Mr. Dusaniwsky said.

Experts are expecting heavily shorted stocks to squeeze as more short sellers begin to close their positions.

Is short squeeze season here?

is short squeeze season here?
Are stocks about to squeeze? Short seller losses in 2023.

Investors and analysts say the rally appears to be driven by a few things.

Signs that inflation is cooling have stoked bets among investors that the Federal Reserve will pivot from raising interest rates to cutting them as soon as the second half of the year.

That has helped risky assets across the board rise.

Especially risky corners of the market, such as stocks with high short interest, have rallied even more.

Analysts say that has likely forced short sellers to close out bearish positions to cut their losses — resulting in what is known on Wall Street as a short squeeze.

Retail favorites such as AMC stock, MULN, and others seem to have bottomed out earlier this year.

It’s very possible heavily shorted stocks such as AMC entertainment squeeze short sellers again this year.

“We’re seeing a mirror image of the performance within the equity market. The worst performers last year have been leading this year,” said David Lefkowitz, head of Americas equities at UBS Global Wealth Management. “It does look like some re-risking and short covering.”

“A lot of these stocks rallying were highly shorted, long duration names with earnings way out in the future. With a significant decline in the discount rate, those earnings are now worth more,” said Sameer Bhasin, principal at Value Point Capital, a New York-based family office.

Source(s): BlackBullMarket

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Market News Today: Short sellers feel the pain in stock market's 2023 rally.
Market News Today: Short sellers feel the pain in stock market’s 2023 rally.

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When Do Shorts Have to Close Their Positions in AMC?

When will shorts close their short positions in AMC? When will shorts cover AMC?
When will shorts close their positions in AMC? When will shorts cover AMC?

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?”

franknez.com

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?

When do shorts have to close their positions in AMC?

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.

AMC short borrow fee interest

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.

AMC Short squeeze Score Fintel

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.

Just In: Short Sellers Are Down $81 Billion This Year

How can retail investors help drive the short borrow fee up?

Retail investors have helped drive the short borrow fee up simply by holding their positions.

When AMC squeezes, not every short will close their positions immediately.

This means retail investors won’t ever be able to time the high.

There will be short sellers who will continue to short even as share prices rise.

If we begin to see AMC’s price action rise monumentally, it is important to have a plan on how to take profits.

Just like a day trade, investors may be profitable for some time until they see gains turn into losses, which usually occurs due to greed in the markets.

This is what you want to avoid.

Important advisory: I am not a licensed financial advisory. I simply have a passion for finance and writing.

What happens when a short close their position?

A short position will be profitable if it is closed at a lower price than the initial transaction; it is at a loss if it is closed at a higher price.

In AMC’s case, shorts who drove began to short around $5 but are still holding to-date are at a loss.

AMC is currently trading around $6.08 per share as of 2/2.

When there’s a ton of shorts closing (in a particular stock), it will result in a short squeeze.

What is a short squeeze?

What is a short squeeze?

A short squeeze occurs when a stock spikes in price action due to an increase of short-sellers closing out their positions.

We’ve seen a short squeeze happen with both GameStop and Volkswagen. GME topped almost $500 while Volkswagen spiked shy below $1,000 back in 2008.

Some short sellers closed in June of 2021 when AMC shares rose to $72 per share as well.

AMC’s price skyrockets to more than +3,000% that year!

Short squeezes are massively profitable for retail investors.

These phenomena are how people are able to accumulate wealth in such little time.

Read: 5 Big Signs Pointing to An AMC Short Squeeze

So, when will AMC shorts close?

When do shorts have to close their position?
When will shorts close their short positions in AMC? When will shorts cover AMC?

Instead of exiting, short sellers have been holding.

Just as retail investors have high conviction on massive price action, hedge funds still have conviction on shorting the company to delist it.

But AMC Entertainment isn’t going bankrupt and AMC shareholders aren’t leaving.

