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That's wrong and shouldn't be allowed to happen but it does. There are documented occurrences of companies issuing tender offers to rebuy their shares, and the tender offer is accepted for more shares than exist. Was reading the story about Falcone buying MAAX Holdings Bonds on this site yesterday. He bought 140% of the existing float! That shouldn't be possible. The problem is we're using a very old settlement system that is now antiquated and not capable of doing the job we need. But fixing that problem is a job so big nobody wants to touch it, plus of course, there's a lot of people whose best interest is for it to remain the way it is.
(Off subject:- Heard an interesting interview recently where they were talking about 'infrastructure bills'. The interviewee was making the point that people think about 'infrastucture' wrongly. It doesn't have to be building roads and bridges. It could be a massive computer project that replaces all the government systems, it could be a project that gives the fed the ability to directly deposit funds into peoples account rather than mailing checks. Found it interesting)
The media narrative is always about what sells the most advertising - that's all they care about. But as Sorkin said ...
The truth is that many of the small investors who look like winners after pushing up shares of GameStop could soon become losers, especially those who jumped into the frenzy in the past day or so. And unlike the wealthy hedge-fund managers on the losing side of the trade so far — who probably have more than enough money to cover the mortgages on their second or third homes, if they have mortgages at all — many of these retail investors can’t afford to take a big hit.
Gamestop currently has a $370 range today, $113 to $483. There is a lot of money changing hands. Some people are losing money they can not afford to lose. That's why they have the 'sophisticated investor' category. It's basically a group of people who theoretically dont need protecting from themselves.
That Andrew Sorkin quote is the equivalent of a "won't you think of the children?" argument.
The fact of the matter is that people get cleaned up and lose money on stocks all the time, with brokers recommending stocks that don't turn out well, or large firms/banks recommending shares to their retail customers while shorting it in another section of the business. Or you've got the corporate business channels pumping out news all the time and talking guff about stocks (looking at you Jim Cramer et al). All of this is perfectly acceptable.
The ONLY thing different this time is that these same people are on the wrong side of the trade. And as 2008 has shown, capitalism (where you lose as well as win) is just for the little people.
This so called concern for the plight of the small investor completely misreads the bulk of people buying GME. They want to do it to wreck the big guys. They're happy with the risk. And if there are others who are piling in as well? As stated, that's never been a problem before has it? Seen Netflix/Tesla recently?
I wonder what happened to old wisdom "if social media says buy, then sell"
Well, either way, I can already see margin calls happening, I wont be surprised if those "funds" make more than what they lost by shorting it soon enough.
I kind of feel bad for the stock though, this kinds of thing, might ruin it permanently.
"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much." - Jim Rohn
So help me out here. If the stock is short 140% of the float and the stock goes to zero, where is the 40% of the money coming from to cover the shorts. Have some shares been lend away twice?
I'm trying to wrap my head around the shorts being over 100% float.
