Tag Archives: Gamestop

Explosive Claims in Lawsuit Against Robinhood

As it prepares to IPO this week, Robinhood Markets, Inc. is facing several class action lawsuits from its users. Inside those lawsuits, an explosive claim:

High level executives and employees of Robinhood and Citadel Securities were in contact around the time Robinhood restricted trades, according to the complaint.

This lawsuit grows out of buying restrictions that Robinhood imposed on stock in AMC, GameStop, and others this January as their prices skyrocketed:

Retail investors suing Robinhood Market Inc and others over trading restrictions in the wake of a social media-fueled rally that squeezed short sellers have filed complaints seeking potentially billions in damages.

One of the proposed class actions filed on Tuesday in Miami federal court accuses Robinhood and clearing brokerage Apex Clearing Corp of acting negligently in cutting off trades in late January. The other lawsuit alleges they and others were part of an antitrust conspiracy with Citadel Securities LLC to spare the market maker losses on short bets.

Citadel plays an interesting dual role here. Citadel Securities handles many of Robinhood’s trades, but its hedge fund arm invested money in Melvin Capital, a fund that was imploding due to losses shorting meme stocks.

I see two possibilities:

  1. Citadel Securities handles a lot of Robinhood’s trades, so Robinhood naturally talked with them about issues it was facing holding enough money to back trades in volatile stocks like AMC and GameStop.
  2. Citadel tried to influence Robinhood to stop its users from driving up the price of meme stocks, which would hurt its positions in Melvin (and perhaps elsewhere)

I don’t think we have enough information yet to determine which it is. We need to find out what was said in conversations between Citadel Securities and Robinhood, and what contact Citadel Securities staff had with people on the hedge fund side of the firm. The lawsuit will likely expose phone records, e-mails and more that could shed light on what really happened.

That said, we definitely have at least the appearance of impropriety here. Citadel is exposing itself to a huge risk of regulatory crackdown and legal judgments. And Robinhood customers may be skeptical enough that they move on to any of the countless other brokerages available.

Major financial institutions are in the habit of saying “just trust us.” What they don’t understand is that after decades of bailouts and conflicts of interest, that’s a very hard sell.

More on AMC:

AMC SHORTS LOST $642 MILLION YESTERDAY

HEDGE FUND LOSSES COULD TAKE DECADES TO RECOVER

SHORT SELLERS LOSE $44 BILLION IN 30 DAYS

Photo: “Fruit of the fireball machine” by SiamEye is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Hedge Fund Losses Could Take Decades to Recover

Melvin Capital, among other hedge funds, has taken severe losses on bad bets in AMC, GameStop and others. They are now down by almost half:

Melvin Capital Management, which lost more than $6 billion in January, is now down 46% for the year through June, the fund recently told investors. Maplelane Capital is down 39% for the period.

Until Melvin recovers all of those losses, it will not earn any performance fees. This juicy 20% fee is what induces traders to set up hedge funds in the first place.

The average long/short equity hedge fund, the class Melvin belongs to, has returned just 3% annually over the last decade. At that rate, it would take Melvin 21 years to recoup its losses.

Here’s what could come next:

  • Manager Gabe Plotkin shuts the fund down, locking in investors’ losses. If he starts over with another fund, he can get performance fees right away.
  • Top traders leave the firm for other hedge funds that are earning performance fees, and hence can pay hefty bonuses. Only the B Team remains.
  • Melvin and similar funds make increasingly risky bets, desperate to quickly recover what they have lost, thereby losing even more. After all, 21 years is a long time to wait.

I think you will soon see more and more hedge funds either shutting down or getting desperate. If I were invested in any fund that saw big losses in meme stocks, I’d sell now before I lose it all.