AMC said bankruptcy was no longer on the table years ago and some Wall Street analysts have said the industry is on a solid path to resurgence, via Hollywood Reporter.

In fact, the short thesis is beginning to change with many incredible developments happening in the movie theatre industry.

AMC Entertainment (NYSE:AMC) is up more than 54% this year-to-date and it looks like the stock has bottomed out.

As we continue to see a high utilization and the short borrow fee increase, we can only expect shorts may be incentivized to close sooner than later.

Will AMC’s price action continue to go up?

AMC stock has always had high demand from shareholders.

While many of these retail activists continue to hold losses from June’s drop, it’s possible this changes – granted that short sellers close out their positions this year.

Short sellers will have the option to hold their loses on paper for months to come (with fees) or close their position at the current share prices.

Short selling is a risky business and bulls have sent a message – “we’re not leaving”.

With new titles coming to AMC movie theaters as well as new developments, we’re only going to continue to see a surge in price action due to an increase in the company’s fundamental growth.

Even if shorts continue to hold, lenders will eventually run up the interest rate again, forcing them to throw in the towel.

Leave a comment below and let the community know what a short squeeze would mean for you.

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Market News Today - When do shorts have to close their positions in AMC?
Market News Today – When do shorts have to close their positions in AMC?

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Wall Street Has Decimated APE Stock

APE Stock News
Market News: Here’s the latest on AMC’s Preferred Equity, APE.

Retail investors are angry at regulators for allowing Wall Street to decimate APE stock.

While AMC’s Preferred Equity (APE) was intended for the company to capitalize on, banks, institutions, and short sellers have abused shares to the ground.

The equity was meant to provide AMC Entertainment with liquidity in order to pay down their debt.

While AMC was able to reduce their debt by $106 million due to APE, shares have been shorted from $7 all the way down to $0.81.

APE momentarily made Yahoo Finance’s Top List of Most Shorted Stock.

Shareholders questioned how shorting APE was possible in the first place, failing to recognize that APE is a tradable security just like any other stock.

Faceless influencers within the AMC community led many retail investors to believe that shorting AMC’s Preferred Equity was impossible.

And unfortunately, this perception clouded many people from creating a proper investment strategy or embracing for what was to come.

Let’s discuss it.

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Retail Investors Seek to CEO for Answers

AMC and APE shareholders all have one common goal in mind, an AMC short squeeze and an APE short squeeze.

And although many shareholders have been transformed into paying customers, others are looking at AMC CEO Adam Aron for answers.

Loyalists don’t question the CEO and will condemn you for doing so, but if shareholders are still invested in the company, they have every right to yearn for answers.

Adam Aron has successfully maneuvered AMC out of bankruptcy, primarily thanks to its shareholders of course.

He’s utilized Twitter magnificently in a way that no other CEO has ever done so before.

And you can’t help but to admire the business personality in him that can raise cash out of thin air.

Even if it’s from his most loyal followers.

But the CEO has failed to address shareholder concerns on the decimation of APE, or the distribution of APE from Citigroup, who’s been short on the company.

Addressing shareholder concerns is important, whether you agree or not.

Does It Even Matter?

Some of you care about your money, your finances, your investments, and some of you simply don’t.

To some, being part of an embracing community, being known in a community, and embracing the movie theatre industry, but more specifically AMC Entertainment, is more important than monetary gains or financial abundance at this point.

And is that even a bad thing?

You just want to be heard; you want to fight evil in the markets without a care about money.

Or maybe you’re simply in the middle.

Let us know who you are – leave your story down in the comment section below.

You can follow me on Twitter & Instagram.


Short Sellers Are Now Paying More to Short AMC Stock

Short AMC Stock
The cost to short AMC stock goes up

AMC’s short borrow fee is rising again and short sellers are now paying more to short AMC stock.

This is the fee short sellers pay to borrow and short the stock.

It fell as low as 0.30% earlier this year but has now risen to 18.60%.

Although the short borrow fee is still relatively low, the progression could lead to more impactful losses.

