Tag: Short Selling

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.

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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.

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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.

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

When Do Shorts Have to Cover Their Positions in AMC?

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

Every retail investor holding a position in AMC wants to know, when will shorts cover 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 short covering.

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.

So, why aren’t shorts covering their positions yet? What do retail investors need to do to squeeze hedge funds out of their money?

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.

AMC’s short borrow fee rate as of 5/04 is: 1.00% according to Stonk-O-Tracker.

Keep an eye on this interest as it will determine just how much shorts are bleeding.

Hedge funds currently shorting the stock are losing money every day. And regrettably for them it’s getting worse the longer they hold.

Why does the short borrow fee matter?

The short borrow fee is an interest that shorts must pay for borrowing AMC shares.

And although the fee has gone down, shorts are still paying a price for going long.

AMC short borrow fee interest

They 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.

They would 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.

The short sellers conviction is strong, even though they’ve already lost.

It’s only a matter of time before they have no other option than to forfeit.

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

Retail investors can help drive the short borrow fee up simply by holding their positions.

When AMC squeezes, retail investors will have to continue to hold their position on the way up.

Not every short will close their positions immediately.

If we begin to see AMC’s price action rise monumentally, it is important to understand that there’s more potential because not every short seller has closed their position.

We might see AMC drop a little after it peaks.

However, if retail investors continue to hold, it’s only going to continue squeezing more shorts resulting in further perpetual gains.

Melvin Capital suffered 49% loss 1st quarter

Melvin Capital - Short position AMC - AMC short position
Melvin Capital – Short position AMC – AMC short position

Community, this is massive. Melvin Capital is a hedge fund that has been shorting both AMC and GME stock. These are the people trying to drive the stock to the ground.

Melvin Capital suffered a 49% loss its first quarter of 2021, via. Markets Insider.

Retail investors are hodling to the moon.

They are not waiting for $100 price action anymore, and some are certainly not waiting for $500+ share price anymore.

The Reddit community is set new standards for the AMC’s stock price.

Here’s why this matters:

  • Not only are shorts losing money every day but huge hedge funds are bleeding billions of dollars due to retail investors holding
  • This is a huge win for retail investors – our favorite companies have been saved
  • Unless shorts close their positions, hedge funds will continue to suffer
  • Interest rates will continue to skyrocket for short sellers, enabling them to close their positions sooner than later
  • An AMC short squeeze might be closer than we think

Here’s what retail investors can do:

  1. Continue to hold your positions, it’s free
  2. Buy the dips to counter any short attacks
  3. Share articles on social platforms that can provide value to the community and keep everyone informed
  4. Keep a close eye on the stocks performance so you do not miss the squeeze

Hedge funds are not going to be able to recover from this.

Yes, they can possibly receive help from huge banks, but this too will be at a cost.

Furthermore, borrowing money from banks won’t change the fact that shorts still have to cover their positions.

Retail investors are buying AMC stock every day. Shorts are fighting a war they cannot win.

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

What happens when a short covers their position?

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

In AMC’s case, shorts who drove the price down to $5 but are still holding to-date are at a loss.

AMC is currently trading around $15.72 per share as of 5/4.

When there’s a ton of short covering happening 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.

Short squeezes are massively profitable for retail investors.

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

Read: How high can AMC stock price skyrocket up to?

So, when will AMC shorts cover?

Instead of exiting, short sellers are holding. Some shorts might be waiting for a more favorable price to close their positions.

Another way shorts will be forced to close their positions in AMC is through a margin call.

This is when their accounts don’t have the sufficient funds to meet the accounts minimum amount of dollar required.

At this point they are forced to liquidate.

Now, because there’s no rule to how long they can hold their positions, they’re in the long game like most retail investors waiting on a short squeeze to happen are.

The good news is that AMC bankruptcy is no longer on the table and Wall Street analysts are even saying the industry is on a solid path to resurgence, via Hollywood Reporter.

As we continue to see a high utilization and the short borrow fee increase, we can only expect shorts will cover sooner than later.

What percent does the short borrow fee have to be?

AMC’s short borrow fee is currently at 1.00%, via. Stonk-O-Tracker on 5/04.

There seems to be some sort of manipulation or loophole here. The borrow interest rate should be much higher.

Short sellers have been borrowing millions of shares to short.

It seems they thought AMC’s 500 million share dilution was going to go through.

Funny enough Adam Aron, the CEO and President of AMC Entertainment actually scrapped that idea leaving short sellers in a deeper hole.

I personally think retail investors are going to experience the short squeeze of a lifetime.

Strap in.

