Losses on short positions in U.S. firms top $70 billion - Ortex data

Reuters ^ | Jan 29, 2021

[11th_VA]

By Sujata Rao

LONDON (Reuters) - Short-sellers are sitting on estimated losses of $70.87 billion from their short positions in U.S. companies so far this year, data from financial data analytics firm Ortex showed on Thursday.

The hefty losses come as shares of highly-shorted GameStop jumped more than 1,000% in the past week without a clear business reason, forcing short-sellers to buy back into the stock to cover potential losses -- defined as a short-squeeze -- while retail investors then piled in to benefit from the surge.

Chasing shorted companies became a trend among retail traders, rippling across U.S. markets and Europe. Ortex data showed that as of Wednesday, there were loss-making short positions on more than 5,000 U.S. firms.

Its data also showed that estimated losses from shorting GameStop at $1.03 billion year-to-date, while those shorting Bed, Bath & Beyond were looking at a $600 million loss.

Ortex said the figures are based on the change in trading prices between the start of January to Wednesday's close, and the number of short positions. The company sources short interest data from submissions by agent lenders, prime brokers, and broker-dealers.

[a fool in paradise]

That would’ve been dog bites man, nothing out of the ordinary.

[Fido969]

without a clear business reason,

Ahhhh... like "without evidence."

Cleaning up - by cleaning out the shorts - sounds like an EXCELLENT "business reason."

[cuban leaf]

I don’t know if you saw my earlier post about this: About 10 years ago I saw a youtube video where a guy claimed he had bought every single stock available for a company, and yet people were still trading the stock on the Nasdaq. That was coupled with a video that explains how that can happen. It’s a bit like how people used to kite checks.

[monday]

“What these small guys effectively did was to cause a run on the rich guy’s bank.”

Hedge Funds are not “rich guy’s” They manage money for many rich guys. To cover their losses they sell other stocks in their portfolio. It isn’t a run on anyone’s bank. Their funds price goes down to reflect their losses and the rich guy’s who invested in them take a loss on paper. That is all.

[Organic Panic]

The Biden DOJ and SEC will make sure the little guy never does this again.

[DUMBGRUNT]

“They’ll get it all back when they short Gamestop, at $350, when it’s price should be $19. That’s the bummer.”

And that is a fact.

Buy on the rumor, sell on the news!

[monday]

“The thing is those losses would've occurred either way.

By selling a stock short you anticipate that you can buy it at a cheaper price.

So these big firms would have screwed the little guys for 70 billion.. Instead the little guys figured out the scam and screwed them”

To be clear. When you short a stock you are paying a fee to essentially rent someone else’s stock so that any gain or loss in a stock is taken by you, not the owner. If the stock goes down you make money because you can buy the same stock later at a reduced price in order to redeem the stock that you “rented” If it goes up however then the “Shorter” loses money because he has to pay more for the same amount of stock he rented.

So no, those losses would not have occurred either way. If you own a stock that cost you $10 and it goes to $1 you lose $9. If you buy an option on a stock for $10 and it goes to $1000 you lose $990.

Also “Little guy's” do not generally sell stock options, which is what the shorters were buying.

The people or funds who made a lot of money were the ones who had large positions in the stock when it was cheap and the foresight to sell options on their positions.

The little guy's investing are buying into a bubble. The ones who sell before the bubble bursts will do ok, but the ones who hold onto their stocks too long will lose.

[isthisnickcool]

I got out of US equities a few weeks back. Mainly because Biden and everyone around him are excellent thieves but unable to understand a balance sheet. They have zero business skills. Take Schumer for example, he’s typical. The guy has never had a non-government job. Collectively they are blind people in a China shop breaking stuff (pun intended).

I used to day trade and when Covid hit last year I stepped back in but it was more like short term trading. Hit Exxon at $31 and got out at $45. Made money off a number of energy sector stocks, airlines and even casino equities. Before this my best bet was TSLA at about $43 in late 2019. I even posted here that people should get in to it about then I think. I’m hoping for a Starlink IPO at some point, I believe Elon Musk is planning on some things with it that will be very disruptive to several tech sectors.

I was pushing BTC even at $16K. Barring some weird government intervention (good luck) or a killing design flaw I’m not sure where it stops. I mine ETH and have for some time. If we could buy more GPU’s I’d expand that.

As the left kills things around it with their stupidity smart people will capitalize on the insanity. You just have to pay attention:)

[Mr. K]

That was my point. The big guys who sold short originally would have screwed all the small investors.

Instead a group of small investors got together and screwed the big investors for billions.

[Taffini]

*

[Freee-dame]

The media has not done its job investigating this and reporting it and certainly are not going to do so now for their own survival.

I agree. Actual investigation and reporting of corruption by big media will never happen. The people at the top of big media live the same lifestyle as the Wall Street and government elite. The people not at the top in the media want to be at the top so they will never investigate any corruption either.