CEO of Success Academy Charter Schools Eva Moskowitz provides insight on ‘America’s Newsroom.’
CEO of Success Academy Charter Schools Eva Moskowitz provides insight on ‘America’s Newsroom.’
And there goes Wall Street's reflation trade.
Shares of GameStop and AMC Entertainment Holdings more than doubled on Wednesday, forcing hedge funds to retreat with heavy losses and sparking calls for scrutiny of social media-driven stock market trading. Short-seller Citron, a target for some of the individual participants on Reddit's "WallStreetbets" thread who have helped drive gains for several niche stocks in the past week, said in a video post it had abandoned its bet on GameStop shares falling after the video game retailer's value soared almost tenfold in a fortnight. With commentators and lawyers calling for scrutiny of the moves, Nasdaq chief Adena Friedman said exchanges and regulators needed to pay attention to the potential for "pump and dump" schemes driven by chatter on social media.
Apple is expected to report record Q1 earnings after the bell on Tuesday with a focus in iPhone 12 sales.
Here's an FAQ about what's going on with the market and what "Wall Street Bets" is.
Stocks dipped Wednesday as investors awaited another batch of corporate earnings results and the Federal Open Market Committee’s (FOMC) January monetary policy decision.
The ability of members of U.S. Congress to buy and sell stocks has been controversial over the years. One of its most prominent members made some purchases in December that could benefit from the new Biden administration. What Happened: It was revealed over the weekend that Speaker of the House and California Rep. Nancy Pelosi purchased 25 call options of Tesla Inc (NASDAQ: TSLA). The purchases could have been done by Pelosi or her husband Paul, who runs a venture capital firm. The options were bought at a stake price of $500 and expiration of March 18, 2022. Pelosi paid between $500,000 and $1,000,000 for the options, according to the disclosure. Pelosi also disclosed that she bought 20,000 shares of AllianceBernstein Holdings (NYSE: AB), 100 calls of Apple Inc (NASDAQ: AAPL) and 100 calls of Walt Disney Co (NYSE: DIS). Tesla shares have risen from $640.34 at the time the calls were purchased to over $890 today. The call options were valued at $1.12 million as of Monday. Related Link: How The 2020 Presidential Election Could Impact EV, Auto Stocks Why It’s Important: The purchases by Pelosi are questionable as arguments could be made that the companies stand to benefit from new President Joe Biden’s agenda. Biden's push for electric vehicles, which could include lifting the cap on sales, would give buyers tax credits again and is advantageous for Tesla. The president has also suggested a possible cash-for-clunkers program that could incentivize customers for trading in used vehicles towards the purchase of an electric vehicle. Pelosi could now have a conflict as she works to pass clean energy initiatives from which her family could profit. Former U.S. Senator David Perdue, a Republican, was criticized for making numerous stock trades during his six years in Congress. Perdue was the most prominent stock trader from Congress, making 2,596 trades during his time served. Some of Perdue’s transactions came while he was a member of several sub-committees. The Justice Department investigated Perdue and found no wrongdoing. What’s Next: It's legal for members of Congress and their spouses to own stocks. The transactions have to be disclosed per the STOCK (Stop Trading on Congressional Knowledge) Act that was passed in 2012. U.S. Senator Jeff Merkley of Oregon is one member of Congress who has co-sponsored legislation to ban the adding of individual stocks by members of Congress. Both Merkley and Pelosi are Democrats. Pelosi’s transactions could push for more regulations concerning stock purchases by members of Congress. (Photo: Official U.S. Embassy photograph by Archibald Sackey and Courage Ahiati.) See more from BenzingaClick here for options trades from BenzingaCharging Infrastructure SPAC Plays: Is EVGo The Best Of The Bunch?Barstool Fund Nears M For Small Businesses And Is About To Get A Huge Boost From Michigan© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
The dynamic that has seemingly contributed to a short squeeze in the stock of videogame retailer GameStop Corp. also appears to be affecting shares in a host of other heavily shorted companies.
