GameStop Rebellion: Retail Traders Take on Wall Street Hedge Funds

nicklebleu

The Living Force
FOTCM Member
Interesting take on this - see full article here:

Archegos is a Chinese family office. The Biden administration is rapidly descending into anti-diplomatic relations with Russia, China and Iran. Every possible provocation of the Chinese nd the Russians you can think of is happening. On March 24th, Ukraine quietly declared war on Russia by making it Ukrainian security policy to retake Crimea (H/T to Mike Snyder at Economic Collapse Blog for finding this little goodie).

Earlier this week we have the Ambassador from the U.S. call Taiwan ‘a country’ in the worse kind of calculated offense and escalation you can think of.

So I have to ask the question, “If you were the Chinese and you were now in a hybrid war with the U.S. how would you send a message back across the Pacific?”

This state of hybrid war, in effect a proxy for a direct military World War III began with the coup in Ukraine in 2014, and has been escalating for years. The entire Trump administration was one big hybrid war exercise of asymmetric attacks on each others’ capital markets and internal domestic policies — sanctions, counter-sanctions, tariffs, currency manipulations, etc.

Would you send warships some place or would you attack our credit markets?

Or more importantly would you plant literal financial tac nukes across multiple sectors of the financial world to combat any big push from the U.S. and Europe to foment a financial crisis on the eve of a conflict going kinetic?

When we go back over the past few weeks of FOMC statements and assess the placidity of the Fed in the face of one of the biggest quarterly moves up in long-term interest rates in U.S. history we have to ask these questions.

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The dollar has been rising since the beginning of the year. Russia and China have been accumulating gold like mad to protect themselves from this which has been under sincere attack since last August’s flirtation with $2100 per ounce.

Gold’s Q1 performance was abysmal.

I’ve said before I thought this approach from the Fed was deliberate despite the markets screaming for it to do something. And when all the Fed does to change policy in March is to open up the limits banks can use to access the repo window (from $30B to $80B) while this is happening, again, I ask the question, what are they preparing for?

So, if I’m China and I’m reading the tea leaves coming from the lack of diplomatic skill, if not intentionally amateurish behavior from the Biden administration, what would I do?

How hard is it to think that there aren’t 20 or 30 family offices, unregulated and opaquely trading in CFDs and TRSs, out there with positions just like Archegos’ ready to go off if the Fed continues to allow a rising dollar and rising long-term rates.

The biggest useable weapon the U.S. has is monetary policy. If you want to blow up China’s rising economy right now you have to allow the dollar to rise, liquidity to drop and induce panic all throughout emerging and frontier markets many of whom are now allies of Russia and China, think Turkey for example.

If you were China how would you defend against that? By creating asymmetric time bombs that blow back on western capital markets the second the dollar begins to drain overseas liquidity.

To quote Zerohedge, “Simple and brilliant.”

In any prelude to kinetic war there is always a financial war that precedes it. First give the world excessive amounts of easy money and allow overseas export markets to overlever to supply U.S. consumption markets, then pull the punch bowl away and watch the cheap dollars become albatrosses around their necks.

Welcome to Russia and SE Asia in 1997-99, Turkey in 2018, etc.

There’s been a massive correction in Chinese large caps since the dollar began strengthening in January. As the Dow Jones Industrials climb higher, the MSCI A50 China Large Cap Index has given back nearly 40% of its gains since last March.

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If I’m China, I allow Archegos to go poof and then watch the plumbing of the financial West clog up like the Suez was last week.

This is how you play the real game. And I would be shocked if this is the only family office nuclear time bomb out there.

Look at the stocks they bought and targeted… Viacom, Discover, Tencent Music, Baidu, etc.

Remember the first rule of derivatives trading: notional becomes net when the other guy can’t pay. It’s why these prime brokers were running around all weekend selling off major blocks of stock at steep discounts to avoid a deeper panic while assuring us that all is well.

In order to really play this game you have to think a couple of moves ahead.

I’m sure that Morgan Stanley, Credit Suisse and the others all thought they had these derivatives owned by Archegos properly hedged, but only if Archegos paid up. They never expected to be on the wrong side of the trade.