Last year hedge funds lost billions betting against the world’s largest movie theatre chain.

Overleveraged positions with high short borrow fee rates only multiplied losses.

Rising short borrow fees could incentivize short sellers to completely ditch the play and close their short positions as shorting becomes more expensive.

Let’s break it down together.

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AMC’s short borrow fee increases

AMC Short Borrow Fee

AMC’s short borrow fee rate has steadily been increasing as the markets have tanked.

It comes as no surprise that the fee to short AMC stock would increase during this liquidity crisis.

The SPY officially hit bear market territory two weeks ago, but the market bounced rather quickly, trading just above bear market levels.

AMC continues to be one of the heaviest shorted stocks in the market.

It wiped billions of dollars from hedge funds shorting it last year.

And with a high short interest of 22.52%, AMC has more than enough juice to squeeze shorts from their positions.

But AMC’s short borrow fee rate and short interest percentage aren’t the only metrics increasing.

Pressure is escalating as AMC’s shares on loan reach an all-time high.

Pressure escalates as AMC’s shares on loan skyrocket

AMC shares on loan

AMC’s current shares on loan have reached 185 million.

These shares on loan eventually have to be returned to the lender by buying back the stock in the lit market (NYSE).

The massive buying pressure is going to create a high demand for the stock.

As the demand for the security goes up, so does the cost to buy it (the value of the security).

When AMC surged to $72 per share in June, it had roughly just over 100 million shares on loan and a short interest of 24% before falling to 20%, then 14%.

Today, AMC’s shares on loan have hit 191 million with a high short interest of 22.52%.

AMC’s Short Interest Data Updated Daily Here

Short sellers owe their lenders more now than they did when AMC shot up to $72 last June.

No matter what the catalyst is, AMC is inevitably going to surge again.

Related: Pressure Escalates as AMC's Shares on Loan Skyrocket

Will AMC’s increasing borrow fee rate force shorts to close positions?

AMC short borrow fee rate

AMC’s increasing short borrow fee rate may certainly incentivize short sellers to close their short positions.

The stock is slowly becoming harder to short and the cost to borrow it might prove to not be worth risking significant losses as the market adjusts itself for a reversal.

At some point, it’s going to be time to start betting long.

As you can tell, short sellers have the biggest risk here.

One simple bull rally can eliminate short sellers’ portfolios.

And with the SPY showing significant strength in the $400 level, one can assume the markets have potentially found a bottom.

The SPY momentarily hit official bear market levels last week but has managed to trade just above it.

A significant break upwards could bring the entire markets back up, hurting short sellers.

Be sure to connect with me on social media for daily updates.

Also, join the discussion in the comment section of the blog down below.

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Related: These Two Signs Will Tell You a Short Squeeze is Over

Hedge Fund Melvin Capital Is Shutting Down End of June

Hedge Fund Melvin Capital is Shutting Down End of June
GameStop short seller Melvin Capital is closing its doors this summer

Hedge fund Melvin Capital, notoriously known by the retail community for betting against GameStop is now closing its doors.

2022 marks the second year in a row the short seller underperforms.

Melvin Capital lost a staggering 20.6% the first quarter this year alone.

In 2021, they took a heavier hit with 50% in losses.

Now the hedge fund tells CNBC they will be shutting down by the end of June and starting a new company.

Let’s dive deeper.

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The apes were right

In March, I published a tweet asking the community whether Melvin Capital would be the next hedge fund to default.

We all saw this coming, but 90% of you voted YES.

Forward a month later and now the hedge fund is announcing it is closing this summer.

Earlier in March we saw another notorious hedge fund known for shorting GameStop pull $2 billion from Gabe Plotkin’s Melvin Capital.

That hedge fund was Citadel.

Citadel also lost billions last year shorting so called ‘meme stocks’, so it comes as no surprise as to why they pulled out from Gabe Plotkin’s Melvin Capital.