More on AMC:

AMC SHORTS LOST $642 MILLION YESTERDAY

SHORT SELLERS LOSE $44 BILLION IN 30 DAYS

HEDGE FUNDS LOSE $12 BILLION ON AMC AND GAMESTOP

Photo: “Forever is Binding and Freeing” by Lomo-Cam is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

When Citadel Almost Died

Meme stock traders on Reddit and elsewhere love to hate Ken Griffin, CEO of Citadel LLC. The hedge fund and market maker manages over $34 billion and handles more US stock trades than anyone else. Many suspect it had a hand in Robinhood limiting buying in GameStop shares, which angered traders.

Its tentacles are everywhere. Citadel is so big, well-known, and rich it almost seems invincible.

But what’s less well known is that Citadel nearly went bankrupt during the financial crisis of 2008:

…in July 2008, Citadel endured the first of six straight money-losing months. Following his old script, Mr. Griffin raced to buy beaten-down assets such as convertible bonds, long his specialty, only to see them take a further beating.

Griffin’s hedge fund lost 55% of its value, and rumors swirled that the fund was about to go bankrupt. That was a very real possibility: 20% of all hedge funds shut down in 2008-09.

Citadel stopped investors from withdrawing money to stanch the bleeding. It also benefited from a helping hand from regulators, perhaps showing its political influence. From The Wall Street Journal:

In particular, regulators pressed Wall Street firms including Deutsche Bank AG not to make drastic changes in their dealings with Citadel, according to these people.

I suspect that if banks had been left to their own devices, Citadel would’ve imploded under an avalanche of margin calls and severed credit lines. When you’re down 50%, much less 55, people assume you can go down all the way. And they want to cut their losses.

With this governmental helping hand, Citadel managed to survive and today is thriving. But I find this history lesson instructive: the mighty can fall, fast.

More on meme stocks:

SHORT SELLERS LOSE $44 BILLION IN 30 DAYS

AMC ON THE THRESHOLD LIST: STRONG EVIDENCE OF NAKED SHORT SELLING

HEDGE FUNDS LOSE $12 BILLION ON AMC AND GAMESTOP

Photo: “R.I.P. Rest In Peace” by Beauteous Babe is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

High Frequency Traders Make Billions on AMC, Meme Stocks

On a side street at the southern tip of Manhattan, behind a long line of metal vehicle barriers, stands a tall glass building. Seventy-six stories up, a team of PhD’s tune computers to trade shares just a fraction of a second faster. This small, secretive firm accounts for at least 5% of all stock trades in America. This company is Hudson River Trading (HRT).

Founded by computer scientists from Harvard and MIT, HRT has quadrupled its head count in the last seven years as profits explode. Driven by the boom in meme stocks, 2021 may be the best year yet for HRT and other high frequency traders:

Hudson River Trading, a 400-person proprietary trading firm that specializes in equities and stock options, reaped about $1.2 billion from trading in the first quarter, an increase of more than 150% from a year earlier, according to people with knowledge of the results.

HRT and other high frequency traders profit from the bid-ask spread, or the difference between what a stock sells for and what it costs to buy. Those spreads tend to increase when markets are volatile, as markets in AMC and other meme stocks have been.

Hot stocks like AMC have also driven incredible trading volume, with the modestly-sized theater operator sometimes the most traded stock on the exchange. More volume gives companies like HRT more chances to collect that juicy bid-ask spread.

Citadel Securities, a market maker hated by many meme stock investors, is also making vast sums from the boom in meme stocks:

Citadel Securities and its majority owner Ken Griffin are among the big winners from a boom in retail investing, cashing in on the zero-fee trading that has lured huge numbers of first-time investors to the US stock market.

“Not only are retail market makers getting increased trading volume, they are likely getting increased profitability per trade,” said Tyler Gellasch, executive director of Healthy Markets Association, a trade group.

High speed trading firms get these orders from brokerages like Robinhood. Robinhood gets payments from those firms for steering orders their way, rather than charging users commissions. This practice is controversial, and Citadel has been fined for giving retail investors worse prices than public markets.

As stock after stock soars amid the social media frenzy, firms like HRT and Citadel may have some very profitable days ahead.