Related: AMC Margin Call: The Squeeze is Inevitable

AMC’s price action will continue to go up

Journalists and analysts alike are now claiming AMC to be a big buy.

Shorts can continue to hold their loses on paper for months to come or close their positions while it’s at the current price action.

Closing now is recommended due to an overwhelming amount of attention AMC Entertainment has received.

With new titles coming to AMC movie theaters soon, we’re only going to continue to see a surge in price action due to an increase in the company’s sales revenue.

Even if shorts continue to hold, lenders will eventually run up the interest rate again and force them to cover.

If you’re a retail investor reading this article, I’m already celebrating your success.

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

AMC is on the ‘Potential Short Squeeze’ list via. Fox Business

fox business amc short squeeze list

In case you missed it, a squeeze is very possible, via FOX Business.

All the data at hand point towards the inevitable for both shorts and retail investors.

Retail investors holding AMC stock are going to experience a once in a lifetime opportunity.

Read: What The Fool isn’t telling you about AMC could hurt you

And lastly…

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A lot of you have been sharing my posts on Facebook Groups, Reddit, Discord chats, and Twitter. Words can’t explain how grateful I am for you sharing positive and valuable information for new retail investors to look at. Thank you.

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Will AMC Squeeze in 2022? Short Position AMC – AMC short positions –

Read: How will we know when shorts cover 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!

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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.

Leave a comment in the comment section down below.

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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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Let’s dive right into it!

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

Let’s dive right into it!

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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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New SEC Rules Could Lift Suppression on ‘Meme Stocks’

New SEC rules could lift suppression on meme stocks
Gary Gensler – New SEC rules 2022 – Meme Stocks could surge

There are new SEC rules coming into play that could very well lift suppression imposed on so called ‘meme stocks’.

The SEC just released a report outlining the variety of ways they intend on protecting retail investors from market manipulation.

Heavily shorted stocks such as AMC and GameStop will skyrocket if these SEC rules are enforced.

And I’m going to break down why in this article below.

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Welcome to Franknez.com – the SEC is proposing new rules that call for short seller transparency. In their report, they acknowledge what retail investors have been saying and have now come up with a plan.

Let’s dive right into it!

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New SEC rules propose market transparency

new SEC Rules propose market transparency
Market News: New SEC Rules propose market transparency | SEC on short sellers | SEC on hedge funds – Meme Stocks

The SEC is proposing a new rule designed to provide greater transparency through the publication of short sale related data.

Short sellers will be required to submit a report on a monthly basis specifying their short positions and short activity data under the 13f-2 rule.

This proposal is significant because it’s going to provide regulators with insight on every short seller trade.

With this proposal in play hedge funds will have no other option than to report overleveraged positions, or refrain from imposing predatorial strategies.

Because short sell activity will be monitored, hedge funds are stuck playing fair.

The SEC has acknowledged that short selling has been used to manipulate the market to drive share prices down.

They also confirm retail investors have been targets of “short and distort”.

Short and distort is a strategy used to drive a stock’s share price down using publicity campaigns and then capitalizing from the drop.

Elon Musk: Hedge funds tank stocks using “short & distort”

Regulators acknowledge market manipulation in report

The SEC said in their report, “while short selling can serve useful market purposes, it also may be used to drive down the price of a security, to accelerate a declining market in a security, or to manipulate stock prices.”

This statement alone is very significant for many reasons.

  1. The SEC doesn’t need to be convinced of market manipulation anymore, they’ve acknowledged it.
  2. They understand exactly what’s happening in the markets and how it’s affecting retail investors.

Now it’s just a matter of finding solutions to lift the suppression being imposed on heavily shorted stocks such as AMC and GameStop.

Disclosure of short sell positions and activity could very well be the start of it too.

If you were slacking off at work but now have your boss micromanaging you, you’d be more inclined to refrain from slacking off, correct?

It’s this type of micromanaging we need to see regulators impose on short sellers so that the demand from retail orders accurately reflect on the price of a security.

Gensler: 95% of retail orders do not go through lit exchange

Rule 13f-2 enforces 10b-21

SEC rule 10b-21 and 13f-2

Rule 10b-21 addresses failure to delivers in securities that have been associated with naked short selling.

This rule is meant to prohibit abusive naked short selling.

However, there has been no way of identifying overleveraged positions or short sell activity to enforce no such acts are carried throughout the market.

That’s where rule 13f-2 comes into play.

13f-2 provides the commission for public disclosure:

  1. The name of the issuer
  2. Title
  3. Class
  4. CUSIP number (a unique identification number assigned to stocks and registered bonds in the United States and Canada.)
  5. and number of short sales of each security

When enforced, this SEC rule will allow regulators to identify everything there is to know about a hedge funds short selling activity.