Ken Griffin’s Citadel also imposed tight restrictions on its clients leading into the new year.

Customers were given an ultimatum to either stay with the firm otherwise coming back would prove to be difficult.

Steve Cohen’s Point72 redeemed $750 million from Melvin Capital around the same time.

Ken Griffin received a $1.2 billion lifeline from partners Sequoia and Paradigm in January of this year.

This was the first time Citadel had ever received private funding.

Don’t bet against the apes

Mainstream media doesn’t give retail investors enough credit for shedding light on market injustices.

The ‘ape’ community has grown since last year as retail investors discover the short interest data that points towards a bigger AMC runup than that of January and May of last year.

In this video I go over patterns that are similar to those from last year’s runup and what we should keep a close eye out on.

The apes were right about naked shorting, dark pools, and the dangers of betting against retail.

Now hedge funds are dealing with the consequences of betting against the people.

Majority of the community continues to buy and hold ‘meme stocks’ such as AMC and GameStop in efforts to create a massive short squeeze.

Retail has said it many times, a short squeeze is inevitable.

While the SEC might be proposing rules that could wash naked short selling, yet avoid them in the future, it would take years to enforce if passed.

Will hedge funds survive?

Hedge funds are currently facing deep scrutiny from both retail investors and regulators.

The DOJ is taking Morgan Stanley, Goldman Sachs, and numerous other hedge funds to court.

Citadel is one of the short sellers currently being investigated by the Department of Justice according to a Bloomberg report.

The SEC and DOJ are looking into the following:

  • Communication between banks and hedge funds
  • Proof of ‘Bear Raids’
  • Spoofing
  • And several other market manipulation tactics

Hedge fund Muddy Waters was already raided by the FBI earlier this year for flooding the market with fake orders to drive stock prices down.

Melvin Capital is only one of many hedge funds that has closed down in the past year due to overleveraged short selling, and bad bets.

What are your thoughts on the Melvin Capital news?

Did you see it coming?

Leave a comment below.

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Stocks and Crypto Are Under Attack by Banks and Hedge Funds

Stocks and Crypto

Stocks and crypto are falling.

SPY stock (S&P 500) has fallen below $400 per share and is now down more than 17% this year to date.

Bitcoin is down more than 37% this year and has fallen below $30,000 again.

Banks and hedge funds have been selling off both the stock and crypto markets as the need for liquidity rises.

Will stocks and crypto go back up again?

Let’s discuss it.

Welcome to Franknez.com – if you haven’t joined the newsletter, be sure to do that below. I’m publishing market news and updates daily.

Let’s dive right into it!

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Banks and hedge funds tank the markets

Banks and hedge funds have been responsible for essentially every market crash in history.

But nothing has truly been done about the systemic risks caused by these financial institutions.

Today we’re seeing the collapse of both stocks and crypto.

Massive selloffs in the market are providing liquidity to institutions in order to keep their losing short positions open.

On top of these fire sales, the amount of shorting has increased to hedge against losses from last year’s bull run.

Short sellers lost billions of dollars last year when the ‘meme stock’ frenzy took over Wall Street.

Today, hedge funds are liquidating the markets to keep up with increased margin requirements this new year.

But at what cost?

Investors invested in great companies are losing money not because of business fundamentals, but because of the lack of regulation in the financial system.

Crypto developers say crypto crash was coordinated

LUNA and UST developers said this week’s crash was caused by a coordinated attack from hedge funds and big banks.

It comes as no surprise since hedge funds and big banks have been colluding to short specific stocks in the market.

The fed has opened investigations looking into these serious issues.

Goldman Sachs’ dark pools are currently under investigation, Archegos founder Bill Hwang was recently arrested with 11 criminal counts, and the list goes on.

Subpoenas went out to several hedge funds and banks earlier this year – one of the hedge funds under investigation is Citadel, according to Bloomberg sources.

Word is spreading on Twitter and Reddit and BlackRock and Citadel are responsible for the massive selloffs in the crypto market too.