What if these were intentionally poison pills?
The goal being to take the positions, allow market conditions to blow them up never intending to raise the capital to pay but rather leave the prime brokers of your enemy up the creek?

Because Hwang would never have gotten that kind of credit to play with to make this kind of ‘rookie mistake.’ This wasn’t incompetence on his part. Why else would he steadfastly refuse to buy himself some downside protection?

$10 billion seems a small price to pay to send that kind of message on behalf of the Chinese government.

Zerohedge is again right when it reminds us that the most likely response by the U.S. here is nothing, because to do so would invite real scrutiny as to how many of these tactical nuclear financial bombs exist and how much panic that knowledge would induce.
 

bjorn

The Living Force
FOTCM Member
To anyone still riding the GME train - congratulations

Let's squeeze them some more.
 
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Revolucionar

Jedi Master
FOTCM Member
There seems to be another short squeeze happening like the one with Gamestop last year.
This time it's Bed, Bath and Beyond stock.
I'm in it with 113 shares at various price points. I got in last week and I'm about 300 euros up at the moment.
I started playing with the market a month or so ago, looking to learn about what it is and of I can maybe attain some material security in that way.
Anyone else here on board the BBBY rocket to the moon?
 

nicklebleu

The Living Force
FOTCM Member
There seems to be another short squeeze happening like the one with Gamestop last year.
This time it's Bed, Bath and Beyond stock.
I'm in it with 113 shares at various price points. I got in last week and I'm about 300 euros up at the moment.
I started playing with the market a month or so ago, looking to learn about what it is and of I can maybe attain some material security in that way.
Anyone else here on board the BBBY rocket to the moon?

If you want to play the stock market, there are better and safer ways to do that - playing meme stocks is a sure way of loosing your money. What you are doing is pure SPECULATION. It’s near impossible to time the highs and lows good enough to find when the rocket has reached it’s apogee before it’s plunging back whence it came …

However INVESTING takes time and effort to do, but you might be able to maximise your returns. And it’s an interesting thing in terms of learning about yourself, too!
 

SOTTREADER

The Living Force
There seems to be another short squeeze happening like the one with Gamestop last year.
This time it's Bed, Bath and Beyond stock.
I'm in it with 113 shares at various price points. I got in last week and I'm about 300 euros up at the moment.
I started playing with the market a month or so ago, looking to learn about what it is and of I can maybe attain some material security in that way.
Anyone else here on board the BBBY rocket to the moon?
I don't dabble but I did briefly.

I think it's okay to play or speculate, whatever you want to call it as long as it is done with amounts you don't mind losing. In terms of long term security, unless you have some sort of skills like a professional or someone doing it for a living, I think you will more than likely either come out even, low or marginally up. Ultimately you'll have stuff that goes to the moon and stuff that goes off a cliff which tend to net each other out.

What I did notice was fundamentals don't really appear to matter that much, speculation and hype matter more really. Look at Tesla for example or Moderna.

If it's all fun and games with amounts that won't get you in trouble with the Mrs, then hey ho is what I say. Researching and learning can be fun.
 

Henchman 21

Jedi Master
There seems to be another short squeeze happening like the one with Gamestop last year.
This time it's Bed, Bath and Beyond stock.
I'm in it with 113 shares at various price points. I got in last week and I'm about 300 euros up at the moment.
I started playing with the market a month or so ago, looking to learn about what it is and of I can maybe attain some material security in that way.
Anyone else here on board the BBBY rocket
I was thinking that a reason for bed bath and beyond might be that it’s a counter to “build back better”. Just my 2 cents. 🤷‍♂️
 

