Tag: Wolf of Wall Street

How Soon Will Hedge Funds Get Margin Called? (AMC)

How soon will hedge funds get margin called?
When will hedge funds get margin called? #AMCsqueeze #AMCstock

Retail investors all want to know. How soon will hedge funds get margin called? I’m going to be updating this article with new information as it becomes available so be sure to bookmark it.

If you’re investing in AMC or GameStop, this article will prove to be of value to you. You’ve done an outstanding job. You’ve bought the rips and dips but most importantly, you’ve held.

Lets go over the data that is currently available regarding margin calls and hedge funds. There are some incredible things happening behind the scenes that you need to know.

franknez.com

Welcome to Franknez.com – the blog where you can digest content on personal finance, side hustle ideas, entrepreneurship, and trending investing topics.

Lets get started!

I want to give a massive thank you to my readers. A lot of you have just recently started following me and I’m very grateful for your support. I love seeing the community sharing FrankNez content on social media. It brings me great pleasure to know I’m providing value in your daily lives.

What is a margin call?

I published a piece fully dedicated to what a margin call is in the stock market world some time ago. In short, a margin call occurs when the value of an investors brokerage account falls below the broker’s required amount. This is when a broker demands that an investor deposits additional money into their account so that it meets the minimum requirement.

A margin call is usually an indicator that a security (asset) held in the margin account has decreased in value. When a margin call occurs, the investor must either add funds to their account or liquidate (sell) some of their assets in that account.

Why does a margin call occur?

  • It may occur when an account runs low on funds usually as a result of a losing trade
  • A margin call occurs when a demand for additional capital is required to meet the minimum margin requirement
  • Brokers may force traders to sell assets, no matter the current market price, in order to meet the margin requirement if the trader does not deposit the funds

If you’re a new retail investor and have recently joined the ape community then you’ve more than likely heard the term margin call before. A margin call is basically a 50/50% chance a short squeeze may occur on the spot.

However, even if hedge funds are able to keep enough capital in their margin accounts to keep them afloat, at some point they’ll have to cave in. Hedge funds are losing billions of dollars and this game is only costing them more money each day that passes.

Bloomberg News on Gary Gensler / Margin Calls

Margin call hedge funds

In this video, Bloomberg News discusses Gary Gensler, the new SEC chairman’s concerns of overleveraging and manipulation in the stock market.

This five minute video is important to log because it demonstrates and acknowledges the concerns in the market. Perhaps the SEC was incompetent in the past to say the least. But it looks like we might be looking at some change here community.

And although this particular video was published on May 6th, below are some things Gary Gensler is already proposing in order to protect retail investors and the overall market in general.

SR-NCSS-2021-002

SR-NSCC-2021-002 AMC automatic margin calls

This proposal from the SEC is massive if it gets approved. The SEC has heard you and they’ve been looking into hedge funds overleveraging their positions in AMC stock and other ‘meme stocks’.

This proposal would allow an automatic margin call system to margin call hedge funds with overleveraged accounts. This margin call system will essentially target short sellers on a daily basis and identify whether they are required to raise margin minimums or liquidate their positions.

SR-NSCC-2021-002 APPROVED 6/21/2021

SR-NSCC-2021-002 APPROVED margin calls
SR-NSCC-2021-002 Approved

Community, proposal 002 has been approved. These regulations have been placed in effect. However, as long as short sellers are able to keep up with their margin requirements then this regulation is rather neutral. A lot of these rules being put into place play in our favor the more money short sellers lose.

Total Return Swap AMC

The SEC and FINRA have gotten together to review the activity of ongoing overleveraging in the stock market. Hedge funds could soon face total return swaps per Gary Gensler, SEC chairman.

In a total return swap, the payer (hedge fund) must pay the interest on the underlying assets, plus any appreciation in the market value of the asset. This sounds a lot like shorts paying all short borrow fee owed on top of the market value of naked shares they’ve traded.

13-F filings and short selling disclosures

There’s a strong possibility that hedge funds also face 13-F filings. This filing will provide the SEC with insight on equity and dark pool disclosure.

Everything now seems to be falling right into place despite the continuous short laddering.

When will hedge funds get margin called?