Deeper due diligence is being done on this matter.

Citadel or not, coordinated attacks on securities is something the government should be taking seriously.

Will stocks and crypto bounce back?

It’s difficult to look ahead when the markets are bleeding, after all you are seeing your net worth drop quicker than it took for it to reach new heights.

If you’re worried about today’s markets, you might have been introduced to a short-term way of investing.

While certain plays could be short-term trades, majority of the market tends to be a long-term speculative game.

We bet that the companies we’re investing in will do great over the span of 10 years or so and let the markets go through the ups and downs, at least in the case of the stock market.

Crypto has and will always have greater potential than it has previously seen.

And crypto heads know this.

Is this the end of the stock and crypto markets?

Absolutely not.

What we’re seeing today has happened several times over the course of both markets.

After a climb, there’s always some setback that scares investors momentarily.

But if there’s something we can always learn from historic patterns, it’s that stocks and crypto have always gone right back up and set even bigger all-time highs.

Is now the perfect time to buy?

is now the perfect time to buy stocks and crypto?
Is now the perfect time to buy stocks and crypto?

It seems both stocks and crypto are having a difficult time finding a bottom.

And trying to time it has always proven that no one can time the markets perfectly.

Searching for a good entry point could just as likely end up hurting you if the markets were to suddenly go through a reversal.

Skilled long-term investors know that when the markets are red, you buy and hold.

Because the price of securities always goes up after a dreadful period of nonstop downtrend.

The upcoming reversal will have you wishing you’d have stocked up on stocks and crypto today.

You can follow me on: Twitter | Facebook | LinkedIn

Related: Are Institutions Preparing to Close Short Positions in AMC?

Tiger Global Hedge Fund Sinks a Massive 34% This Year

Tiger Global Hedge Fund Sings 34%
From left, Chase Coleman III, Scott Shleifer, and John Curtius. Photos by Bloomberg. Art by Mike Sullivan, Edited by Frank Nez

Tiger Global has an AUM of $95 billion, that’s $57 billion more than Citadel’s AUM of approximately $38 billion.

The monster hedge fund is managed by Chase Coleman, 46, who was up until now considered to be a hedge fund legend.

Tiger Global Management had a rough 2021 according to sources and losses are piling up in 2022.

Hedge funds seem to be in a lot of distress recently.

Let’s break it down together.

franknez.com

Welcome to Franknez.com – if you haven’t joined the newsletter, be sure to do that below. I’m publishing market news and updates daily.

Let’s dive right into it!

Join the newsletter to become part of an activist group fighting for market transparency!

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Hedge funds face turbulence in 2022

Tiger Global

This year we’ve seen many hedge funds face massive adversity.

Hedge funds have been dealing with significant losses this year, probes from the DOJ, and scrutiny from retail investors.

Hedge fund managers once deemed leaders in their industry now have their reputation on the line.

Gabe Plotkin was named a great trader by Citadel’s Ken Griffin although the hedge fund had to bail Melvin Capital out due to the ‘meme stock’ frenzy.

Citadel pulled $2 billion from Melvin Capital in recent months.

Chase Coleman is in a sticky situation too.

Tiger Global Management is down 34% this year through March.

The speed of the reversal has shocked just about everyone, considering that Coleman is celebrated as one of his generation’s brightest stars, a standout among the elite money managers mentored by the famed Julian Robertson, Bloomberg.

Tiger Global Management treads rocky waters

The bad run has been fueled by massive bets on stocks that have been hammered, such as fast-growing tech companies in the U.S and China.

Tiger Global hedge fund lost 7% last year, its first annual drop since 2016 and its third total, according to Bloomberg.

Tiger Global told clients in a letter that it’s opening up both its hedge and long funds to a limited amount of capital from existing investors to bolster positions in stocks that underperformed

However, we see the results in the first quarter of 2022 has not been what the hedge fund anticipated.