More on AMC:

HEDGE FUNDS LOSE $12 BILLION ON AMC AND GAMESTOP

HEDGE FUNDS’ AMC DOOMSDAY SCENARIO

HEDGE FUNDS BURN $6 BILLION IN A MONTH SHORTING AMC (AND OTHERS)

Photo: “File:Three World Trade Center, New York, NY.jpg” by JJBers is licensed under CC BY 4.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Hedge Funds Lose $12 Billion on AMC and GameStop

Hedge funds’ losses on meme stocks have reached staggering levels:

Hedge fund losses since the start of the year from betting against just GameStop, AMC and Bed Bath & Beyond total more than $12bn, according to data group S3, while bets against a number of others have each run up additional losses of hundreds of millions of dollars. More than half short sellers’ $5.1bn of losses betting against AMC this year have come in June.

“In two waves, a few hedge funds have seen modestly sized short positions turn into extinction-level events,” said Andrew Beer, managing member at investment firm Dynamic Beta Investments. Funds that suffer multiple rounds of losses on short bets “will face difficult questions from investors as to whether their risk management failed to adapt to a changed market environment”.

Other short bets haven’t fared much better:

An index compiled by Goldman Sachs of stocks favoured by retail investors has almost doubled since June 2020, while another that tracks companies that are targeted by short sellers has gained 28 per cent.

More here.

Many in the financial industry complain that it’s difficult to know which stock will attract the attention of retail traders next. But watching online message boards is already common practice at Asian funds. There are even some excellent, publicly-available sources that identify the stocks that are most popular on Reddit’s Wallstreetbets, one of the main discussion boards for retail traders.

Swaggy Stocks produces one such chart,which every hedge fund manager should have bookmarked. I would suggest avoiding a bearish position in any stock on this list. A name with moderate interest today could become the most talked about stock tomorrow, leading to a huge price spike. The most dangerous names on this list are those with both high interest and a lot of shares sold short. Those stocks, such as Workhorse Group Inc., are particularly ripe for a short squeeze.

I wonder how long investors will be patient with colossal losses in hedge funds. They are supposed to be the shrewdest players at the poker table. But as the losses mount, they’re no longer looking so smart.

More on AMC and hedge funds:

HEDGE FUNDS’ AMC DOOMSDAY SCENARIO

HOW AMC IS BLOWING UP THE HEDGE FUND INDUSTRY

HEDGE FUND TORCHED BY AMC

Photo: “Police Stationed outside AMC Theater showing Joker film 4573” by Brechtbug is licensed under CC BY-NC-ND 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Hedge Funds’ AMC Doomsday Scenario

Hedge funds have been perfectly capable of blowing themselves up with common trades like shorting and selling call options. But with the epic rise of AMC Entertainment Holdings, Inc. stock, there lurks another potential danger for hedge funds. And this one could be worse than anything else we’ve seen.

Aside from shorting and options trades, another common way to bet against a company is to purchase credit default swaps (CDS). These are insurance on a company’s bonds. If AMC were to go bankrupt, that insurance would skyrocket in value, since everyone would want protection for their imperiled portfolio. But if AMC soars, that insurance could quickly become almost worthless.

Why would hedge funds turn to CDS to bet against AMC? Because they’re being cut off from their traditional bear trades like shorting and options. Many prime brokers, who process hedge fund trades, have banned such moves in AMC, GameStop and other meme stocks, afraid they’ll be left holding the bag if hedge funds can’t cover their losses.

The CDS market is massive, covering protection on over $10 trillion in credit. CDS is especially dangerous for several reasons. The market is extremely opaque; these derivatives are usually custom-made for each buyer and trade away from any exchange. The leverage available with CDS is unbelievable: buyers usually only need to put up 1% of the value of all the protection they want to buy. So, if a hedge fund plunked down $10 million, they could be exposed to the swings in a $1 billion portfolio of AMC bonds. Even a small drop in AMC’s default risk would have major implications.