(Bloomberg) -- The first sign of trouble for hedge fund wunderkind Gabe Plotkin came in late October: A poster on Reddit’s popular wallstreetbets forum was taking aim at his wildly successful investment firm.“GME Squeeze and the demise of Melvin Capital,” wrote the user, Stonksflyingup, referring to stock ticker of GameStop Corp. and Plotkin’s $12.5 billion firm. Before long, veryforestgreen weighed in: “Melvin Capital New Short Attack.” Then, greekgod1990: “Melvin vs WSB! And GME to the moon.”So it was that the tables turned on Wall Street -- and a hedge fund star suddenly found himself at the mercy of the day-trading Reddit bros who have become one of the most powerful, if improbable, forces in the stock market today. The attack on Plotkin’s six-year-old Melvin Capital shifted the balance of power in ways that would have seemed unimaginable only months ago. By Wednesday, the firm had capitulated to the amateurs and covered the GameStop short.The explosive growth in retail day-trading, powered by platforms like the Robinhood trading app and forums like wallstreetbets, has turned the old order on its head. Melvin Capital’s mistake, if it can be called that, was leaving footprints behind in the marketplace. Reddit users were able to identify stocks that Melvin was wagering against and then buy those en masse, unleashing a violent run-up in prices that turned Melvin’s winning bet into a loser.So steep were the losses -- about 30% through last week -- that Melvin on Monday turned to billionaire hedge fund founders Ken Griffin and Steve Cohen -- Plotkin’s former boss -- to shore up the firm.As of Tuesday, the fund’s losses had increased even with the portfolio repositioning, though investors wouldn’t say by exactly how much for fear of angering the money manager, which they expect can still fight its way back.A representative for the firm declined to comment on performance, other than saying the portfolio had been repositioned in the past few days and “the social media posts about Melvin Capital going bankrupt are categorically false. Melvin Capital is focused on generating high-quality, risk-adjusted returns for our investors, and we are appreciative of their support.”The risk of going long is intuitive: Buy $50 of shares, and if the price drops you lose that amount. But losses on bearish bets can be more severe and swift. A classic $50 short can lose multiples that amount if the stock soars. And while using options may limit losses, investors can get wiped out quickly if the stock rises.The shorts that were listed in Melvin’s regulatory filing from the third quarter all rocketed in recent weeks. Names include Bed Bath & Beyond Inc., iRobot Corp. and GSX Techedu Inc. GameStop, the stock that seemed to set off the short squeeze, soared 634% in the month through Tuesday. That night Elon Musk tweeted a link to the Reddit thread with the caption “Gamestonk!!” And by mid-Wednesday in New York, the stock more than doubled again.Investors caught in a short squeeze can close out bets and eat their losses, or try to ride out the price surge -- typically requiring they put up more money.Melvin’s cash infusion was almost unheard of in hedge fund land. Griffin, his partners and the hedge funds he runs at Citadel threw in $2 billion and Cohen’s Point72 Capital Management, which already had about $1 billion invested in Melvin, ponied up another $750 million.Cohen, one might argue, was bailing out his own investment. For Griffin, it was a rare opportunity to invest in a talented manager on the cheap. Both firms got a minority revenue share from the firm for stepping in.Late Tuesday, Cohen broke his usual habit of only tweeting about his New York Mets. “Hey stock jockeys keep bringing it,” he wrote on the social media platform.Until this year, Plotkin, 42, had one of the best track records among hedge fund stock pickers. He’d worked for Cohen for eight years and had been one of his biggest money makers before leaving to form Melvin -- named after his grandfather -- in December 2014.So good was Plotkin’s reputation that the firm closed to additional investors before word had even spread that he was setting out on his own. Despite a loss in 2018, he’s posted an annualized return of 30% since opening, ending last year up more than 50%, according to an investor.Then came January, when Melvin first became aware that a Reddit crowd had put a target on the firm’s positions, ramping up an attack on GameStop and other shorts.Exposing PositionsWhy they singled out Melvin remains a mystery. As far as hedge fund managers go, Plotkin is considered low key. He doesn’t show up at many conferences or hobnob at society balls. Former colleagues and current investors say he’s a nice, quiet guy -- not the type to make enemies.The most obvious explanation is that his positions were in some sense knowable. Hedge funds generally go to great lengths to guard their short positions. If they use put options, for example, they buy them over the counter, which means they don’t have to list them in regulatory filings. Plotkin’s filing in the third quarter showed put options on 17 companies, many of them highly shorted names.