This is my Michael Burry moment.
It all starts with Melvin Capital. Who had around $13bn in assets. From them reporting being down over 30% as of Fri 22–1 in the month overall we can deduce that at the time they had a $3.7bn loss. The stock price on the day before was $43.03.
When the price rallied to the $70s on Fri-21 they were panicking because they were now showing nearly a $6.5bn loss. They called up their buddies Citadel and Point72 and got $5bn in loans, convinced their brokerage they could get out of it (to not get liquidated), and started trying to illegally manipulate the market. It didn’t work; you retards and whales held. And kept buying.
As of EOD 1–26, the stock price closed at $150, then to $240 aftermarket.
Melvin now has a $13bn loss. This kills Melvin.
These short positions are now parasitic fuck bombs that will literally consume anyone who is holding it when the dust clears.
Melvin’s brokerages will be liquidating their assets ASAP less they get stuck with them. But here’s the fun part… No one’s selling. But, alas, there’s a solution. There are funds like Blackrock that specialize in Security Lending (see securities-lending-viewed-through-the-sustainability-lens.pdf).
In a typical securities lending transaction, an asset owner lends securities — both stocks and bonds — to a third party, often one who needs to cover a short position.
cover. a. short. position
Turns out, Blackguard owns 13.2% of GME — 11,271,702 shares. And they just sold 2,054,367 shares to bail someone out for over $400mill. How do we know? Because of this SEC document filed today (also see fintel).
And what happened at EOD today? Price exploded to $240 for a moment as these got bought. Lines up. This is the smoking gun to signal the action.
At conservative estimates, there are at least 50,000,000 short positions yet to cover. Blackrock is their last lifeline and will only hold out for so long. Once Blackrock goes it’s a fucking free for all. All the shorts that have yet to cover are screwed. Completely screwed.
At $200, 50,000,000 shares is $10bn. But $10bn is literally GME’s market cap. To get rid of $10bn in GME shorts they’ll be at least doubling the price/market cap, so by the second that $10bn loss is going to grow, and grow. Doubling, tripling, quadrupling even.
This is their armageddon. That single $GME short position could completely wipe them out. That position is a wildfire in their portfolio that can only be extinguished with money.
$1,000? That’s a fucking joke. They will be scrambling to cover, constantly outbidding each other on orders.
This could be hitting over $5,000 or more
… It’s on.
DISCLAIMER: This is not investment, legal, or financial advice.