Revolucionar

Jedi Master
FOTCM Member
Today it was a crazy day. Ended with the financial MSM posting articles with fake headlines alleging that an important investor in BBBY sold his entire 10% stake in the company. This dropped the price significantly right before market close and now all the outlets are either changing the headlines or removing the articles.
The market manipulations are so transparent. I understand this is exactly the sort of thing that was happening during the GME squeeze in Jan 2021.
I would go so far as saying that this reddit anti-hedgefund movement is a part of the Revelations. Masks are falling down for all to see as regular people start to get in on the profits.
These are overwhelmingly Americans with normalcy bias. Not conspiracy theorists. So when they start seeing how the media actually works in real time first hand, they might start wondering about what other lies they may be spewing.
Not too hopeful, but I think it's just another brick in the wall.
And this squeeze may well be the real deal like GME, so let's wait and see what other lies and dirty trick they try.
Like the article the other day showing how empty a Bed Bath and Beyond store was and how their inventory was crap. What an obvious paid for hack job that was.
 

hlat

The Living Force
FOTCM Member
It's like Transformers, more than meets the eye. He's probably just a figurehead or frontman.

In Sureal Story, 20-Year-Old Student Acquires 6% Of Bed Bath & Beyond, Makes $110 Million In 3 Weeks
BY TYLER DURDEN
WEDNESDAY, AUG 17, 2022 - 08:01 PM

We thought that today's story about Ryan Cohen filing to dump his entire stake in Bed Bath & Beyond after sparking a massive gamma squeeze using deep OTM call options would be the most absurd meme-related story of the day. Boy, were we wrong.

In a late Wednesday article published on the FT which at first (and second, and third) read comes across as a cross between absurdist satire and a PR puff piece, we read the day's feel-good "riches to riches" story in which a 20-year-old university student, Jake Freeman, who is an applied mathematics and economics major at the University of Southern California, managed to accumulate 6.2% of the entire outstanding stock of Bed Bath & Beyond at under $5.50 share (did we mention he is a 20-year-old university student) amounting to $27 million, which he announced in an activist 13-G letter to BBBY Management on July 21, 2022, and less than a month later sold out of his entire stake - thanks to the insane gamma squeeze in the stock - not through some prime broker but through his TD Ameritrade and Interactive Brokers accounts, making $110 million in the process!

First things first - how the FT got the idea for the story in the first place was rather inspired: they looked at the HDS page of BBBY and found that the 4th largest holder of BBBY is a completely unknown entity called Freeman Capital, which alongside only Ken Griffen's Citadel and Federated Hermes, were the only three Top 20 holders to build out their entire stakes in the second quarter (as a reminder, shortly before the close we learned that the 2nd largest holder, Ryan Cohen's RC Ventures, filed a 144 to dump its entire 9.450MM share-equivalent stake). And while we wait for RC Ventures to liquidate its stake, we now know for a fact that the #4 top BBBY holder already sold to unwitting retail investors.

What is remarkable is that at the same time Freeman disclosed its 6.21% (or 4,968,000) stake, the 20-year-old also sent out a 9 page activist letter (hardly the stuff 20-year-old college math majors write) to BBBY management explaining that the company is "facing an existential crisis for its survival" and that the company "needs to cut its cash-burn rates, drastically improve its capital structure and raise cash." The first page of the letter is below (link to the full letter here). In it...

... Jake Freeman writes that his "plan for the realignment of BBBY consists of two crucial legs: cutting debt and raising capital." He proceeds to detail his proposal for both legs, which would culminate in reducing the company's senior debt from $1.2 billion to $500 million (through an exchange offer of the current discounted debt into far less par debt), and the issuance of converts to somehow raise $1 billion in the market (how this would have worked when the stock was trading around $5 with imploding EBITDA is anyone's guess). But what was most remarkable is what Freeman said in the highlighted section: namely that the "US options market is pricing in high implied volatility for BBBY derivatives which can be leveraged and capitalized on in order to effect a realignment of BBBY's debt", in other words a debt reduction using... a gamma squeeze?

Perhaps. We don't know who on the board (or management team) read Freeman's letter, or what they did next, but less than ten days after the recent teenager shipped out his "activist letter" to BBBY, the stock doubled, then tripled, quadrupled and so on, from his cost basis... at which point Freeman, quite content with the 6x return he made on his initial investment of $27 million, sold his BBBY stake north of $130 million, making more than $100 million in less than a month!

