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According to a recent Bloomberg article:

Melvin Capital closed its position after repositioning its portfolio, according to a spokesperson. Citron Capital’s Andrew Left also said Wednesday that the firm covered the majority of its GameStop short bets at “a loss of 100%” in a YouTube video.

Is it possible for a skeptical third-party observer to somehow confirm if this claim is true and their portfolio is now indeed free of $GME shorts? It would be very beneficial for the hedge fund to lie about closing their positions without actually closing them, as this might help them avoid a short squeeze after all.

Rodrigo de Azevedo
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JonathanReez
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    One obvious point is that if they had, they wouldn't have paid apps like RobinHood to shut down their trading. – user253751 Jan 28 '21 at 18:22
  • @user253751 exactly, my b******t meter went off the charts when I've read this article. But trying to see if there's a way to validate my assumptions. – JonathanReez Jan 28 '21 at 18:27
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    @user253751 That is an incredibly dangerous supposition to make. There is 0 evidence that the closure of trading on GME by various brokers was done as some sort of conspiracy. Consider instead that even though the price continued to climb after some retail brokerages closed doors to purchasing shares, it dropped back past what it was a couple of days ago. These companies are practically begging users to not throw money away with the crowd, and have been proven at least partially correct already. Doesn't the trading halt make sense from that perspective? – Grade 'Eh' Bacon Jan 28 '21 at 18:29
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    @Grade'Eh'Bacon if this theory is true, they're actually helping hedge funds avoid losing money rather than helping normal investors avoid losing money. I don't know if its true or not (that's why I've started the open question), but you have to admit there's at least some credibility behind it even if its incredibly risky. – JonathanReez Jan 28 '21 at 18:31
  • @JonathanReez If a stock is at a bubble, and a retail investor buys it, then they are able to lose their shirt. Stopping them might help a short seller on the brink of a margin call, but if the price of GME drops down to $30 in a week, anyone who bought at $300 is going to be sad indeed. That is the driving idea behind blocking retail investors from buying a stock which increased 20x over a week because of rabid enthusiasm. – Grade 'Eh' Bacon Jan 28 '21 at 18:32
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    @Grade'Eh'Bacon I wouldn't expect to make money based on the supposition. But I don't see any reason why Robinhood would want to stop its users from losing money. Surely that's not their job. At the most, they should put up a warning screen "This stock is really volatile! You'll probably lose all your money! Are you sure you want to proceed?" – user253751 Jan 28 '21 at 18:35
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    @user253751 There's a separate question discussing why they might do that. Please stick to the topic on this page, and preferably only use comments to improve the question, not partially answer it. – IMSoP Jan 28 '21 at 18:50
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    @Grade'Eh'Bacon the retail investor can lose their investment. The short seller can lose their shirt. – Jontia Jan 28 '21 at 19:00
  • @Jontia A lot of posts on reddit are currently proudly proclaiming that 'its not about the money'. Supposing most of those posts are even made by real people with skin in the game, do you think they might change their minds if they lose $500 after the dust settles? Why should I care about whether Melvin Capital goes bankrupt? Why should I pay $500 for the privilege of making that happen? Particularly when users like u/deepfuckingvalue proudly show off $5M+ gains that are being made off the backs of those same redditors about to lose their investments. – Grade 'Eh' Bacon Jan 28 '21 at 19:13
  • "It's like David vs Goliath" [if David won by giving all his money to some huckster in order to make Goliath also lose money]. Feels to me like the campaign to 'donate' money to the Kardashian who was almost a billionaire. – Grade 'Eh' Bacon Jan 28 '21 at 19:15
  • @Grade'Eh'Bacon my understanding of the whole situation particularly how someone makes the $5M is limited. But I can see how short selling is unpopular. If a major hedge fund can be collapsed by individuals who dislike the practice at what they feel is a reasonable cost then it seems less likely for them to be aggrevied afterwards than say someone who donated that same money to a political campaign. – Jontia Jan 28 '21 at 19:18
  • @Jontia How u/deepfuckingvalue made money, is he bought about $50k in 'call options' [giving him the right to buy shares at a set price in the future, meaning if price rises higher than that, he can buy at a discount and immediately sell for a gain], when the price was something like $20 / share. When the price was something like $100 / share, I think he posted his gain as about $5M total [if he cashed out at today's high of $400, he would get something like $20M]. He bought those shares and then the subreddit rallied around the idea of raising the price. He is reaping the benefits. – Grade 'Eh' Bacon Jan 28 '21 at 19:26
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    I actually posted an answer on here trying to explain velocity trading, as a further factor after the short squeeze per se, but everyone downvoted it. So, everyone can go to hell! Whaa! – Fattie Jan 28 '21 at 19:28
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    @Jontia - hedge funds are the "bad guys", they exist to either skim or chomp money from the (merely avaricious) ordinary old Vanguard funds etc. which one's grandma invests in. Hedge funds "make and lose" vast sums of money as a normal thing. hedge funds get destroyed (and, "fuck them!") on a regular basis - it's no big deal. there are any number of famous stories of (the sons o' bitches) at hedge funds getting busted, just read about LTCM, well there's 1000 examples. they are the "bad guys", they are supposed to get wiped out now and then. – Fattie Jan 28 '21 at 19:32
  • @user253751 - it's a very difficult issue. the whole stock market is just a kind of balance of government regulation. it is not, and is not meant to be, any sort of libertarian "free market". – Fattie Jan 28 '21 at 19:36
  • @Fattie sure, insider trading rules and all that. But insider trading is very different to shutting down trading just because you are losing. – user253751 Jan 28 '21 at 19:38
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    It would be very beneficial for the hedge fund to lie about closing their positions without actually closing them, as this might help them avoid a short squeeze after all. This statement is categorically false. The players in the GME saga are going to do what they do regardless of what Melvin Capital says. In addition, a bunch of words in a public relations statement doesn't help them avoid a short squeeze in any way. – Bob Baerker Jan 28 '21 at 20:48

2 Answers2

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Is it possible for a skeptical third-party observer to somehow confirm if this claim is true and their portfolio is now indeed free of $GME shorts?

No. However, the number of shorted shares for a given company is publicly known.

Franck Dernoncourt
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    Where can you find the chart for GME's % of shorted shares over time? – JonathanReez Jan 28 '21 at 22:18
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    @JonathanReez https://www.marketbeat.com/stocks/NYSE/GME/short-interest/ though this one is not too fine-grained. That's the kind of question that should make website recommendation on-topic on https://money.stackexchange.com/ – Franck Dernoncourt Jan 28 '21 at 22:27
  • https://isthesqueezesquoze.com/ => confirms Melvin Capital likely lied and they're still holding those shorts. Accepting your answer. – JonathanReez Jan 28 '21 at 22:52
  • This is really interesting. The link shows that last year 55-65 million of GME shares were shorted all the time. With this in mind shorting GME does not sound like the huge game it is always portrayed – Manziel Jan 29 '21 at 16:11
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No, trades are private. If you are large enough then there are regulations that force you to reveal your trades, but those still take time because they're only mandatory every 3 months.

Form 144: Notice of Proposed Sale of Securities is a document issued by the Securities and Exchange Commission (SEC). It must be filed with the SEC by an executive officer, director, or the affiliate of a company when placing an order to sell that company's stock during any three-month period in which the sale exceeds 5,000 shares or units or has an aggregate sales price greater than $50,000. This is also known as Rule 144 of the Securities Act of 1933.

(source above)

Allure
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