CDS also includes a feature similar to margin calls in stocks: collateral. Both parties commonly have to post collateral when their position moves against them. If AMC stock continues to soar, making it easy for the company to raise money and taking bankruptcy off the table, a hedge fund’s CDS could plummet in value. The fund could face sudden and massive demands for collateral because its CDS covers such a huge amount of AMC bonds. These collateral calls could quickly bankrupt a hedge fund.

Will this doomsday scenario come to pass? Who can say? But with other avenues to bet against the likes of AMC rapidly closing and ever increasing pressure to redeem large losses, hedge funds may be attracted to this risky strategy.

A wiser path would be to avoid betting against anything with a cult following as powerful as AMC.

More on AMC:

Photo: “Scary clouds over New York City!” by Orangeadnan is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! And please leave your comments at the bottom.

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

How the Mormon Church Made Millions on GameStop

There have been a lot of winners in GameStop’s dizzying, over tenfold rise in the last year. An unlikely one is the Mormon Church, which made over $8 million on GameStop shares through its investment arm:

The Church of Jesus Christ of Latter-day Saints’ play for stock in GameStop paid off big-time as the Utah-based faith saw its shares in the video game retailer swell in value from $867,000 to $8.7 million in a matter of months.

Overall, the church’s largest investment fund, managed by Ensign Peak Advisors in Salt Lake City, grew by $2.4 billion in early 2021, continuing a dramatic rebound from pandemic-induced losses last spring and catapulting its total value to $46.5 billion.

More here.

Their timing was superb: Ensign bought 46,000 shares at the end of 2020, just before a short squeeze briefly pushed the stock to prices over $300. The church also scored huge gains on Tesla shares. Ensign Peak Advisors is wholly owned by the Church of Jesus Christ of Latter-day Saints, making it perhaps the only church in the world with its own hedge fund.

The fund’s assets total over $100 billion, greater than the GDP of Ethiopia. The church has banked up over $6,000 for each member, a staggering rainy day fund. This money comes primarily from all members being required to donate 10% of their income to the church, a practice called tithing.

I’ve always found the Mormon church fascinating and have read several books about it. I was intrigued to find out they played a part in something as far removed from religion as the GameStop saga!

Dig into these posts for more on GameStop:

Photo: “Salt Lake City Temple” by SheldonPhotography is licensed under CC BY-NC 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

GameStop Pays Off $216 Million in Debt

It’s no secret that GameStop shares have gone vertical, up more than ten fold this year. Besides making millionaires of a lot of Redditors, this also lets GameStop sell more shares at high prices, enabling them to raise capital with ease.

And raise they did, to the tune of $550 million in April. They recently used that money to completely pay off their long term debt:

The company said it completed its voluntary early redemption of $216.4 million of its 10.0% senior notes due 2023. The voluntary redemption covered all of the outstanding 10.0% notes, which represented all of its long-term debt.

More here.

At 10%, this debt was costing GameStop over $20 million a year. Getting rid of it should give them more room to fund their planned transformation into an e-commerce business, which is being led by Chewy co-founder and soon-to-be GameStop board chairman Ryan Cohen. On the other hand, this share raise dilutes existing GameStop shareholders, making their stake worth less.

GameStop still has $146 million in short term debt and a revolving line of credit, per their most recent annual report, but that is likely under lower interest rates than those long term bonds. I wouldn’t be surprised to see the short term debt paid off early as well.

In all, GameStop seems to be seizing the opportunity to use its high stock price to fund its transformation. Whether they can actually pull that transformation off remains to be seen.

Dig into these posts for more on GameStop:

Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

If you found this post interesting, please share it on Twitter/Reddit/etc. using the buttons at the bottom of the page. This helps more people find the blog! 

Save Money on Stuff I Use:

Fundrise

This platform lets me diversify my real estate investments so I’m not too exposed to any one market. I’ve invested since 2018 and returns have been good so far. More on Fundrise in this post.