Charles Schwab has recently raised margin requirements for both AMC and GME stock. This means that if they are unable to keep the minimum cash required in their margin accounts, they’ll be required to liquidate some or all of their positions!

This would create massive price action to trend in an upwards position. We know that short sellers are losing millions of dollars every day. Ladies and gentlemen. This is simply a waiting game. The point is going to come where they can no longer afford to be negative each day.

This movement is about to get on a whole other level of excitement. The fundamentals to this AMC short squeeze have not changed. All retail investors will have to do is hold until short sellers cave in and close their positions willingly, or brokers margin call them.

BREAKING NEWS: Charles Schwab raises margins on short sellers shorting AMC and GME stock

Charles Schwab raises margin requirements

Charles Schwab raises margin requirements

The broker is adjusting 100% margin requirements for AMC on all long positions, and 200% on short term positions. As for GameStop, the margin requirement is 100% on all long positions and a whopping 300% on short term positions.

All this essentially means is that short sellers will be required to have more cash at hand as collateral. So not only are hedge funds losing a lot of money every day but are now being required to put enough cash into their accounts to cover their entire positions if need be!

You know what happens if they can’t cover right? That’s right, margin call. Instant liquidation of their accounts resulting in the MOASS we’ve all been waiting for.

Margin calls will result in a short squeeze

At first we might experience what’s known as consecutive gamma squeezes. These are usually triggered by high volume in the market due to expiring call options in the money or very high purchasing days.

As more short sellers and hedge funds with larger short positions in AMC stock begin to cover, we will begin to experience the beginning of a short squeeze.

A short squeeze could last several days to several weeks. During this timeframe, the stocks price will continue to skyrocket as more short positions are closed.

It really does feel like we’re coming to an end here. This new beginning is going to change millions of people’s lives and I’m glad to be that first person to congratulate you.

NSCC-2021-010

Proposition NSCC-2021-010 allows the NSCC to act as a third party lender to oversee every transaction between lenders. It prevents short sellers from using naked shorting strategies and from creating FTDs.

This is one of the biggest AMC news yet regarding the stock. The NSCC is also requiring that short sellers have more cash at hand to limit overleveraging their positions.

This proposal can go into effect at any time but may take a few weeks in case something needs to be revised. Once approved, AMC stock will surge past $40 leading back to higher levels of support.

When should I exit my position in AMC?

I wrote an AMC exit strategy guide to help the community make a strategized decision on how to sell when AMC squeezes.

I do want to relay that this is only my take on it. Many of you already have your own exit strategies, I understand this. Regardless, it’s there if you need it and would like insight from a different perspective.

And lastly . . .

Franknez.com

If you gained value from this article be sure to share it with the rest of the community. Thank you to everyone publishing this information on Facebook, Twitter, Reddit, and Discord groups.

If you would like to support the blog you can do so on Patreon where you will also be able to access exclusive Frank Nez content.

And remember, this article will be updated as more information is revealed to the public so be sure to bookmark this page for your convenience.

Read: Here’s why people are buying AMC stock: Investors guide

Twitter | Facebook | InstagramExclusive content on Patreon


Why Hasn’t AMC Squeezed Yet? (The Truth)

Why hasn't AMC squeezed yet?
Keep hodling apes, your time is coming

Retail investors have been diamond-handing AMC stock for quite some time now. Massive props to those of you who have been holding since AMC’s gamma squeeze as of late January. You guys have seen it all by now. The gains, the short ladder attacks, the manipulation in the media and so on. So, why hasn’t AMC squeezed yet?

After all, we deserve an explanation. With so much DD out on YouTube and Reddit, some answers just aren’t being answered. Luckily, extensive research is done here to provide you with value you won’t find anywhere else.

Here’s what we know.

franknez.com why hasn't AMC squeezed yet?

Welcome to Franknez.com – the blog where you can digest content on personal finance, side hustle ideas, entrepreneurship, and trending investing topics.

Lets get started!

why hasn't AMC squeezed yet?

AMC Entertainment is after all one of the most heavily shorted companies in the market. So why hasn’t this stock shot up to the moon yet!?!

Shorts and hedge funds alike continue to lose money every day they hold. Shouldn’t they be covering by now?