Community, this is quite big.

Public disclosures will occur every month.

“Buy to cover” rule and CAT firms

Proposed Rule 205 would establish a new “buy to cover” order making requirements for certain purchase orders affected by a broker-dealer.

The Proposal to Amend CAT would require CAT reporting firms to report short sale data not currently required that would enhance regulators’ understanding of the lifecycle of a trade – from order origination and through order execution and allocation.

This means the SEC will now have eyes on where a short sell comes from and where it gets processed and moved to.

Here is where naked shares may be exposed, recorded, and become obligated to get closed.

This Proposal to Amend CAT holds every party during the trade of a short sell accountable.

How do these rules lift suppression on heavily shorted stock?

The SEC says these proposals could help to advance the policy goal of investor protection by deterring market manipulation.

This means that when enforced, hedge funds will now be forced to play by the rules since all data is being recorded through a variety of parties, making it complicated to report inaccuracies.

The SEC on illegal short selling and “Bear Raids”

Bear Raids
The SEC on Bear Raids – ‘Meme stocks’ plummet

The SEC’s report is filled with information retail investors have been raising awareness about for over a year now.

They briefly go over the spread of false information from which short sellers profit from the decline of a stock’s share price.

“Market manipulators may seek to spread false information about an issuer whose stock they sold short in order to profit from a resulting decline in the stock’s price.”

This is something Elon Musk just recently spoke to CNBC about.

Hedge funds and corporate media have played a big role in “Bear Raids”.

Bear raids are an illegal practice to plummet a stock’s price through concerted short selling and the spread of false or negative information about the target.

This influences public sentiment and opinion.

We’ve seen this illegal practice too many times with AMC and GameStop.

Platforms owned by News Corp. attacked AMC and GameStop by publishing articles to derail retail investors from purchasing the stocks.

As millions of retail investors bought ‘meme stocks’, hedge funds shorting the stocks lost billions of dollars.

CEO and founder of hedge fund Citadel Ken Griffin coincidentally has a stake in News Corp.

The SEC warns short sellers of “Short Squeeze” risk

sec warns short sellers of short squeeze risk - meme stocks short squeeze

A short squeeze poses massive risk to not only hedge funds and market makers but also to small short sellers.

The SEC did not miss outlining the risk a short squeeze has on short sellers in their market transparency report.

AMC and GameStop’s current reported short interest is more than 20% each.

This is more than enough short interest to squeeze shorts from their positions.

And because hedge funds have been overleveraging their positions, this is no ordinary play anymore.

Hedge funds now have a ticking time-bomb that may cause systemic risk.

Will AMC and GameStop experience a managed short squeeze?

Leave your thoughts in the comment section below.

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Overstock Founder Says SEC Has Always Turned A “Blind Eye”

Overstock founder Patrick Byrne on Market Manipulation and short selling
Overstock founder Patrick Byrne on Market Manipulation and short selling

Overstock Founder Patrick Byrne says the SEC has always turned a blind eye when it comes to predatorial practices in the stock market.

AMC and GME stock have both seen an incredible amount of naked shorting, but regulators have failed to enforce market makers and hedge funds from closing their overleveraged short positions.

The Overstock Founder has an extensive history of fighting for a fair market and explains why the SEC has always turned a blind eye.

I’m going to breakdown key highlights to this incredible interview and embed the video for your viewing pleasure at the end of the article.

franknez.com

Welcome to Franknez.com – the blog that fights for retail investors and exposes injustices in the market. Today we’re discussing the biggest scandal in history.

Let’s get started!

Who is Patrick Byrne?

Now, if you are not familiar with who Patrick Byrne is, he’s the founder of Overstock.com, an online retail company.

Patrick Byrne has a history of exposing injustices in the market after Overstock experienced an incredible amount of shorting.

His activism and knowledge in the markets grabbed the attention of Chinese economists.

The Chinese have adopted Patrick’s principles and knowledge on how to properly build and run an efficient market that eliminates systemic risk to the country.

He has been under several investigations by the SEC due to exposing the corruption no one is willing to change.

Overstock Founder Patrick Byrne Short selling
Overstock Founder, Patrick Byrne

“Since the 90’s, they’ve always turned a blind eye to penny stocks in the market.”

Overstock Founder, Patrick Byrne

How deep are hedge funds in AMC and GameStop?

AMC and GameStop

According to the Overstock founder, he describes short sellers as having their foot on top of a bouncing betty.

Meaning as soon as they take their foot off, a massive explosive is triggered.