If you decide to invest in Fundrise, you can use this link to get your management fees waived for 90 days. With their 1% management fee, this could save you $250 on a $100,000 account. I will also get a fee waiver for 90-365 days, depending on what type of account you open.

iHerb

The only place I buy vitamins and supplements. I recently placed an order and received it in less than 48 hours with free shipping! I compared the prices and they were lower than Amazon. I also love how they test a lot of the vitamins so that you know you’re getting what the label says. This isn’t always the case with supplements.

Use this link to save 5%! I’ll also get 5% of however much you spend, at no cost to you.

Misfits Market

My wife and I have gotten organic produce shipped to our house by Misfits for over a year. It’s never once disappointed me. Every fruit and vegetable is super fresh and packed with flavor. I thought radishes were cold, tasteless little lumps at salad bars until I tried theirs! They’re peppery, colorful and crunchy! I wrote a detailed review of Misfits here.

Use this link to sign up and you’ll save $10 on your first order. I’ll also get $10.

Departing GameStop CEO Gets $179 Million Payout

GameStop CEO George Sherman will be leaving the company soon, but not empty handed:

As a condition of his exit, GameStop is speeding up the time frame for Sherman to receive the shares, generating the award.

Sherman, who has been CEO since April 2019, forfeited $98 million worth of stock this month because he did not meet performance targets, GameStop disclosed last week.

Still, he stands to receive a stock payout currently worth $179 million because GameStop granted him more shares linked to his tenure at the company rather than to his performance as most companies do with their CEO, said Eric Hoffmann, a vice president at compensation consultant Farient Advisors LLC.

This strikes me as bad policy and poor corporate governance, especially for a company that is losing a lot of money and facing rapidly declining sales. Why should an executive be rewarded simply for sticking around, as opposed to actually accomplishing something?

Why should an executive be rewarded simply for sticking around, as opposed to actually accomplishing something? $GME

I am hoping the new board, which will be chaired by Chewy founder Ryan Cohen and includes several other former Chewy executives, will put a stop to payment for no performance. After all, GameStop is already being robbed enough:

Two dozen cars squealed up to a GameStop store in Emeryville early Thursday and their occupants smashed the front door glass, broke inside and rifled the store shelves, police said.

An unknown amount of goods, including collectible figurines, was taken from the store at 3980 Hollis Street shortly after midnight.

Dig into these posts for more on GameStop:

f you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “Retail GameStop” by ccPixs.com is licensed under CC BY 2.0

Short Sellers Have Abandoned the Stock Market

Short sellers have abandoned the stock market after massive losses in GameStop shares, among others:

According to data from Goldman Sachs, median short interest as a percentage of float across the S&P 500 has fallen to 1.6%, near the lowest reading since 2004.

More here (see the April 19 post.)

But that’s not all. As downward pressure on stocks from short sellers has all but disappeared, upward pressure via margin buying is exploding. Margin buying lets traders borrow money to buy more stock than they could otherwise afford. All those buy orders push up prices:

While the bears head for the hills, the bulls double down. Data from FINRA released today (thank you, Kevin Duffy) show that margin debt among member firms reached a record $822.5 billion in March. That’s up 35% from the average for March across 2018 and 2019 and 82% above last year’s virus-influenced figure.

These are worrying signs for stocks. True believers mortgaging themselves to the hilt along with a lack of skeptics looks like an excessively frothy market to me. I cut back my allocation to stocks several weeks ago, buying beaten-down Treasury securities instead. Especially if your portfolio is out of balance, with stocks accounting for a share that’s above your target due to recent gains, it may be time to take some profits.

Especially if your portfolio is out of balance, with stocks accounting for a share that’s above your target due to recent gains, it may be time to take some profits.

For more on the stock market, check out these posts:

If you found this post interesting, please share it on Twitter/Reddit/Facebook/etc. using the buttons below. This helps more people find the blog! And please leave a comment at the bottom of the page letting me know what you think and what other information you’re interested in!

Check out the Stuff I Use page for some great deals on products and services I use to improve my health and productivity. They just might help you too!

Photo: “Tumbleweed” by jezarnold is licensed under CC BY-SA 2.0