Loading ...I noticed those crazy spikes in cheap stocks long ago looking at charts, of which I look at hundreds of them. The Media is a diabolical liar and cause trouble often.
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A look at the 10 most-purchased stocks by retail traders during the market mania last month is missing one key stock: GameStop.
The prevailing narrative was that a band of Reddit-inspired small traders rose up against Wall Street by buying GameStop en masse, forcing a short squeeze by professional hedge fund managers, who were forced to cover their negative bets or risk catastrophic losses.
But several signs are pointing to institutional investors as big drivers of the wild price action on the way up.
“Although retail buying was portrayed as the main driver of the extreme price rally experienced by some stocks, the actual picture may be much more nuanced,” JPMorgan global quantitative and derivatives strategy analyst Peng Cheng told clients in a note.
The rookie investor “vigilantes” grabbed the most attention by being all over social media, posting screenshots of their positions and crucifying Robinhood and other brokers when the firms were forced to limit trading in the high-flying names. The membership of Reddit group WallStreetBets has rocketed to 8.5 million subscribers.
However, it’s possible the noise from this crowd caused most to overlook Wall Street co-opting this trade to make a fast buck as well, data shows.
“Maybe it’s not as much of just the little guy versus the big guy,” said JMP Securities analyst Devin Ryan. “I think that it’s reasonable to say that institutional investors were also very active in those stocks last week because there are institutional investors that participate in names that have elevated volume. I think most likely that was also expressed in some of the options activity last week as well.”
Retail investors were actually net sellers of GameStop from Tuesday through Thursday last week, according to data from Citadel Securities.
“What was going on in the stocks forced the hedge funds to trade to cover, or they might have been playing, too, to win,” said Piper Sandler analyst Richard Repetto. “There always could be the hedge fund that was totally uninvolved, wasn’t short, but saw what was going and said this might be a way that I can profit just by going long.”
New York-based hedge fund Senvest Management reportedly made $700 million off of the GameStop mania. Another proxy for retail trading, Trade Reporting Facility volumes, showed that retail investing decreased significantly after Tuesday of last week. The volumes are basically all the trades that aren’t executed on the exchanges. So, what goes into that TRF is normally the vast majority of all the retail volume.
The Rest:
BTW Take a look at MJNA +450% in days just like GameStop. and MMNFF, and there are many others not talked about on TV.