Tag Archives: Investing

AMC Shares 50% More Likely to be Traded in Dark Pools

The huge proportion of shares in AMC Entertainment Holdings, Inc. trading in dark pools has raised suspicions among retail investors. So today, I decided to find out if AMC is really more likely to be traded in dark pools.

What I found surprised me.

First, a little explanation. A dark pool is a privately operated stock exchange. It does not report prices publicly like the NYSE or Nasdaq.

In fact, there is little transparency of any sort. Most are operated by large investment banks like Goldman Sachs and Morgan Stanley.

60% of AMC shares in the last 30 days have been traded in these dark pools. In general, 40% of the market by value is traded there.

So AMC shares are 50% more likely to be traded in this opaque, secretive type of exchange.

What’s more, shares in tiny “microcap” stocks are the most likely to trade on dark pools. But AMC has a market cap of $21 billion, making it a large cap stock.

If you look at the two stocks most similar in size to AMC, VICI Properties, Inc. and Netapp, Inc., you see much lower figures. 30% and 26% of their shares trade in dark pools respectively, less than half that of AMC.

And if you look at one of the most commonly traded shares in the market, the S&P 500 ETF Trust, it too is traded in dark pools only half as often as AMC.

Let’s review: a massive proportion of shares are traded in dark pools. Add that to a long term pattern of huge fails to deliver suggestive of illegal naked short sales (see this, this, and this).

Trading in AMC shares looks increasingly fishy.

How much more evidence does the SEC need before they investigate?

More on markets:

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

Will Evergrande Spark a Global Financial Crisis?

New Data: AMC Fails to Deliver Down 85%

Photo: “Bruce Springsteen” by afevrier is licensed under CC BY-NC-SA 2.0

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Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

AMC Has Burned Short Sellers for $4 Billion in 2021, Per Latest Data

So far this year, shares of AMC Entertainment Holdings, Inc. have increased by a factor of 20:

This runup has badly burned short sellers, largely hedge funds. New data shows just how bad the bleeding is:

The latest data, courtesy of S3 Partners, LLC, reveals that by the end of last week, short-sellers who bet against AMC had lost $4.08 billion over the course of this year. The picture was bleaker for those who had targetted GameStop, with the data revealing that the short sellers’ year-to-date losses stood at $6.44 billion. Cumulatively, this shows that AMC and GameStop short-sellers have lost $10.52 billion as we exit the third quarter.

But hedge funds don’t seem to be learning from their mistakes:

Interestingly, however, while the AMC short interest shares have dropped since June, recent data reveals that they are rising again. For instance, in late August, they stood at roughly 82 million, highlighting that by the end of last week, more than four million short interest shares were added to the bets against the company.

These losses have already caused the implosion of some funds that bet against meme stocks. It’s incredible that fund managers can look at their colleagues losing everything and not change their strategy.

I suspect the problem is their mindset. Institutional investors are used to viewing retail traders as “dumb money.” If I’m so convinced that I’m smarter than my adversary, even clear evidence that my side is losing may not change my mind.

It’s just a shame that the teachers and firefighters whose pensions many hedge funds play the markets with don’t have a say.

More on markets:

New Data: AMC Fails to Deliver Down 85%

Will Evergrande Spark a Global Financial Crisis?

What a Hedge Fund King Fears Most

Photo: “Prescribed Burn Sign” by U.S. Fish and Wildlife Service – Midwest Region is marked with CC PDM 1.0

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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

Will Evergrande Spark a Global Financial Crisis?

A massive Chinese property developer is teetering on the edge of bankruptcy, roiling markets worldwide today:

Worries about spreading contagion from troubles in China’s property market sent U.S. stocks toward their steepest declines in months on Monday.

The retreat came amid concerns over property developer China Evergrande Group. Market participants increasingly believe that Beijing will let Evergrande fail and inflict losses on its shareholders and bondholders. The company’s debt burden is the biggest for any publicly traded real estate management or development company in the world.


What Is Evergrande?

