Unequal confrontation on Wall Street: losing $ 20 billion in 1 month, short sellers of GameStop shares still refused to give up

The stock boom in GameStop has caused short sellers to lose nearly $ 20 billion this month. However, this group of investors still has no intention of surrendering.

According to data from S3 Partners, the short-selling hedge funds suffered a loss of $ 19.75 billion when placing bets on the game retailer, including a loss of nearly $ 8 billion on Jan. 29 alone.

However, the group of short sellers is still mainly holding down position or being replaced by other funds willing to bet on this stock. According to S3, the number of GameStop shares that are being borrowed and short sold fell by about 5 million last week, marking an 8% decline in the rate of short sales. Most short covering sessions took place on January 28, when the stock fell for the first time in six days.

Last week, the hedge fund famous for its short sales – Melvin Capital, recorded a loss of 30%. Therefore, on January 25, Melvin had to “ask for help” from the billionaires who founded the famous hedge fund Ken Griffin and Steve Cohen. As of January 26, the fund’s loss continued to increase despite the adjustment of the portfolio, but the company’s representatives did not disclose the exact number.

Ihor Dusaniwsky, managing director of predictive analysis for S3, said: “I hear people constantly talking that most GME short sales are underpriced. In fact, the data shows the sum. the number of short-sold shares hasn’t changed that much. ”

A volatile week of GameStop when witnessing the following events: Over 150 USD on 25/1; Elon Musk shared on Twitter ‘Gamestonk; Melvin Capital said it has closed a short position with GME; Plummeted sharply when brokers restricted trading; Robinhood said restlessly.

Ihor Dusaniwsky added in an email: ” While ‘value short’ transactions placed in the previous GME were forced to prematurely sell, most of the borrowed shares continued to be shorted by the name ‘new .’

Along with many other stocks that were strongly short-sold, GameStop continued to increase strongly yesterday, after Robinhood said it was continuing to trade limited these stocks. This positive development drove GameStop’s gain this week to more than 400% and this month to 1,600%.

The game retailer’s stock has become a star in the Reddit forum’s r / wallstreetbets chat room, with its membership rapidly growing to more than 5 million. Members of this group called for stocks to be bought with GameStop call options, triggering a massive short squeeze that caused short funds to lose heavily.

The GameStop stock loan fee – or the fee to borrow stocks for the purpose of short selling, has increased to 29.32% for existing short sales and 50% for new short positions, S3 said.

Dusaniwsky said: “If most of the bets were underpaid, the equity borrowing fees would not be this high. Currently, you can borrow GME stock at one digit, due to the supply. Equity lending has increased, the cause is that borrowed shares are being repaid after “supposedly underbought” rounds.

S3 data shows that GameStop is still the stock with the most short selling rate on the market, with 113.31%.

Consult CNBC