The claim that Melvin closed their position is something of a game of "telephone" in that it was a CNBC anchor that claimed that "from what I understand" Melvin Capital is out of the stock, after he talked to the CEO (off camera).
Importantly, there was no recording of the conversation, just a journalist claiming a source said something. The fact he used "from what I understand" instead of a direct quote is telling.
Melvin themselves have not (as far as I can see) issued any kind of statement, written or otherwise, that clearly states they have zero position on GME any more.
All of the other stories about the claim simply state "according to CNBC".
My point is that as far as I can see, there is no evidence that Melvin are actually out of their position, other than easily-deniable comments that a single journalist claims "from what I understand" on.
Link here to the video from CNBC: https://www.cnbc.com/video/2021/01/27/melvin-capital-sells-o...
The full quote from Sorkin's segment, ~40 seconds into the video: "Melvin Capital is now out of the stock. They got out of the stock, from what I understand, yesterday afternoon." (https://twitter.com/cnbc/status/1354406938319216640). It could not be more clear -- "from what I understand" refers to the precise timing and not the overall fact.
> The claim that Melvin closed their position is something of a game of "telephone" in that it was a CNBC anchor that claimed that "from what I understand" Melvin Capital is out of the stock, after he talked to the CEO (off camera).
That's not a game of telephone, that's quoting a direct source. Sorkin talked to the CEO of Melvin Capital right before he went on air and then immediately reported it.
> just a journalist claiming a source said something
And it's not "some CNBC anchor," it's a well known journalist (Andrew Ross Sorkin) with a reputation at stake.
> All of the other stories about the claim simply state "according to CNBC".
Because CNBC got the scoop. It's journalistic etiquette!
> no recording of the conversation, just a journalist claiming a source said something
Every single article published in any newspaper ever is a journalist claiming a source said something.
> Melvin themselves have not (as far as I can see) issued any kind of statement, written or otherwise, that clearly states they have zero position on GME any more.
The CEO of Melvin Capital calling a prominent CNBC journalist counts as a statement, if you're willing to put aside your rabid paranoia for a few minutes and think critically instead of conspiratorially.
No, it's not. Not at all.
A quote is where the actual words someone said are put forth verbatim. What we got was a summary of what was said and that's exactly my issue with the statement - summaries leave wiggle room for people to come back later and say "well, that's not exactly what I said".
>Every single article published in any newspaper ever is a journalist claiming a source said something.
Yes, and there are conventions to make it clear when the journalist is directly quoting a source (the use of quotation marks) and when the journalist is giving their own summary of what the source said.
The problem with this is that it's easy for the CEO to later say "the journalist misunderstood" or "I said we covered some of our position (1% is 'some' right?)" or many other things.
Is there a definitive statement from Melvin themselves anywhere?
Yeah but your shorts will be in the money and you probably double your investments instead of losing 53%. There is more to gain than lose.
I understand your response. There is one assumption that I think marks the difference between what side of the line one falls on.
My understanding of your belief is that you think Melvin would not lie due to there being a large risk associated with lying.
One might also assume that Melvin would not be dumb enough to short over 100% of GME stock.
In exercise, I believe this to be the crux of the speculative argument that Melvin is dumb enough to use psychological warfare (which may have legal ramifications if they get caught) to try to get GME stock back down.
Okay as soon as I read this I knew I shouldn't be expecting much, but...
> My understanding of your belief is that you think Melvin would not lie due to there being a large risk associated with lying.
This really isn't just lying a little bit, and isn't just a large risk. If you're running a fund like this, purposely making materially false statements like this would be akin to jumping out of a plane without a parachute and somehow hoping for the best, while 5M angry redditors are purposely trying to make sure you crash into the hardest thing possible. This position of "well maybe he's lying, you can't definitively prove he's not!" position is so bonkers that it's closer to a conspiracy theory than an actual opinion.
> One might also assume that Melvin would not be dumb enough to short over 100% of GME stock.
This has been discussed in depth elsewhere. You're understanding of this concept is fundamentally flawed. Frankly, even if it wasn't, you're suggesting that a single firm shorted more than 100%? Or that both Melvin Capital and Citron both shorted more than 100%, and that somehow added up (with your misunderstanding) to 140%?
There is no need for you to get feisty over an comment that I (who seems like someone you disagree with) posted on the internet. Perhaps this is a point where you can self-reflect on how you articulate yourself.
Please understand that I don't care anymore. I don't care if you think I'm out of line. Yes, I read and understand your comment. I just don't engage with people that have bad communication skills.
I am only writing this in an attempt to make you a better person.
The argument being made is that the original funds never exited their original ~$10 shorts. So every $100 increase in stock price is a 10x increase in losses.
If someone re-entered at ~$300, a $100 increase would be a 30% increase in loses.
The scale of these is massively different.
I have absolutely no doubt that other firms have entered short positions.
Claiming that "Melvin may have re-entered afterwards" is obviously a possibility, but is not the same as having lied about exiting in the first place.
Basically, my point is: if your rebuttal to the question of "did they lie?" is "no, that's preposterous, it would be a death sentence for the firm", then your answer might be correct technically as to the literal meaning of the question, but you've missed the spirit of what was being asked.
1. Short interest on GME is still high, even after they claimed to have closed their short position.
2. They have a "huge incentive" to lie about this, because people believe it would encourage a selloff.
That is the entirety of the evidence. It is uncritical despite the fact that it gets frenetically repeated on reddit. Here is the evidence which suggests they didn't lie:
1. That first argument doesn't prove what people believe it does. First, short interest is only officially reported twice monthly, and most cited data is out of date or estimated. More importantly, short interest is an aggregate measure which does not track specific positions. It only tracks all positions together. Other firms which haven't been burned by the price increase have opened new positions, hoping to short from the top tick (or thereabouts).
2. The second argument is reddit cargo culting "game theory", and it violates both logic and Occam's Razor. If you're a fund manager who lies to the public about closing a highly volatile position that could bankrupt you, you are facing securities fraud and violation of fiduciary duty, respectively. Either of those will pierce the veil of your firm and leave your personal assets liable for reclamation by the SEC and/or angry investors. You will be sued. You will lose.
Moreover, the "incentive" of this move is that you might prompt a selloff and get to keep your short position. It strains credulity to think someone would make such an uncertain bet with a huge psychological component when their firm is literally on the line. If you're wrong, your firm is dead and all of your personal assets are up for seizure in the ensuing fallout for the aforementioned reasons.
The alternative is that you just close the position, don't lie about it, and your firm survives and you just have a bad year. You are personally unscathed as the fund manager. And since you've had historically excellent returns and this was a 3 or 4 sigma event, long term you'll probably be fine. You'll have a new signal to incorporate into your portfolio risk management and you'll move on.