Evergrande is an odd company. It is one of China’s largest property developers but also has its hands in electric cars, soccer and bottled water. It has more debt than any other real estate company on the planet.

Sales have slowed in recent years, along with China’s economy. Rather than devising a new strategy or pulling back on growth, Evergrande has continued to build at a breakneck pace, earning lower and lower margins.

It’s the old “We lose money on every one, but we make it up in volume!” mistake. And as if to make things even worse, they’ve expanded to businesses they know nothing about. What unique insights does a property developer have on the bottled water market?

Risks in China

If Evergrande goes down, who’s going down with them? Probably mostly Chinese banks, as they’re the major holder of the embattled conglomerate’s debt. JP Morgan estimates that China Minsheng Bank has the largest exposure.

China Minsheng bank is an interesting company. In a banking sector dominated by state owned banks, China Minsheng was the first bank mostly owned by the private sector.

In a moment when Xi is trying to centralize the economy and promote state owned business, he could let it fail. The state owned banks could pick up the pieces, cementing their position.

But if a massive property developer like Evergrande fails, perhaps taking some major banks along with them, the Chinese financial system could be badly shaken.

Add this to crackdowns on numerous tech companies and even seemingly random targets like celebrities, and I could see a crisis in confidence in Chinese markets.

They’re already weak:

What About the US?

I think US markets are overreacting today. The institutions with heavy exposure to Evergrande appear to be mostly Chinese, not American. Moreover, trade with China is just 6% of US exports.

In all, I could see China’s economy and markets taking a significant hit, but I think the damage will be contained.

Investors in China, good luck.

More on China:

How China’s Tech Industry Dies

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

China’s Tech Crackdown Means Economic Decline

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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

Machine Learning Engine Predicts 20% Rally in AMC in Next Month

I came across a fascinating little tool today. It’s a machine learning program designed to forecast returns in stocks.

It’s called the Trefis AI Engine and it draws from 8 years of past stock returns.

Given the intense interest in stock of AMC Entertainment Holdings, Inc., I had to see what the oracle would say.

AMC is up 34% in the last month. Based on past scenarios, what does the next month have in store?

The machine learning engine predicts a 20% return over the next month in this scenario.

Machine learning is a series of algorithms that can be used to identify patterns and make predictions. It powers Google search, Netflix recommendations, and even self driving cars.

Will the genie be right? I honestly don’t know. But I find the tool an interesting thing to play with.

Type in some scenarios of your own and let me know what you find in the comments at the very bottom of the page!

Kudos to Forbes for the tip.

More on AMC:

New Data: AMC Fails to Deliver Down 85%

What a Hedge Fund King Fears Most

For Retail Traders, AMC Has Become the Only Meme Stock

Photo: “DSC_0274” by oblomberg 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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

New Data: AMC Fails to Deliver Down 85%

New data from the SEC today shows fails to deliver in stock of AMC Entertainment Holdings, Inc. dropped 85% in the second half of August:

AMC fails to deliver from 8/13 (last day of prior reporting period) to 8/31 (last day of current reporting period), from SEC data

Investors have closely watched fails to deliver in this popular stock. Its large and persistent fails to deliver, or trades that don’t close, may be a sign of naked short selling.

Let’s review what short selling is and how naked short selling fits in. Short selling is borrowing a stock to sell, then giving it back to the owner later.

A short seller is betting the stock’s price will drop. That means he’ll make money because the shares he has to return aren’t as valuable as those he sold.

Naked short selling is selling short shares without borrowing them first. It’s generally illegal.

Naked short selling can powerfully push down the price of a stock. If you never have to find shares to borrow, you can sell as many as you want!

A long term pattern of huge fails to deliver, which we see in AMC stock, often happens because of naked short selling. Trades don’t close because the shares never existed in the first place.

Hedge funds have been short selling AMC shares all year, and have taken some brutal losses along the way.

I suspect they are using illegal naked short sales to drive down the price and save themselves.