More and more institutional buyers are bulking up on the stock, retail investors continue to hold and buy the dip, so what are we missing?

For one, let’s start with volume

Stock Volume needs to be high for a short squeeze

AMC’s market volume hasn’t been as high as we need it to be if we’re to see a short squeeze. Although, we’re finally beginning to see volume surpass 300 million. We’ve also seen it go as high as 700 million.

The market is going to need big volume to come in so we can see this price action really move. Well, how much volume do we need for AMC to squeeze?

The highest volume we’ve seen so (post gamma squeeze) was back in February where the volume reached over 400 million, until recently. In June we saw a surge of new retail investors buy AMC stock and volume reached around 700 million. The volume will need to be well over this amount.

Trey’s Trades has mentioned the perfect squeeze setup will require the volume to sit around 600 million plus. Some DD on Reddit has shown a squeeze will most likely occur in the billion volume mark.

Low volume = consolidation

low volume = consolidation

We’ve been seeing this with AMC until now. The stock has held up really well consolidating in the $40-$50. This level of support is indicating investors are mainly holding their positions. Retail investors will need to continue to add to their positions and project bullish sentiment if they want to see the price action continue to move up.

We saw AMC reach $70 when the volume surged back in June. It has since come down due to heavy short ladder attacks. Short sellers have been borrowing millions of shares to short AMC stock.

And while new retail investors are buying the stock during the dips, these ladder attacks on upticks have kept us consolidating.

Is consolidation in a stock bad?

Not at all. Consolidation is just a sign a particular stock has found a level of support and has developed strength.

Driving the price action up could force short-sellers to close their positions; however, a new pattern has risen.

According to Benzinga, “Volume in AMC’s stock has been declining, especially in terms of bearish volume, which indicates the stock is running out of sellers. This pattern is often seen before eventual large upward swings in a stock.”

Shorts still need to cover their positions

AMC money investing

Shorts haven’t covered their positions which means they’re holding just like retail investors are. The only difference is they’re paying an interest fee until they close their positions.

It costs nothing to hold AMC for the retail investor but it’s costing shorts and hedge funds money every single day.

Moral of the story? Hold until shorts can no longer afford to pay the interest. Yup, that’s really all there is to it. Keep living you day to day life. When AMC squeezes, you will hear about it.

The short borrow fee has been relatively low

Low borrow fee rate means no squeeze

Now, unfortunately the short borrow fee for shorts has been relatively low the past several weeks. At least according to Fintel.

This just means the fees aren’t hurting shorts too bad from the interest right now, although they continue to lose millions with every passing day.

AMC short borrow fee

Shorts continue to bet against AMC in efforts to bankrupt the company but the company is actually doing great right now.

Yup, although bankruptcy is officially no longer on the table.. And all movie theaters are now open.. and AMC Entertainment is bringing in huge revenue from new movie titles..

Yeah, I don’t understand their logic either.

This interest fee really doesn’t affect retail investors. Whether it’s low or high it’s costing hedge funds money. And at some point compound interest will really be hitting them hard.

It would be in shorts best interest to close their positions now while their fee is still low, and the stock price is around the mid $40 range. Because as soon as the stock price goes back up and so does the borrow fee rate, they’ll wish they had closed sooner.

Read: When do shorts have to cover their positions (AMC)

Wanda caused more shares to float into the market (ARCHIVE)

This information was what older apes experienced months back and will be included in this article for record purposes only.

One of the reasons why AMC didn’t squeeze months back was due to Wanda’s continues selloffs every time the stock would come near $14. This slowed the growth process significantly. Here’s how it happened.

With Wanda converting class B shares to class A shares, it essentially put more shares out into the market. This happened quite some time ago (early this year) but it’s worth mentioning because it goes back to volume. This is previous news though and Wanda no longer has a position in AMC due to foreign policies.

Key: Retail investors will need volume in order to squeeze shorts out of their positions.

Wanda Group had fueled red days (ARCHIVE)

Wanda is a group based in China who has been AMC Entertainment’s biggest shareholder for quite some time.