“There’s no targeting going on - WSB is far less organized than all the articles are making it out to be,” said Lucas Severyn, a member of wallstreetbets. “From time to time, WSB gets obsessed with some stock, now it’s GME, and for the first time ever this stock just keeps giving.”Melvin’s losses mounted in January, and after they passed 15% last week, it had conversations with investors and got commitments of about $1 billion for Feb. 1. By the end of last week, losses had mounted to about 30%.On Monday morning, Plotkin reached a deal with Point72 and Citadel to provide him with more liquidity to help put Melvin back on the offensive. That Cohen would step in made sense, given his longstanding relationship with Plotkin -- and an initial investment of about $200 million in the firm that had grown to about $1 billion.Griffin, who started Citadel in 1990, has a history of swooping in when others are in distress. He’s hired teams or took on assets from hedge funds such as Sowood Capital Management, Visium Asset Management and Amaranth Advisors after they imploded. He may also have welcomed the chance to invest in Plotkin’s fund. Melvin generally manages money for charitable organizations like endowments and foundations.New RiskInvestors have been expressing faith that Plotkin will climb out of this hole.Griffin said Monday that he and his partners “have great confidence in Gabe and his team.” Cohen called him “an exceptional investor and leader.”A person familiar with the thinking inside Plotkin’s firm said one lesson is clear: Don’t leave a trace and only buy put options over the counter.“This phenomenon of retail investors jumping on a bandwagon to dominate trading activity is a new kind of portfolio risk,” said Jay Raffaldini, global head of sales and distribution at UBS O’Connor. “It’s going to cause a lot of hedge funds to rethink how they approach their long and short investment strategies.”(Updates with shares in ninth paragraph. An earlier version of this story corrected a title in 19th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Highly shorted stocks are being targeted by some investors trying to force people who have bet the prices will fall into covering. Watch Dillard’s and AMC Entertainment.
The Dow Jones lost ground as stocks reversed. Apple stock and Microsoft stock rose as Boeing stock dived. Big Short investor Michael Burry issued a warning.
Reddit and its r/wallstreetbets forum have become powerful, unpredictable forces in the market, sending certain stocks unexpectedly to the moon.
During a Senate hearing, Yellen said she would look into tax benefits, Social Security and ways to help Americans save
(Bloomberg) -- U.S. Treasury Secretary Janet Yellen and the Biden administration’s economic team are watching stock market activity around GameStop Corp. and other heavily shorted companies, White House Press Secretary Jen Psaki said.“Our team is of course -- our economic team including Secretary Yellen and others -- are monitoring the situation,” Psaki told reporters at the White House on Wednesday. She called the unusual trades in the video-game retailer “a good reminder, though, that the stock market isn’t the only measure of the health of our economy.”A Treasury Department spokesperson declined to comment. Federal Reserve Chairman Jerome Powell also declined to weigh in on the activity around GameStop.“I don’t want to comment on a particular company or day’s market activity or things like that. It’s just not something really that I would typically comment on,” he told reporters at a Wednesday afternoon press availability.A retail-investor frenzy over the company has caused GameStop’s shares to soar in recent weeks, squeezing hedge funds with large short positions in the company.Shares in the video-game retailer more than doubled as of 1 p.m. in New York, triggering at least two volatility halts as it at once notched its biggest-ever intraday advance. GameStop has surged eightfold in the past week, adding almost $20 billion to its market value.Read More: GameStop Rally Hits New Extremes as Short Sellers SurrenderGameStop’s meteoric rise has captivated Wall Street, as an army of small traders spurred on