I suspect hedge funds are using illegal naked short sales to drive down the price and save themselves. $AMC #AMC
https://tremendous.blog

Just because fails to deliver dropped at the end of August doesn’t mean the problem is gone. As you can see from the chart above, when they become extremely elevated the market makers tend to clear them up, only to see them rise again.

AMC still has a huge amount of fails to deliver compared to other stocks. With 140,978 shares failing to deliver on August 31st, AMC has 28 times the fails to deliver of Apple.

Apple is the biggest stock in the market, at over 100 times AMC’s size.

The SEC and market makers have a long way to go to make the market in AMC shares work properly.

What will it take to get their attention?

More on AMC:

AMC on the Threshold List: Strong Evidence of Naked Short Selling

AMC in Top 4% of Stocks for Fails to Deliver

For Retail Traders, AMC Has Become the Only Meme Stock

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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

Should Anyone Own Bonds?

I used to love bonds. Especially government bonds. Guaranteed income, easy liquidity, and stability in a crisis.

What’s not to like?

But my old flame hasn’t done much for me lately. And I’m not the only one.

The Problem

Bonds have hovered at or below the rate of inflation since 2009:

Just barely keeping up with inflation might be enough, given that I have much riskier positions in stocks, real estate, and tech startups.

But if an investment pays a yield below the rate of inflation, you’re essentially paying someone to hold onto your money. Instead of getting even a modest return, you lose a little of your cash every year, like clockwork.

Today, I own long term treasury bonds and medium term treasury and mortgage bonds. The long term bonds pay 1.73%, and come with a big risk of decline when interest rates increase. Which they’re just about bound to do, given that that they’re are sitting near 0.

The shorter duration bonds pay even less: 1.28%.

What Kind of Return Do We Need to Keep Up With Inflation?

Recent inflation numbers have been scary: over 5% a year. But, if we look at the longer run averages, the picture brightens a little.

Over the last 20 years, inflation has averaged 2.16%. Over the last 10 years, the figure is 1.89%.

I don’t know how long the sudden higher inflation of the last couple of months will last. But it appears that a floor for a return that will keep up for inflation is no less than 2%.

Where Can We Get Our 2%?

The attractive features of government bonds are liquidity, stability, and a modest income. Let’s review a few alternatives, with that in mind:

1) Corporate bonds. Returns aren’t much better than government bonds, at around 1.7%.

2) Fundrise. Love it, but not a good substitute for bonds. Real estate development just isn’t as stable. It’s not very liquid either. However, returns are good. I’ve notched around 7% since I started investing.

3) Single Premium Immediate Annuities. A rather exotic choice. Rates can be good at around 3.5% in some cases. And the income is guaranteed. But they’re not very liquid: there’s a 10% IRS penalty for withdrawal before age 59.5. But if you’re older, they could work well.

4) Dividend Aristocrats. These aren’t just any high dividend stocks. These have a history of paying higher dividends every year for at least 25 years. That’s a surer bet than many stocks with even higher dividends, because those huge payouts may not last.

The yield on some of these large, stable companies is impressive:

ExxonMobil: 6.5%

Chevron: 5.5%

IBM: 4.8%

Consolidated Edison: 4.2%

Of course, the stock prices could go down.

But if you’re buying for income, and the company is large and stable and has increased its dividend of decades on end, you don’t care. You just collect your check and head to the golf course.

What’s more, you can buy a basket of these stocks, rather than just one, insulating yourself from the chance that one of them cuts its dividend.

Wrap Up

Dividend Aristocrats seem like one of the best options to replace the income bonds no longer offer. They are also less likely to fall with higher interest rates.

What do you think the best option is? Leave a comment at the very bottom of the page and let me know! I just might use your idea. 🙂

More on investing:

What Does the Pandemic Mean for Real Estate Investments?

Why I Just Invested in EyeRate, the Best Online Review Tool

What I Learned From an Investor Who Turned $100,000 into $100,000,000

Photo: “Governor Jerome Powell speaks at Brookings panel, ‘Are there structural issues in U.S. bond markets?'” by BrookingsInst 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! 