Built by Coleman and his partner Scott Shleifer, Tiger Global has long been seen as a throwback to the industry’s glory years, when double-digit returns were the norm and ‘hotshot managers’ unerringly backed winning companies and shorted the losers.

Across the firm’s $35 billion in funds focused on public companies, this year’s losses have triggered a more than $10 billion hit to investors that include foundations, endowments and pension funds, as well as Tiger Global insiders.

Coleman’s personal wealth has dropped by $1.3 billion, according to calculations by the Bloomberg Billionaires Index. 

Coleman’s hedge fund headed towards worst year

Tiger Global hedge fund may be on track for one of its worst years yet.

Tiger Global Hedge Fund

The blue in this chart indicates the hedge fund’s losses in 2008, 2016, 2021, and 2022.

The firm’s first serious bump was during the 2008 financial crisis, when it lost 26%, followed by a 1% gain the next year.

While markets were already jittery this year due to high inflation and expectations of rate hikes, Russia’s war against Ukraine triggered a flight from risk. 

The Russia-Ukraine conflict has affected every corner of the financial sector.

Earlier we saw Citadel and other hedge funds faced default on Russian bonds from tech company Yandex.

But Tiger Global Management isn’t the only hedge fund struggling.

Investors are pulling out $250 million from Coatue Management and the hedge fund cannot meet its investors demands.

We’re beginning to see this domino effect of losses begin to catch up to even the biggest hedge funds in the world.

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I’d love to hear your thoughts on the matter.

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Bill Ackman Says He’s Done with Activist Short Selling

Bill Ackman
Pershing Square’s Bill Ackman on short selling and ‘meme stocks’

Billionaire Bill Ackman said Tuesday that he will no longer take part in vocal activist short selling campaigns.

Bill Ackman, an activist short seller said Pershing Square has permanently retired from this line of work.

Bill Ackman’s Pershing Square is an American hedge fund run in New York with more than 13.1 billion assets under management.

His story as a short seller is well known for losing a significant amount of money shorting Herbalife.

A very interesting take in my opinion and I’m going to share with you all the details below.

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Bill Ackman, Herbalife short

Herbalife corporate building

Now former short seller activist, Bill Ackman is known for shorting Herbalife.

He began shorting Herbalife in 2012 but closed his position in 2017, cutting his losses.

Ackman had expected the stock to tank further over time, enabling him to make a windfall through a short sale.

But the strategy backfired.

Bill Ackman’s short bet on Herbalife cost him $1 billion in losses.

Now the short seller says Pershing Square is taking a different approach.

Entering the 19th year of Pershing Square, Ackman said he’s ready to take his firm to the next era to focus on long-term, “quieter” bets.

So, it looks like the short seller is trying to steer from having eyes on them.

He said they have had the opportunity to get to know many boards and management teams, and they’ve built a reputation as a constructive, long-term, and helpful owner.

Ackman added his team has been cordial, constructive, and productive and that they intend to keep it that way as it makes their job easier and more fun, to improve their quality of life.

Bill Ackman on GameStop and retail investors

Ackman said in an interview last year that retail is the biggest investor in the world.

He said investors have the power to move stock prices.

And he’s not wrong.

The only thing stopping retail investors from truly moving the markets is the lack of regulation on market makers and hedge funds.

You can watch the full interview below.

Heavily shorted stocks such as AMC and GameStop have cost short sellers billions of dollars both last year and this new year.

AMC short sellers saw $750 million in losses over a period of two weeks.

Short sellers betting against GameStop saw almost $500 million in losses in one day alone last week.

AMC is up more than 39% this week while GME stock is up more than 30%.

You can view their updated short interest data here.

Both these stocks continue to be heavily shorted despite their complete turnaround in fundamentals.

And it seems short sellers are taking this one personal with retail.

Retail investors weren’t wrong about AMC’s first two massive runups last year, and they won’t be wrong about the third runup this year either.

What is Bill Ackman’s Pershing Square investing in?

