From John Hempton of Bronte Capital ( AUS )
"The rise in garbage stocks has been very difficult for us. We short garbage stocks.On the plus side we look at shorting opportunities now and see a “target rich environment”. Alas, recent experience tells us that the targets can shoot back."
"Rampant speculation in growth-oriented and garbage stocks has had many drivers – but the one that matters most to us is the massive increase in the number, value and confidence of retail investors, particularly online retail investors, often young and with no investing experience or historical perspective.It is not uncommon to have 20-year-old “investors” ask you about call options. The widespread retail interest in short-dated, highly levered positions is reflected in massive call option volume in the most speculative retail stocks. Tesla has literally billions of dollars in one-week call options every week, even in the low-volume Christmas week."
"Historically the biggest driver of our short book – and the driver that has worked best for us – is shorting stocks aggressively promoted to retail investors. We seek to find the most cynical and self-serving promoters who promote fads, frauds and failures to retail investors. But “sold to naïve investors” is a basic tell.This tell has not worked in 2020. Indeed, it is a way to lose considerable money as a shortseller. When you think the retail investors being promoted this new shiny fraud (that they cannot possibly know anything about) are hitting exhaustion, a new wave of newbies – with their Robinhood accounts – comes to bid your short up double or triple.3 The biggest retail stock of them all – Tesla – is a stock we have no position in (anymore). But the eight-fold increase in stock price this year has convinced many newer investors that they can do no wrong.If your main schtick is finding the dumbest retail investors and shorting whatever has been sold to them then you have done poorly. This sort of bullish investor may have the intelligence of their bovine counterparts, but a herd of them can gore you."
I've been following Hempton, and Jim Chanos as well, for years. Hempton was one of the first to shine the light on Valeant. Their mantra of go short so you can go long I can relate with, though I prefer a different implementation of their strategy.
Anyway, here is the whole note.
https://mcusercontent.com/0d29cf83b737cac9573670d07/files/69b6a116-0847-4bbe-9392-9521980ad76c/Ganymede_Update_202012.pdfAlso from Joe Weisenthal, move over FAANMG, here comes the BRATS.
Bitcoin
Russell 2000
ARKK
Tesla
SPACs
In regards to GME; 197,157,946 shares traded today, 2,117,720 options traded ( equivalent to 200,117,720 shares ) However, put volume was 52% ! HSGFX as of 9/30/2020 held 150,000 shares !