Unfortunately, Wanda had taken profits every time AMC’s stock rose to $14. This was usually seen as a major selloff in the market. CEO and President of AMC, Adam Aron explained in a recent interview with Trey’s Trades the cause for this. China’s government has a policy that requires international investors in China to focus their investments domestically to fuel their economy.

According to Adam Aron, Wanda is still a great partner and doesn’t believe the sell has anything to do with Wanda’s sentiment or believe in the company.

As of today, retail investors now hold majority of the float and Wanda no longer the large shareholder it was in AMC. This gives retail investors more control.

Stock market manipulation

Something incredible is unraveling here. Something very bad.

And although it’s bad, this means it’s also time for change. This entire journey with AMC and GameStop has allowed very intelligent people to uncover data that was never meant to be uncovered.

It’s only a matter of time before this data and DD get into the hands of writers looking to document this historic event occurring before our eyes.

One of AMC’s biggest reasons why it hasn’t squeezed is due to the heavy manipulation that’s been occurring for many months now. Nonetheless, AMC has moved up from $5 to the mid $40. Despite hedge funds cheating, retail investors keep winning.

It’s going to take continuous patience from retail investors in order to squeeze shorts out of their positions.

Read: How do hedge funds manipulate the stock market?

Hedge funds pay the price

stock market manipulation
Melvin Capital suffers 49% loss their first quarter of 2021

Melvin Capital, a hedge fund who shorts both AMC and GameStop stock has reportedly suffered a 49% loss its first quarter.

The reason being is they have not closed their short positions although in a recent statement they advised they had. This hedge fund along with short-sellers are losing money every day due to the short borrow fee continuously increasing.

Short sellers are sitting on billions of dollar loses, via REUTERS. If short positions were covered, both AMC and GME would have come into an immense amount of gains just from this one hedge fund buying back several millions of shares.

Related: AMC margin call: the squeeze is inevitable

Mudrick Capital

Mudrick Capital is another sleezy hedge fund that has been very well documented on FrankNez for its dishonest play. Laura Stine and I collaborated on publishing this piece from when Mudrick Capital met AMC and departed with AMC.

Laura captured the entire timeline perfectly and provides the community with insight as to how we are where we are today.

Read: Hedging against America: The Mudrick short report

Short-ladder attacks

Retail investors started digging into the manipulation as AMC’s share price continuously got ladder-attacked. Shorts use this strategy as a means to drive the price down as the stock moves up.

Redditors have discovered which platforms are owned or partners of Melvin Capital and Citadel. We’ve seen manipulation through bogus headlines trying to divert the public from buying a heavily shorted stock. MarketWatch, who is owned by Melvin Capital and Citadel, took to eliminating AMC from their #1 place on the most shorted stock list in the market back in February.

Citadel also owns The Fool which has been publishing lies for many months now.

This only urged more people do further dig in. We’ve found the unethical use of naked shares, which are essentially ‘fairy stocks’. They don’t exist but are traded and shorted otherwise. These are also known as ‘I owe you’s’.

In a world post squeeze, these financial platforms will no longer be trusted by the general public.

A house of cards, r/superstonks (Reddit post)

A Redditor just posted an insane amount of DD on Reddit. This long form post discuses the transition from paper filled orders to the use of computers going all the way back to the mid to late 80s.

The post reveals the beginning of issuing naked shares. We’re also learning that a lot of transaction are being held by the actual institutions that are shorting these stocks.

Robinhood routes more than half of it’s customers to Citadel. This information has now been disclosed via the Washington Post.

You can read the full Reddit post here.

Trey’s Trades does a quick breakdown on this DD as well. The video is embedded for your viewing pleasure.

With all this in mind, manipulation in the stock market has been able to keep AMC’s share price consolidating in the $40-$50 range thus far.

You can read more on how hedge funds manipulate the stock market to better understand why we haven’t seen an AMC short squeeze yet. Because this DD is so relevant, it will also be included in that post for new readers to see.

Final verdict

Regardless of the manipulation going on surrounding AMC’s squeeze, I strongly believe retail investors should stay the course if they are to see life changing results in the market. The price has moved up significantly! Once AMC’s stock price hits $80 we’ll begin to see $100 easily and beyond.

When a community rises and people stick together, real change is inevitable. With so much information coming to light, it’s only a matter of time that the tables are turned and justice is served.