The expression denotes the particular circumstances hedge funds and market makers are currently in.

Hedge fund industry expert, Charles Gradante has recently stated that market makers created naked shares to refrain AMC and GameStop from further causing hedge funds great distress.

Read the full article here.

Now, Patrick Byrne confirms hedge funds and market makers will do anything to get out of this sticky situation.

Including using the media to attack AMC and GameStop, and even buy regulators in the SEC to allow the market manipulation to continue.

According to the Overstock founder, the only way out of that bouncing betty is to drive the stock’s price to 0.

Something retail investors are not allowing to happen.

Overstock Founder says the SEC, DTCC, and Fed are all corrupt

SEC is corrupt

In this incredible interview, Patrick depicts all regulators as a stack of turtles (I’ll embed the video below).

They’re all corrupt, all the way down, no matter the branch.

He’s heard Gary Gensler is not one of the ‘corrupt ones’; but although intelligent, might not know how to fix the problem.

Retail investors have been raising awareness of market injustices in hopes to receive acknowledgement from Gary Gensler.

However, the SEC Chairman has failed to take matters seriously.

Related: Fed’s Kaplan and Rosengren resign in market manipulation scandal

What will trigger AMC and GameStop to squeeze?

what will cause AMC and GameStop to squeeze

If short sellers are doing everything in their power to drive AMC’s and GameStop’s prices to 0, then retail truly is the only solution.

Buying and holding the stock is what’s keeping AMC and GameStop from going to 0.

If hedge funds drive these two stocks’ price down to 0, they win, and the bouncy betty is disassembled.

And the only way they can accomplish this is if retail investors call it quits.

So, we know that as long as retail investors continue to buy and hold the stock, hedge funds cannot drive the price down to 0.

What is the solution?

Time.

Every day, every week, and every month that hedge funds have not closed their positions, they lose money.

While retail investors accrue unrealized losses, hedge funds and market makers pay a fee to keep to their short positions open.

The time of desperation is already here.

The markets are getting liquidated, mainstream media continues to spread FUD about AMC and GameStop, and retail investors are not leaving.

You’ve already won if you’re holding either stock, you are the bouncing betty.

These multibillion-dollar companies are working together to scare you out of your money first.

They’re doing this by continuously overleveraging their positions and driving the share price down in hopes that retail will sell, and they’ll take the companies down to 0.

Be sure to watch this incredible interview on Overstock founder Patrick Byrne.

Patrick Byrne on short sellers and market manipulation

Exposing manipulation in the markets

Citadel Securities market manipulation

It’s going to take more than just time to trigger a short squeeze.

A short squeeze is going to require the community to demand proper market structure.

Patrick talks about T-Zero and blockchain technology as solutions that would eliminate naked shorting and the suppression of a stock’s share price in the market.

But the SEC considers the Overstock founder’s idea as market manipulation.

The retail community will not squeeze shorts from their positions unless proper market structure is demanded.

Short sellers will need their foot off the bouncing betty for AMC and GameStop to squeeze.

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How Will We Know When Shorts Cover AMC?

How Will We Know When Shorts Cover AMC

AMC stock is showing major resistance in the high $30-$40 levels. The short interest has gone down by 3.5% since it peaked, did shorts cover?

And if they did, shouldn’t the price have gone up?

This is a very interesting topic indeed. Let’s discuss it.

franknez.com

Welcome to Franknez.com – the blog that gives retail investors a platform. Today I want to discuss some key attributes that will let us know when shorts cover AMC.

Let’s get started!

But before I continue, I want to thank every single one of you who continues to share the content and who’s been supporting the blog all these months.

Identifying Short Covering

Short covering is what’s going to ultimately get you astronauts to the moon.

It’s a battle of tug-a-war if you ask me.

Except it’s not physical, it’s a mental game of strategy. And the first to cave in, loses.

Now, it’s worth mentioning that the domino effect may fall upon either side of the spectrum.

This means both long shorts and long retailers are susceptible to influencing one another.

The difference is whether we lend strength to one another, or doubts and fear.

In my list of 6 things retail investors should know about AMC, shunning negativity is one of them.

And for great reason.

The same way we can pull each other up, we can also pull one another down.

Short Interest Data

To the best of my knowledge, there are two major factors that will allow us to identify when shorts cover.

The first is through the short interest data.

What does short interest data tell us?

The short interest helps us understand how much of a stock’s float is being shorted.

It’s the number of shares that have been sold short but have not yet been covered or closed out.

short interest calculation

For example, a heavily shorted such as AMC has a short interest of 16.56% (currently).