Ackman said about 30% of our equity portfolio is invested in music and video streaming — UMG and Netflix, while 26% in restaurants and restaurant franchising — Chipotle, Restaurant Brands and Domino’s.

He also owns sizable stakes in Lowe’s, Howard Hughes and Hilton.

“We expect that each of these companies will grow their revenues and profitability over the long term, regardless of recent events and the various other challenges that the world will face over the short, intermediate, and long-term,” Ackman said.

What do you think led to Ackman’s complete business remodel?

After all, Pershing Square was one of the hedge funds that benefited from Fannie Mae and Freddie Mac half a decade ago.

Short sellers made approximately $100 million according to S3.

In a time where short sellers are under extreme scrutiny, do you think it’s possible this billionaire is trying to stay away from the likes of the Justice Department?

Citadel, Muddy Waters Research, Citron, and others are all currently under investigation by the DOJ.

I’d love to hear what you think.

Leave a comment below.

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Breaking: The Moscow Exchange Bans Short Selling

Moscow bans short selling

(Bloomberg) Moscow bans short selling, indicating officials are preparing to reopen the market.

Russia is banning short selling in some of the country’s biggest companies.

The power to ban a strategy used by hedge funds to inflict damage on a company’s stock raises curiosity.

Is this Russia’s way of raising capital?

And should more countries like the U.S. also ban short selling?

Let’s break it down together.

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Moscow bans short selling in some of Russia’s biggest companies

Moscow exchange bans short selling
Moscow exchange bans short selling

Investors won’t be allowed to bet on declines in about 30 Russian companies, according to Bloomberg sources.

Most of which are petroleum and coal companies.

The decision went into effect on Tuesday.

Russia’s stock market has been closed since February28th, the longest shutdown in Russia’s modern history.

There has not been any confirmation as to when stocks will begin to trade in the Moscow Exchange.

The head of portfolio strategy at Toronto Dominion Bank in London says the Russians might want to remove residual risk on falling prices.

Other exchanges have used short-selling bans to limit volatility during a crisis.

Back in March 2020, at the peak of the Covid pandemic-fueled selloff, Italy, France and Belgium also banned shorting selling.

In other places such as mainland China, investors have limited ability to short stocks.

In the United States investors have what seems like an unlimited ability to short company stock, which in some cases results in bankruptcy.

Let’s use Hong Kong as another example.

Only stocks specified by the lit exchange in Hong Kong may be eligible for shorting.

Investors say its near certainty that stocks will tumble when Russia’s stock market opens.

Should the U.S. ban or limit short selling?

The U.S. on the other hand has a real issue with abusive short selling practices.

A collective of institutions such as banks and hedge funds collude to drive the share price of a company’s stock down for profit.

Financial institutions will even go as far as to bankrupting a company to avoid paying taxes on the bets.

The Justice Department is currently investigating banks and hedge funds relating to market manipulation and other injustices in the market.

If Moscow can ban short selling, and other countries can too, do you feel the U.S. should as well?

Due to the capitalistic nature, banning short selling in the U.S could prove to be difficult, which raises the question; should it be limited?

I’d love to hear your thoughts below.

Is this ban temporary?

Moscow exchange short selling
Moscow exchange bans short selling

It seems like Moscow’s short selling ban may only be a temporary strategy for the country to begin stabilizing again after its economic turmoil.

Russia was removed from the SWIFT system in February when it invaded Ukraine.

This escalated tension worldwide as Russia was no longer able to access money outside the country.

The biggest companies in the world also pulled out from Russia which further crippled its economy.

What the ban on short selling in Moscow shows us is that governments have the power to remove the same predatorial short selling that we see happening in recovering companies such as AMC and GameStop.

While short selling has its use in the market to balance volatility, limiting the use of short selling on a group of companies wouldn’t be such a bad idea.

I’d love to hear what you think.

Leave your thoughts in the comment section below.

Stick around for more market news

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