Hedge fund Melvin Capital cleared its short position in GameStop on Tuesday afternoon after experiencing huge losses. The next target of the U.S. retail army may be it...
According to CNBC on Wednesday, Gabe Plotkin, the fund manager of the U.S. tens of billions hedge fund Melvin Capital, announced that the fund closed its short position in GameStop on Tuesday afternoon after suffering huge losses. . However, he did not disclose the amount of Melvin's loss this time.
Gabe Plotkin also clarified rumors in the market that Melvin Capital is about to be liquidated. He said that speculation in the market that the fund will file for bankruptcy is a rumor.
GameStop, which stumbled Melvin, continues to rise. GameStop's stock price more than doubled this week, reaching nearly $150 per share, and the increase in January reached 685%. Who would have thought at this point that the stock was only worth $6 four months ago. Before the U.S. stock market opened on Wednesday, its stock price continued to skyrocket, rising more than 140% at one time and then narrowing to 65%.
Amid GameStop’s explosive rally, short sellers have accumulated more than $5 billion in mark-to-market losses on the stock so far, according to S3 Partners.
Although Melvin has completely admitted defeat, this short squeeze drama may not end there. According to Zero Hedge, the next target for U.S. retail investors may be another relatively small hedge fund, Maplelane Capital.
Maplelane Capital is a hedge fund headquartered in New York with a scale of approximately US$3.3 billion. Founded in 2010, it is a hedge fund focused on using options trading to execute short-selling strategies.
Maplelane Capital was founded by Leon Shaulov, the former founder of notorious tech hedge fund Galleon, whose boss Raj Rajaratnam was jailed more than a decade ago for insider trading on tips provided by Goldman Sachs directors.
Zero Hedge provides a brief introduction to the investment style of this hedge fund, as follows:
This fund focuses primarily on stock investments in order to seek attractive returns. Additionally, its portfolio is generally known for its short-term focus, but it does occasionally hold some longer-term positions. The fund uses a significant amount of leverage, using options trading to execute its strategy. The fund has significant net short exposure to the stock market.
To put it simply, this is a fund that uses options to short U.S. stocks, and it also adds high leverage. It can be said to be a veritable big short.
Seeing this, you may already understand why it may be the next target of American retail investors.
The picture below shows the fund’s latest 13F position. It can be seen that its position is very similar to Melvin’s. It is basically short-selling and even holds more put options. The picture below shows MapleLane’s latest position:
As you can see, most of the stocks shorted by MapleLane are the most shorted stocks on Wall Street. Therefore, MapleLane may also be attacked by American retail investors like Melvin.
The only thing we have seen about the fund's performance so far this year is a brief report in the Wall Street Journal saying that the fund "has seen a decline this year."
If Maple Lane suffered huge losses like Melvin and was required to make a margin call, the fund would either have to cough up billions of dollars to cover the margin or go into liquidation. Unless Citadel, SAC pardon Point72 or other large hedge funds also lend a helping hand to finance its margin calls. A netizen on
Wallstreetbets said that the last time hedge funds were forced into this situation was the financial crisis in 2008. At that time, hedge funds were scrambling to sell assets that were highly liquid and easy to liquidate, while real estate that was difficult to liquidate was sold. On the side.
It is worth noting that this short squeeze craze by retail investors may further escalate. Hedge fund long positions have also been affected. Hedge funds' long positions were suddenly in trouble. Square Inc. , Roku Inc. Hedge fund favorites including Peloton Interactive and Peloton Interactive all fell at least 3% on Tuesday.
Separately, Goldman Sachs’ Hedge Industry VIP ETF, which tracks hedge funds’ favorite stocks, has fallen for four days in a row, setting its longest losing streak since October last year. At the same time, the basket of the most shorted stocks rose 15%. . The market seems to have completely gone against hedge funds.
Bay Crest Partners chief market technical analyst Jonathan Krinsky said that if short positions experience excessive losses, the situation may get worse and worse, and even involve long positions, and hedge fund managers will have to significantly reduce their holdings to reduce losses.
Once hedge funds begin to reflexively sell their original long positions to raise funds to cover their shorts, a vicious cycle will form, leading to overall deleveraging of the fund and more short covering. Meanwhile, the prices of most shorted stocks will continue to soar.
Zero Hedge points out that what is happening in the market right now is neither the fault of hedge funds nor the fault of retail investors. The only person responsible for this situation may be the Federal Reserve, which injected trillions of dollars in the hope of maintaining market stability, but in fact it distorted the market. Many investors are "surprised" by what is happening in the market.
This article comes from Jinshi Data