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

Why is the SEC Threatening Coinbase?

The SEC has threatened to sue Coinbase Global, Inc. over its plans to introduce a crypto lending product called Coinbase Lend :

The U.S. Securities and Exchange Commission has told Coinbase Global Inc (COIN.O) that it plans to sue the cryptocurrency exchange if it goes ahead with plans to launch a programme allowing users to earn interest by lending digital assets, Coinbase said.

Coinbase was working with the SEC prior to the surprise lawsuit threat, per CEO Brian Armstrong:

Why is the SEC Doing This?

It’s not every day that the SEC privately threatens a lawsuit against a major American corporation. What is the SEC’s motivation here? From Cointelegraph:

The Commission could have a reason for not being forthcoming with information related to cryptocurrency lending products and this stance could be related to upcoming enforcement actions against the interests of BlockFi.

If the SEC is preparing to go after BlockFi and other players in the crypto lending scene then perhaps responding to Coinbase’s request for guidance might have constituted revealing its enforcement playbook prematurely.

Behind the Crypto Lending Boom

Behind the rush into crypto lending: incredibly low interest rates. Whether you look at bank deposits or treasury bonds, returns on safe assets are well below the rate of inflation.

Coinbase planned to offer 4% interest in its Lend product.

Is the SEC Right?

It seems likely to me that Armstrong is wrong in saying his Coinbase Lend program isn’t a security, and thus need not comply with typical securities laws. Banks have an exception from these laws when they pay interest on an account.

But Coinbase is not a bank. So it’s hard to see how this product isn’t a security.

SEC Shenanigans

That said, I think the SEC’s behavior here is extreme and bad for American business. If the SEC has determined that Lend is illegal, they should tell Coinbase that. At least Coinbase could move on to other projects.

Instead, they’ve left Coinbase in regulatory limbo. They don’t know if their product is legal or not, they don’t know what the SEC’s standard is, and they can’t launch anything without being sued.

This is a recipe for stagnation, not innovation. How can American businesses compete in the global economy when regulators won’t work with them?

As part of its threats to Coinbase, the SEC is even digging into private citizens:

Apart from the threat of legal action, a move seemingly out of left field from the Commission’s usual approach to enforcement, the SEC also asked Coinbase to provide customer details from its Lend waitlist.

On what authority are they doing this? And what are they planning to do to those prospective customers?

Keeping investors safe has its place, but bringing business to a standstill and snooping on average Americans isn’t part of it.

The SEC needs to clean up its act.

More on tech:

How Solana Could Wipe Out Visa and MasterCard

What if Everyone on Earth Had Super Fast Internet for $1?

China’s Real Goal in Tech Crackdown: A Regimented, Obedient Society

Photo: “775208327GB00106_TechCrunch” by TechCrunchis 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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

What a Hedge Fund King Fears Most


Stephen Mandel, Jr., founder of hedge fund Lone Pine Capital, ranks #752 on Forbes’ list of billionaires.

His net worth: $3.9 billion. His fund’s performance is among the greatest in history.

So you might be surprised to hear what he fears most:


In late January, when retail traders swarmed into short targets of hedge funds like Melvin Capital and D1 Capital, commentators and industry experts called the moves unprecedented, but Mandel sees the parallels between the dot-com bubble excitement and today’s Reddit-directed investors.


“The day I feared the most, every year, was the day after Thanksgiving because it was the day when a lot of people were at home, echoes of what’s going on now — retail traders sitting at their desks,” he said.


He said that the firm’s ethos on long positions — investing in change, whether technological, regulatory, or otherwise — is the same, but shorting has become so expensive thanks to the additional competition in the markets that it’s impossible to make the same alpha in that part of the portfolio.


“There was no problem borrowing Pets.com and eToys and Onsale and all these crazy things. Today, when things like that appear in the markets, the borrow cost shoots up to ridiculous levels immediately, the access to borrow is very limited,” he said about the shares funds that bet against a stock have to borrow from shareholders to hold a short position.