Additionally, retail investors are winning right now. Shorts and hedge funds are losing money every day. More malpractice is being discovered and publicly shared. A lot of the analysis circulating AMC is pointing to a nasty nasty squeeze. Continue to stay positive and share positive and enlightening news.

AMC news and squeeze facts

  • AMC was on FOX Business ‘high squeeze potential list’
  • Movie theaters are now open everywhere
  • Godzilla vs. Kong secured $9.6 million in tickets on its opening night. New titles are breaking records
  • AMC Entertainment has raised over 2.2 billion dollars in cash as of early this year and continue to earn revenue
AMC Ticket Short Squeeze

Bankruptcy is officially off the table according to Adam Aron, and new titles are making their way to AMC movie theaters. I’m personally bullish on the stock and see lots of organic growth potential.

Growth is what’s going to inevitably squeeze shorts out of their position.


Join the Discord

Thousands of new retail investors have joined my Discord group in order to stay updated on this movement. I created this safe community for your voice to be heard and for your rights to be protected. Retail investors are learning something new here every day.

Here’s a personal invitation to the club.

franknez.com discord AMC

You can support the blog on Patreon.

Twitter | Instagram | Facebook


Breaking Down Trey’s Trades Video w/ Wolf of Wall Street

The Wolf of Wall Street Interview Trey's Trades

Trey’s Trades just released an honest video interviewing Jordan Belfort, AKA The real Wolf of Wall Street.

The ape community holding AMC stock was actually looking forward to this video but found themselves perplexed and rather disappointed.

I’m going to breakdown key points from the video to provide some clarification. I’ve watched ‘listened’ to the video a few times to gain a different perspective on the interview.

Massive thanks to Trey’s Trades for the intention. I think we can all agree Trey held himself very well during the interview with Jordan Belfort. You’re the real goat brother.

Trey’s Trades vs. Wolf of Wall Street – Intro

This interview begins with Trey humbly expressing his gratitude, concern for Jordan’s health, and respect for the wolf’s time.

Trey sets the mood with by saying, “I think there’s a huge opportunity for some education”. He also mentions there’s been a lot of cool stuff going on in The Wolf of Wall Street’s Twitter as he expresses his excitement.

As most of you know, Jordan Belfort has been supporting the AMC movement via Twitter.

The AMC & GameStop situation

The Wolf of Wall Street goes on to discuss the dilution of shares in general. Jordan Belfort further explains that a dilution would mean short-term discomfort in the stock but could benefit a company immensely long-term.

I actually said this back on April 1st when AMC share price started to drop due to Adam Aron’s announcement seeking approval from its shareholders to issue 500 million more shares. You can check out the post here.

Jordan Belfort thinks an issue of shares will pass

Trey asks The Wolf if he thinks it’s likely that an issue of shares can pass where Jordan then responds with certainty that it will pass.

Apes, you have to take this with a grain of salt. This is only Jordan Belfort’s opinion. Remember, you the shareholder get to vote whether this passes or not.

If you hold AMC stock then you should have received an email from your brokerage account with the form to vote. Be sure to search it in your mailbox if you’re uncertain.

What happens if 500 million shares are approved?

If it passes:

  • AMC becomes more of a long-term investment with a lot of upside for the company. As a shareholder, you will still be profitable.
  • Will a squeeze still happen? More than likely. A dilution would bring the stock price down which would be a favorable position for shorts to cover.
  • Approving this does not mean all shares will be issued at once. This is only a ‘backup’ in case of another disaster that can be a detriment to AMC as a company.

If we vote no:

  • AMC will simply have to pay it’s dues as they continue to see profits
  • The share price will not dilute
  • AMC won’t have a backup in case a second pandemic occurred hypothetically speaking

Verdict?

All in all, The Wolf of Wall Street had nothing negative to say about AMC here. These are straight facts that really don’t affect AMC negatively in any way.

“Wildly Overvalued”

Jordan Belfort then begins to advise that both AMC and GameStop are wildly overvalued.

I personally think he’s mainly referring to GameStop here. GameStop is wildly overvalued and it’s certainly no surprise to hear so. Again, there’s no negative talk about the stock(s). The Wolf of Wall Street is presenting an opinion that is widely accepted through fundamentals.