Apple on the other hand has an SI of 0.62%.

Apple has almost no shorts to squeeze from their positions where AMC has 16.56% of the float shorting the stock.

That’s approximately 106.82 million shares out on loan that have yet to be covered.

So in theory, as shorts begin to cover their positions, AMC’s short interest data should begin to decrease.

Price Action Change

Another common way to identify whether shorts cover their positions is through sudden price movements.

Short covering adds momentum to the buying pressure of a stock which results in a spike or bullish run.

What makes identifying when shorts cover is that the price action and short interest data don’t align at the same exact moment.

The reported short interest doesn’t happen right away.

It’s actually released a week and a half.

However, when we look at AMC’s runup back in June, we see that AMC peaked two days after it’s last report high short interest.

See below.

It took two business days for AMC’s small short covering to take AMC from $31.81 to an all-time high of $72.62 per share.

The chart from Ortex below shows us a drop in short interest between the dates of May 28th and June 9th where the stock began to cool down from it’s runup.

We saw the short interest drop from 20% to 14.76% by mid July before shorts began taking new positions, further driving the short interest up past 19%.

And I know what some of you might be thinking. Shorts haven’t covered! They never did!

Community, I’m presenting you with data that shows how price fluctuated based on the short interest updates.

Strangely enough, when the short seller, not hedge fund, Iceberg Research announced they closed their short position in AMC, two days later we saw a very small increase in price action though retail volume was low.

People were quick to dismiss Iceberg simply because it’s one analyst publicly shorting AMC but I though the news was super bullish.

In fact, I hoped other short sellers would follow in closing too.

Will AMC Squeeze Based On The Current SI?

AMC Short Interest October

AMC’s current short interest as of the date of this publication is 16.39%.

You can keep tabs on the short interest update here where I update it daily from Ortex so you don’t have to buy it.

AMC’s current short interest by definition is considered to be extremely high.

There is more than enough juice to get some serious price action out of AMC with this data.

And of course, if more shorts begin taking positions in AMC then the short interest percentage will continue to go up.

Otherwise, we can expect it to stay the same if they continue to hold, or decrease even if very small short positions are indeed being closed.

With AMC’s short interest slowly going down and an incredible amount of short shares being borrowed, I’m curious whether their exit strategy is to heavily short the stock while closing smaller short positions.

You can see how many short shares are being borrowed daily via. StonkOTracker.

Tinfoil hat on but I can see a strategy where the amount of overleveraged shorting is countering any small short covering.

Even then, this scenario is just speculation to be quite frank.

If you have any idea why the short interest is slowly going down I’d love to hear your thoughts in the comment section below.

I’m confident others would like to as well.

A Short Squeeze Requires Apes To Play Offense

I just published an article on what will trigger AMC to short squeeze.

If you have not read it I strongly suggest you do so.

In short, heavy volume and buying pressure is what initiated strong price movement back in January and this past June.

The community has set a new bottom for AMC in the mid to high $30 levels.

Holding will merely sustain the stock there, and low volume will not create momentum.

If the AMC community is to squeeze shorts from their positions, momentum will be the number one factor to creating another runup before the end of this year.

Could an even bigger third wave shake bigger short sellers?

I absolutely think so.

The next runup would force new shorts to close at a higher price then the previous wave of short sellers did.

Again, this is based on what the short interest data and price action have reflected.

We’ve raised the bottom during every runup, we’ve raised the market cap, and we’ve raised the all-time high.

There’s no doubt in my mind we can finish the mission through continuous buying pressure.

What About Synthetic Share Covering?

Unfortunately, there’s no way of identifying the process of synthetic share covering.

The safest way to track this short squeeze play is through the data that is provided, such as the short interest data.

And although at times it may be skewed due to being self-reported, it’s one way of tracking the information.

Synthetics shares are one of those things that regulators have been turning their heads on.

While the community is aware of them and acknowledges the use of synthetics, I find it’s counterintuitive for us to rely on information that is not being publicized as precisely.

Especially if we are to make big money from this short squeeze trade.

Be open to it, dig deeper to fuel your conviction, but also have a plan and be prepared for anything.

Stay true to your conviction, and make sure you make an awesome trade as shorts begin to cover.

How High Will AMC Go?

At this point, the short interest percentage is our fuel.

We cannot predict exact numbers based on the data available.

However, the data does show us that with enough applied pressure, AMC’s share price will skyrocket.

Ladies and gentlemen, there’s no way you cannot make money from this play.

It will be up to the community as a whole to be engaged, and continue playing offense.

In a war of mental tug-a-war, this third wave could be our grand win.

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