He has a reason to be afraid. Other hedge funds like D1 Capital and Melvin Capital lost 20-50% of their fund trying to fight retail holders of stocks like AMC Entertainment Holdings, Inc. and GameStop Corp.

The cost to borrow and sell short shares of AMC and GameStop is not particularly high at the moment. However, in any new rally, that interest rate could easily shoot up, as GameStop’s did in January. This would make holding or adding to short positions very costly for hedge funds.

And all the while, they’d be losing money as the stock moves against them.

I find it fascinating that the most threatening thing for a billionaire hedge fund manager is a guy sitting on his couch.

Thing is though, there are a lot of them.


More on AMC and hedge funds:

AMC in Top 4% of Stocks for Fails to Deliver

AMC Fails to Deliver Up 1088% in Latest Data

Hedge Funds Get Special Treatment During Margin Calls

Photo: “I’m scared too, but we’ll make it.” by qousqous is licensed under CC BY-NC-SA 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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

AMC Fails to Deliver Up 1088% in Latest Data

Major new data just came out today from the SEC. It shows fails to deliver in AMC Entertainment Holdings, Inc. up 1088% in the first half of August:

These fails to deliver sometimes happen for benign reasons. But when massive fails to deliver occur in a stock over a sustained period, it’s often a sign of naked short selling.

Naked short selling is the illegal practice of intentionally selling shares short (betting against them) without ever borrowing the shares as required. This is a powerful tool to distort markets. Since you never have to actually obtain any shares, you can sell as much as you want, pushing down the price.

The fails to deliver in AMC are truly enormous. And after falling significantly last month, they’re back with a vengeance. As of August 13, the last day in the series, AMC’s fails to deliver were 157 times larger than Apple’s. Apple is the largest stock in the market, at 113 times AMC’s market cap.

How could there be so much questionable activity in such a small stock? I strongly suspect illegal trading, likely on the part of hedge funds.

Maybe they’re trying to make back some of their losses.

More on AMC:

AMC #3 on Robinhood for September, Behind Only Apple & Tesla

For Retail Traders, AMC Has Become the Only Meme Stock

Short Sellers Lost $1 Billion Yesterday in AMC and GameStop

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:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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. 

AMC #3 on Robinhood for September, Behind Only Apple & Tesla

The seasons are changing but one thing is not: the incredible popularity of AMC Entertainment Holdings, Inc. among retail investors.

Robinhood lists AMC at #3 on its leaderboard for September, behind only Apple and Tesla:

Apple is the largest stock in the entire market, with a market cap of $2.6 trillion. That’s 113 times larger than AMC. Tesla is 32 times larger.

AMC is more popular than massive companies like Amazon, Microsoft, or Walt Disney. It’s also significantly hotter than Robinhood Markets itself, at #12.

Even more incredible is that AMC has held the #3 position for six months straight. AMC also holds the #3 spot on Fidelity.

My understanding is that the Robinhood leaderboard reflects how many users own a particular stock, not the total amount held. So the amount of money in Apple, Tesla, or Amazon held by Robinhood accounts could be much greater than the amount in AMC, given those companies’ massive size.

Nonetheless, when a $23 billion business is more widely held than some of the most powerful companies on earth, I stand up and take notice.

More on AMC:

Charting The Huge Drop in AMC Fails to Deliver

For Retail Traders, AMC Has Become the Only Meme Stock

Short Sellers Lost $1 Billion Yesterday in AMC and GameStop

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! 

Photo: “Robin Hood sai à noite” by freddie boy is licensed under CC BY-SA 2.0

Save Money on Stuff I Use:

Amazon Business American Express Card

You already shop on Amazon. Why not save $100?

If you’re approved for this card, you get a $100 Amazon gift card. You also get up to 5% back on Amazon and Whole Foods purchases, 2% on restaurants/gas stations/cell phone bills, and 1% everywhere else.

Best of all: No fee!

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.

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%! 

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.