The Secret Broker: Two little boys had two little toys and each had a wooden hedge.
The Secret Broker
The Secret Broker
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The Reddit WSB boys we wrote about in last week’s TSB have continued wreaking havoc on the traditional Harvard educated suits.
As I type, a hedge fund called Melvin lost 30% of its U$13bn of funds under management and had to be bailed out.
The hedgies have come out swinging against the great unwashed retrobates, who have managed to not only stop their party but have driven a tank straight through the front door, over the cake, and out through the backdoor, leaving a trail of destruction behind them.
This havoc occurred just as the guy in charge of Melvin, called Plotkin, was just settling on his U$44m Miami Beach house purchase.
(Plotkin named his fund Melvin in honour of his grandfather, Melvin Plotkin.)
When I say beach house purchase, I mean two — one house for U$32m and the next door neighbour for U$12m.
As we all know, you always need to take out the neighbor with less money than you, so he can’t lean over the fence and ask to borrow the ride-on or see if one of your servants could feed the cat whilst they are away.
And here is a picture of Plotkin and his beach houses.
U$42m to the housing market and U$3.9bn (lost) to the stock market, by the same chap in the same week is impressive stuff.
Yesterday, when a journalist phoned up Melvin Capital Management for a quote on this situation, he was told no one is talking publicly about the size of the loss, as no one wanted to upset and embarrass Mr. Plotkin in print.
To give you an idea of the pain the great unwashed has given Plotkin and his grandfather, have a look at the latest chart on Gamestop, which now have a U$26bn valuation and with their 52 week range is $2.57 to $380.00.
Other hedge funds had to act and save Plotkin and his fund.
This is what one hedge fund manager said about this situation.
“He was short in a market that no longer allows people to stay short. Today, you take a position after doing the work then some guys on Reddit use their phones to buy penny stocks and you end up with your face ripped off. It’s nuts.”
If they had let him fall over, then every hedge fund would then be vulnerable to the same herd attack and their game would be up. Luckily for Plotkin, he had another wooden horse to climb up upon, thanks to his previous hedge fund employers, who have saved him, his fund and his beach houses from being repossessed via the injection of U$2.7bn in capital.
As this battle raged on between Reddit and Plotkin, he managed to get the subreddit closed down (briefly) and some of the big broking firms froze trading but then in the midst of all of this Elon, who absolutely hates shorters with a passion, tweeted out this to his 43m followers.
— Elon Musk (@elonmusk) January 26, 2021
This one word tweet instantly added U$5bn to Gamestop’s market valuation and was just a gentle reminder from Elon to Plotkin that he was also once a shorter of Tesla stock and he hadn’t forgotten. The washup is going to be interesting.
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