By this point, readers should have some questions, like for example how did a 20-year-old get $27 million in cash to buy 6.2% of the outstanding shares of Bed Bath & Beyond, and become the 4th largest shareholder? Here, the FT comes to the rescue:

Freeman’s initial stake cost about $25mn, which he said was mostly raised from friends and family. He has invested for years with his uncle, Dr Scott Freeman, a former pharmaceutical executive. The two recently built an activist stake in a publicly traded pharmaceutical company called Mind Medicine.

There's more:

Freeman also said he had interned for years at a New Jersey hedge fund, Volaris Capital. Just before his 17th birthday, Freeman and its founder, Vivek Kapoor, a former Credit Suisse executive, published a paper titled “Irreducible Risks of Hedging a Bond with a Default Swap”.

But we digress: let's get this straight: "friends and family" handed a tiny $25 million (really, $27 million) to a 20-year-old math major at USC, whose extensive financial background is co-investing with his uncle "a former pharma executive" and interning at a hedge fund located above a Starbucks office in Milburn, NJ, yet which oddly enough is primarily focused on various options trading strategies.

... $25 million which he invested, through his hedge fund Freeman Capital Managent, LLC, which doesn't really exist except through a Sheridan, Wyoming-based commercial registered agent at 30 N Gould St. (where more than one registration scam has been discovered recently) and which was "founded" in May 2022 ...

.... into just one high-beta, practically bankrupt stock just weeks after the company reported dismal earnings report according to which BBBY sales plunged by 25% in Q2 while its net loss widened to $358mn from $51mn, and its cash position had dwindled to just $107 million from $1 billion at the start of the year, or just a few weeks from insolvency, culminating a catastrophic trend of disappearing EBITDA.

Surely such a concentrated, undiversified investment by a young "hedge fund" guru who doesn't even have an active Bloomberg account...

... screams "fiduciary duty", and we can only applaud the "friends and family" who handed their $25 million to this young investing wizard, who were surely expecting a few percent returns here and there, instead of a 5x return in 3 weeks. Surely.

According to the FT, Freeman himself quite shocked by the outcome: “I certainly did not expect such a vicious rally upwards,” Freeman told the Financial Times in an interview on Wednesday. “I thought this was going to be a six months plus play . . . I was really shocked that it went up so fast.”

So young Master Freeman was expecting the 5x return to take place in "six months" but was "really shocked" it took just 24 calendar days. Come to think of it, we would be too (or maybe not, especially since the entire idea was that of Jake's uncle Scott, M.D.... but more on that in a subsequent post. But here one additional thing is worth noting, between July 13 (when FCM BBBY HOLDINGS, LLC was registered in Wyoming by Jake Spencer Freeman) and July 20 when the 13G was filed disclosing the 5 million share stake, just 41.9 million shares traded, which means that young Master Jake was in quite a rush to build up his stake: as JC Oviedo pointed out, "to amass its stake in this time period, FCM BBBY HOLDINGS, LLC would have had to be over 11% of the average daily volume!"

That's not only a ton of conviction where to put in every last penny of your "friends and family" money but one hell of a rush too.

Finally, what did Freeman do after making $100 million in what may be the luckiest investment ever made by a 20-year-old?

After selling the shares, Freeman went for dinner with his parents in the suburb of New York City where they live and on Wednesday he flew to Los Angeles to return to campus, he said.

We, for one, can't wait to see how Freeman Capital Management makes its next 5x return in under a month next (actually we know how, and we will reveal it tomorrow).
 

Yupo

The Living Force
FOTCM Member


Bed Bath & Beyond CFO Plunges to Death From NYC Skyscraper Following Mass Layoffs​

By Jack Phillips

September 4, 2022 Updated: September 4, 2022

Story is in Epoch Times. There is some speculation in the comment section as to whether he jumped or was pushed. And a few comments like this: "The author of this article, Jack Phillips, failed to mention the most interesting part of this story, which is that the dead guy was one of several parties named in a civil class action securities fraud suit filed Aug. 23 in federal court in Washington, D.C. The complaint alleged that from March to August of this year, the parties artificially inflated Bed Bath & Beyond shares."
Most BBBY woes are blamed on getting woke/going broke in that comment section.
 
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