40 billion hole for funds – Corriere.it

After a week of financial battle over the GameStop title, the clash between Reddit traders and hedge funds is back on. The latter in particular according to the company S3 Partners, which processes market data, they would have lost about 19.75 billion dollars on the title of the video game store chain alone. But GameStop wasn’t the only title targeted. The Reddit platform community also bought shares in AMC, a cinema chain, and Bed Bath & Beyond, an American chain of retail stores selling household goods. So much so that Barclays speaks of a total hole of 40 billion for hedge funds. A triumph for the little ones who rebel against the financial establishment.

The fight

The game is still open. In fact, few funds have declared defeat by formalizing the loss. Hedge fund Melvin Capital lost 53% in January following its bets on Gamestop and other stocks. According to the Wall Street Journal, the hedge fund started the year with 12.5 billion and now has 8. The largest share of those who invest for still at the forefront: among these are the funds Cohen’s Point72 Asset Management, Sundheim’s D1 Capital Partners and Maplelane Capital. There is therefore great expectation for the opening of Wallstreet.

But there is not only GameStop in the sights of the little ones. According to information circulating on the net, the rebels of Reddit could storm the silver market, the ultimate safe haven asset. It is no coincidence that the hashtag #silversqueeze has become trending on Twitter. The retail craze is driving silver prices to an 8-year high: the precious metal hit a high of $ 30 an ounce in the spot contract which now rises by around 10% to $ 29.74 an ounce, while the March future remains above 30. The rally in prices started last Thursday (in the previous session the spot prices were traveling below $ 27 an ounce) and is affecting the shares of mining companies such as Fresnillo (+ 20%), Polymetal (+ 6%) and Hoschschild (+ 16%) in London. Expected therefore for a strong upward opening on the American markets for the Canadian Pan American Silver and Fortuna Silver Miners while, according to markets.com, the Blackrock iShares Silver Trust recorded net inflows of 944 million dollars on Friday. According to Neil Wilson, chief market analyst at markets.com, traders using social platforms like Reddit are replicating what has happened in recent days for titles like GameStop.

Eyes on Bitcoin and Dogeco, another obsession for individual investors.Digital currency inspired by Shiba breed dogs and born almost for fun, the Dogecoin entered the good graces of the Redditors in the last sessions: its value doubled so much as to force the Robinhood platform, the most used by Reddit degenerates to buy shares, to intervene.

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The investigations

Defined the gateway to Wall Street for small investors and a key tool for the democratization of finance, Robinhood now at the center of controversy for the decision to limit trading on some stocks, including Gamestop. The Securities and Exchange Commission (SEC), the US federal body responsible for supervising the stock exchange, is investigating the matter. Washington has not officially commented, not even on the rain of criticism rained down on the SEC for not intervening on what many define as market manipulation. The SEC is evaluating all elements with the aim of protecting individual investors and the integrity of the marketsaid Brian Deese, number one on the White House National Economic Council. The SEC’s work – points out Jared Bernestein, one of President Joe Biden’s economic advisors – does not prevent volatility or speculation, but ensure that market fundamentals are solid. Meanwhile, the count down for the opening of the Stock Exchange has started.

The anti-fund strategy

But how did the small investors manage to put the big ones in crisis? By playing by their rules. The Reddit Wallstreetbets online community has chosen stocks on which the funds were exposed with short bearish positions: you earn if the value of stock x decreases and you lose if it rises. A bet on the downside. The boom in small stock purchases has therefore triggered short squeeze deals – when a market’s prices suddenly rise, exceeding analysts and investors’ expectations. To limit losses, funds could and will be able to do one thing in the event of a boom in purchases: buy back the shares. To do this, liquidity is required, which in the long run could result in the forced sale of shares of healthy stocks.

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