by Reddit message board posts have pushed the company’s stock price to unheard-of levels. Shares in the company began the year at just $19. Hedge funds who held short positions in GameStop, such as Melvin Capital, have closed out of them as the rally continued, suffering billions of dollars in losses.While some commentators have cast the frenzy as a populist uprising against Wall Street institutions, others see a dangerous play that could eventually leave investors exposed to major losses. Some wondered if it was the result of purposeful market manipulation.Earlier: Michael Burry Calls GameStop Rally ‘Unnatural, Insane’ Investor Michael Burry, who previously championed GameStop in 2019, called the current phenomenon “unnatural, insane, and dangerous.”“What is going on now -- there should be legal and regulatory repercussions,” tweeted Burry, who made his name for his bet against mortgage-backed securities before the 2008 financial crisis.Burry’s tweet tagged the Securities and Exchange Commission’s Division of Enforcement.(Updates with Federal Reserve comment beginning in third paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
GameStop shares are set to rally 70% this morning when trading starts, and AMC shares opened up 300%, extending a run that has perplexed market observers, irked hedge funds, and generally made crypto's recent gains appear soft and weak. Robinhood blew up the trading fee economy, and now along with a host of similar companies -- Public.com with its social focus, Freetrade in the UK, and so forth -- has made retail investing far more accessible than it was before to more folks. It's something that was noted by none other than the founder of Reddit Alexis Ohanian who shared some thoughts on Twitter.
What if I'm in my 40s and don't have a retirement fund? Some experts say that by age 40 you should have at least three times your salary saved for retirement. If the 401(k) was funded with pretax contributions, any amount converted will be taxable to them but converting to Roth could be a good move because at 21 and 23, they are likely in a low tax bracket. If they convert, invest prudently, and leave the funds alone, in 2030 they could get a good chunk of money tax-free at a time when they may be in a higher tax bracket.
Efforts to close out short positions have lifted the retailer’s market capitalization to more than $23 billion from less than $300 million six months ago.
Shares of Nokia Corp. shot higher in very volatile and active trading Wednesday, enough for the Finland-based networking company to comment on the activity.
(Bloomberg) -- American Airlines Group Inc., the most shorted major U.S. carrier, surged after a mention on Reddit’s Wall Street Bets forum.“AAL the next GME?” said Reddit user u/cardiffgiantthe1st in an online discussion Wednesday, referring to the stock tickers of American and GameStop Corp., the video-game retailer that has quintupled in value this week alone.American’s stock gain adds to a flurry of share increases this week as Reddit-fueled retail traders take on short sellers and drive up prices. With stock after stock, legions of day traders have identified companies with high levels of short interest and piled in. In the case of GameStop, the soaring price has forced many short sellers to give up their positions.American jumped 9.3% to $16.98 at 2:11 p.m. in New York after advancing as much as 15% for the biggest intraday gain since Nov. 9. Other companies on a Standard & Poor’s index of big U.S. airlines either fell or were little changed.The Fort Worth, Texas-based carrier didn’t immediately respond to a request for comment.The gain isn’t “justified by anything fundamental,” Darryl Genovesi, an analyst at Vertical Research Partners, said in an email. He expressed the same view about the gain of as much as 41% during the session by another company he covers, Virgin Galactic Holdings Inc.Short interest as a percentage of American’s free float is about 29%, according to data from S3 Partners. No other major U.S. airline has short interest of more than 5%.American is scheduled to report fourth-quarter earnings on Thursday. Like its rivals, the airline has been contending with the unprecedented collapse of air travel because of the coronavirus pandemic.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2021 Bloomberg L.P.
Nokia stock has continued to soar—one of a growing group of stocks seeing outsize moves on the back of surging retail trading.
At least one major brokerage house is starting to respond to a frenetic surge in the price of shares of companies that has been attributed to rabid buying by individual investors on social-media platforms.