GameStop was hyped to squeeze despite the drop in value and revenue in the company, so there’s no argument there. However, AMC is currently undervalued if you look at pre-pandemic records.

The Wolf is already thinking ahead. AMC is not overvalued yet, but it will be.

And as he mentions in the interview, once these stocks take off they are bound to come back down. Fundamentals will eventually correct the stock and trade on ‘normal’ levels.

At least they should.

“Whoever Buys The Stock Is Kinda Nutty”

The Wolf of Wall Street goes on to say that as a shareholder, it is our responsibility to take advantage of the inflated price.

Jordan Belfort is trying to get a lot out during this part of the interview. He mentions if people are going to buy the stock at 10 times the price that it’s trading at ‘fundamentally’ it’s not worth buying.

Again, I believe he’s referring to GameStop where it’s currently sitting at. What I get from this message is that it doesn’t make sense to buy at the top of a stock that can potentially correct itself back to fundamentals.

He then goes to say whoever buys the stock (at the inflated price) is ‘kinda nutty’.

“This doesn’t mean you can’t make a lot of money trading at these higher prices”. This quote is why I believe he’s referring to GameStop. AMC isn’t there yet.

This is how I’m perceiving this part of the video. Let me know in the comments section below your personal opinion.

Trey agrees with this

Trey agrees that GME is overvalued and that a dilution would help AMC in the long-term with cash should they ever need it.

Most people didn’t catch the Bitcoin bit

Most apes didn’t catch this but the reason The Wolf mentioned Bitcoin is because he was using it as an example to compare it vs. how stocks work.

He basically states that Bitcoin unlike stocks can go up and stay up for a while, come back relatively low, and continue this cycle. Jordan states that stocks don’t move this way and he wanted to clarify this for the viewers, mainly new retail investors.

GameStop second squeeze?

Trey asks The Wolf of Wall Street if he thinks GameStop will have a second squeeze. Jordan responds saying he predicted the second squeeze meaning it’s already happened and that a third one isn’t likely. Although, he does make a reference that it was most likely a ‘gamma squeeze’ the second time around.

Again, this is only Jordan Belfort’s opinion and solely based on GameStop, not AMC.

“I love the average person is making money”

The Wolf of Wall Street expresses he thinks it’s great the average person is making money and doesn’t want us to think he’s against what’s going on. Jordan then goes to say he just doesn’t think any high price action will be sustainable.

Which makes sense apes. When GameStop’s squeeze peaked at $500 it did not sustain. It became volatile and dropped all the way back down to $40 before gamma squeezing up to $200.

The bear market discussion

The Wolf of Wall Street explains that a rising tide lifts ships and a falling tide sinks all ships.

He’s referring to a bear market vs. a bull market. Jordan further explains that during a bear market all stocks tend to go down no matter what hype surrounds it.

We’ve seen a little bit of this occur with AMC mainly on the days that the S&P 500 has been down. It’s simply how the market works.

Here, The Wolf is simply having a discussion with a younger investor as he portrays Trey after asking him his age.

You see this sentiment carry over when discussing how his former colleagues lost a lot of money day-trading. This conversation can be looked as personal insight from The Wolf’s experience and possible ‘advice’ to new retail investors.

We get off track a bit

A lot of the interview from here on out is simply a conversation between Jordan and Trey.

The Wolf seems to get off track from the AMC phenomena and starts talking about other investments and fundamentals. The rest of the video from here on out is a rant from Jordan that Trey entertains out of respect.

The video is concluded with The Wolf of Wall Street advising to make as much of money as you can while the times are good, and to play it more conservatively when they’re not.

Conclusion

Trey did an amazing job at respecting Jordan Belfort’s time which is why we didn’t see much deeper conversations regarding manipulation in the market, etc.

I hope you guys enjoyed this breakdown from the video. I too was a little puzzled after watching it the first time. With a lot of uncertainty going on, I figured I’d listen to it a few times over and provide some perspective to provide some form of value to the community.

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

Twitter | Instagram

© 2021 Franknez.com

Theme by Anders NorenUp ↑

%d bloggers like this: