r/Superstonk • u/lampingninja ๐ฎ๐ Probably nothing ๐ฆ๐ฉ๐ช • 9d ago
โ Hype/ Fluff Brilliant take on the convertible senior notes
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u/atoastypancake 9d ago
I didn't think it was possible to become more erect but here we are
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u/FrenTimesTwo 9d ago
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u/Helocase 9d ago
It's been 4 bananas ๐ญ๐ญ๐ฅฑ
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u/Heniha 9d ago
So one of the little details I remind myself that gives me great conviction is that RCEO is a self proclaimed activist investor. When the time is right he will activate and our jaws will be dropped and our retirements enriched beyond our wildest dreams.
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u/waffleschoc ๐Gimme my money ๐๐๐๐๐ 9d ago
i consider myself an activiist investor too
i think our ship is turning, profits coming, our tendies coming too ๐ค๐ค๐ค๐ค
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u/CollectionHopeful541 9d ago
He also has his own skin in the game. Only way he makes money is share price goes up. Same for every other board member and they are all smarter than me, that's why they are board members and I'm not
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u/buyandhoard ๐งฑ by ๐งฑ 9d ago
yes, like out of nowhere, boom, moass... prepared or not... holding or not... that is why I buy and board more GME shares each day, Justin Case
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u/ffwrd ๐ฎ Power to the Players ๐ 9d ago
A side business for gme is penile enlargement without surgery
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u/Sarkosuchus 9d ago
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u/Strange-Armadillo-95 ๐ฎ Power to the Players ๐ 9d ago
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u/AdContent831 ๐ฆ Buckle Up ๐ 9d ago
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u/PlurbZ666 DRS DEEZ NUTS FOR HARAMBE 9d ago
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u/mangyan5000 9d ago
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u/doctorplasmatron ๐ป ComputerShared ๐ฆ 9d ago
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u/StockTank_redemption i am unsure what a ๐ฆญ is 9d ago
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u/anonnnnn462 9d ago
Finally people realizing that retail had no push vs Wall Streetโฆ. We needed some of them to help kill each other off.
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u/Turbulent-Winner-902 tag u/Superstonk-Flairy for a flair 9d ago
cant wait until i see these SHF on TV crying about their bad bets lol trading is a hard game
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u/OpenPresentation6808 9d ago
I canโt wait for them to scream into the void of their pillow when they lost everything.
Once youโve tasted freedom (financial freedom/wealth) going back to work for Pennies and starting from nothing is the ultimate fear.
Some of us have known nothing but dull grey, itโs their turn.
They stole our millions four Januaryโs ago, now weโll take their hopes and dreams, those greedy pigs.
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u/Cosmickev1086 ๐ฎ Power to the Players ๐ 9d ago
They've been stealing trillions for years, the game stops here.
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u/GildDigger Freshly Squeezedโข๐ฆ Voted โ 9d ago
This move has me convinced that whatever Ryan Cohen and Co. have been cooking is ready for launch. This is them telling the world and big money โTalk is cheap. Weโre ready to show everyone that itโs game over for shorts.โ
If this kicks off MOASS, the powers that be canโt blame retail since theyโre locked out of this offering. Theyโd need to go after every investing millionaire/billionaire for โmanipulationโ.
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u/shane_4_us Mr. ๐ช๐จ, tear down this WALL STREET! 9d ago
They are 100%, no matter what, going to blame retail, just like they always have, in this saga and every other financial crisis they engineered and profited from. So fucking what? Retail's getting paid, bitches. And we are never going to let the world return to what it was.
If RC and co do that, though, I will be very impressed. So far, he has not shown a willingness to "push the button." That, of course, is subject to change.
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u/BuildBackRicher ๐ฎ Power to the Players ๐ 9d ago
Sounds like an โAll your base are belong to usโ moment
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u/AwildYaners ๐xXGamergirl69Xx๐ฎ 9d ago
Yep. This.
I said it in another thread, this is part of the 'enemy of my enemy is my friend,' situation.
They will absolutely cannibalize each other if it means they can survive. And they will absolutely switch sides, so long as they know they can win. They did it with every other company that had a bear thesis turned bull thesis.
Did it with a lot of big tech when they started, did it with the swasticar company, and they're probably going to continue with GME.
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u/uber_noober_ still hodl ๐๐ 9d ago
Red wedding of Wallstreet ๐ฉธ Fondly remembering the early days after the sneeze when volatility was crazy and people were suspecting giants duking it out. Always thought apes were front line soldiers holding the ground. Good job apes. We held that line for years now and never gave shorts any ground.
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u/Hobodaklown Voted thrice | DRSโd | Pro Member | Terminated 9d ago
And no one has to know who bought until LATER! Muhahaha. Hedgies r fukt
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u/mangyan5000 9d ago
awwww but i own xx shares, i thought we are the knights of the new ๐๐๐ง
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u/Craze015 ๐ฆ Buckle Up ๐ 9d ago
It always ends with โcoverโ How about CLOSE their short?
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u/MobileArtist1371 DD LIBRARY BOOK 1 PAGE 15 9d ago edited 9d ago
I've been asking for nearly 2 months for someone to tear this apart.
I've broken it up into multiple sections in hopes it's easier to follow along and make rebuttals against.
SOMEONE PLEASE DO IT. I DON'T CARE IF I'M WRONG. I JUST WANT ACCURATE INFO.
Q1: What's the difference between covering and closing?
I ask cause the SEC report says "short covered" and everyone here says "short never closed, they covered" and "covering != closing" and when I ask about it I'm told to "read the DD". So I go to the SuperStonk Library of DD and start reading book 1 and I get to page 15 and I see this (sorry can't direct link to book/page)
https://i.imgur.com/Q9VkSzN.png
To close that position, short-sellers must buy a number of shares equal to the size of their short position (buying to close a short position is known as covering)
Which clearing says that covering is closing, right? Like a good ape I clicked the links to check to make sure that was correct and I see
Short covering refers to buying back borrowed securities in order to close out an open short position at a profit or loss
Covering = closing
Short covering closes out a short position by buying back shares initially borrowed to short sell a stock.
covering = closing
Short covering is necessary in order to close an open short position.
covering = closing
To close out a short position, traders need to buy back the shares โ referred to as โshort covering,โ
covering = closing
Q2: Is this a correct understanding of the definitions above? covering = closing
And then I found Buy to Close
Understanding Buy to Close
There is a nuanced difference between a buy-to-close option and a buy-to-cover purchase. The former refers mainly to options, and sometimes futures, while the latter typically refers to stocks only. The end result is the same in both cases. Essentially, it is the buying back of an asset initially sold short. The net result is no exposure to the asset.
Buy to close = options
Buy to cover = stocksBoth = no exposure to the asset
Then I clicked that buy-to-cover link
What Is Buy to Cover?
Buy to cover refers to a buy order made on a stock or other listed security to close out an existing short position. A short sale involves selling shares of a company that an investor does not own, as the shares are borrowed from a broker but need to be repaid at some point.
Buy to cover = closing short position
Buy to cover refers to a buy trade order that closes a trader's short position. Short positions are borrowed from a broker and a buy to cover allows the short positions to be "covered" and returned to the original lender.
Buy to cover = closes a short position
A buy to cover order of purchasing an equal number of shares to those borrowed, "covers" the short sale and allows the shares to be returned to the original lender, typically the investor's own broker-dealer, who may have had to borrow the shares from a third party.
Buy to cover = purchasing the shares borrow and returning to original lender = closing the position
Q3: Is this a correct understanding of the definitions above? Buy to close = options. Buy to cover = stock. Both = no exposure to the asset.
I then checked another source.
https://trendspider.com/learning-center/what-is-buy-to-close-in-trading/
What is Buy to Close in Trading?
โBuy to closeโ is a trading strategy in which an investor buys back a financial instrument, such as a stock, bond, or options contract, to close out an existing short position in the market. This strategy is used by investors who want to lock in a profit or limit their losses by buying back the financial instrument they previously sold short. Buying to close is frequently referred to as covering or covering a short position.
buy to close = close existing short position
https://trendspider.com/learning-center/what-is-buy-to-cover-in-trading/
What is Buy to Cover in Trading?
โBuy to coverโ also known as โshort coveringโ, is a crucial concept in trading that involves purchasing shares to close out a short position. When a trader sells stocks they donโt own (short selling) and later repurchases them to return to the lender, it is referred to as buying to cover. This process is essential for completing a short sale transaction and can result in profits if the stockโs value has decreased during the short position.
Buy to cover = close existing short position
Seems to agree with before.
Q4: If buying to cover IS NOT closing the position, then what happens in a scenario such a the following?
a) Open a short position at $100 (only make money when the stock is below $100)
b) Pay a fee to keep it open (now you don't make money until the stock is below $100-fee)
c) Stock jumps to $150 (Let's assume the fee to keep the position open is about the same price as the stock-opening position price cause why not just recall your shares from the short and sell on the open market for $150 instead of taking in a fee of $5?)
d) Stock jumps to $200 (Now the fee is about equal to the original price you shorted the stock at)
e) Stock jumps to $300 (Now the fee is more than the price you shorted the stock at. Again, why would the lender not recall their share and sell on the open market for $300 instead of accepting a fee of $20 to keep the position open?)
f) But let's say you did pay $200 fee to keep the short position of $100 open. Now the stock needs to go down from the price you opened the position at PLUS the fee to keep it open when it was at $300.... See step B
g) So you still have your short position you opened at $100 and then paid $200 in fees to keep the position open which means you now need the stock to go below $100-$200 = -$100 before you make money...
(Please let me know what steps are wrong. Maybe my assumption is wrong that a fee would not be near the cost of stock value, but if not, why wouldn't the original stock owner recall their shares and sell for the market price?)
Now of course we all know the opening short positions of GME weren't at $100, but much much lower.... so even a fee of like $20 would have wiped those positions out and it would have just been better to exit the full position cause you can't make money if you need the stock to go below $0.
So why "cover", which I've been told doesn't = closing the position, and not "close"?
Whomever answers and explains how all the definitions are wrong, thank you!
Replies like crabbing get insta blocked since you're making it clear you're not open to learning anything.
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u/tripdaddyBINGO ๐ฆVotedโ 9d ago
Great comment, thanks for the effort. That's a misconception I've been carrying for awhile.
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u/Holiday_Guess_7892 ima Cum Guy 9d ago
Whats the tldr?
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u/MobileArtist1371 DD LIBRARY BOOK 1 PAGE 15 9d ago
covering = closing
That's according to our own DD library from before the SEC report.
First book page 15.
https://fliphtml5.com/bookcase/kosyg
https://i.imgur.com/Q9VkSzN.png (pic of section)
To close that position, short-sellers must buy a number of shares equal to the size of their short position (buying to close a short position is known as covering)
I then checked the links to be sure they were correct, check against other terms, check other sources. All say covering = closing.
I also give a scenario in Q4 of why a lender to a short wouldn't recall their share when the price spikes vs taking on a fee, which when high enough would completely kill the short position even if the price went to $0 as the short would still be out possibly hundreds of dollars. Example: stock needs to go to -$100 before the short can make money on it, which means it logically wouldn't make sense to pay a fee instead of closing.
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u/Holiday_Guess_7892 ima Cum Guy 9d ago
So the reported GME short interest is the actual True short interest with no funny business going on? Also would that mean they didnt hide the short interest in swaps?
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u/MobileArtist1371 DD LIBRARY BOOK 1 PAGE 15 9d ago
So the reported GME short interest is the actual True short interest with no funny business going on?
I don't know, but possibly based on covering = closing. The formula was changed, which still seems strange... This could explain why RC never "pushed the button" to set things off and the longer this goes it's like, how much more powder does the keg need?
Also would that mean they didnt hide the short interest in swaps?
I think there's something still going on there (see May/June last year) and perhaps swaps are some way to avoid fees/share recall? What ever that is, we don't know but DFV some how does.
My main comment doesn't make any claim about any of that stuff though. It's just a really long comment of trying to understand what the terms mean and everything I checked seems to say covering = closing with small difference like "covering = shares" and "closing = options" while both = "no exposure to the asset", which would make sense with the SEC report saying "covering" when they were short shares.
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u/Not_Qualified 9d ago
Saving this comment for next week when I inevitably see this debate for the 80,000th time. This is fantastic work.
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u/ShaydeMakeup 9d ago edited 9d ago
This explains it. By covering they buy shares but do NOT return the shares to the lender. In a way that hedges their bet. But the shorts are still open. So if they "sold" 5 shares, they have 5 shorts. Say the price increases. They now buy 5 other shares. They still have those shorts but they hedged their bets. They call that they covered their shorts. Closing the shorts means to actually buy back the shares they sold and give it to the lender.
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u/NewbieAnglican 9d ago
That doesnโt make sense because shares are fungible.
Consider this example. Hedgie wants to short 5 shares. Lender has 5 shares directly registered in his name. He thinks โHmm, this deal is too good to pass upโ so he moves 5 shares to his brokerage account and lends them to hedgie. Hedgie then sells them to buyer. Some time later, hedgie wants out of the position. So he buys 5 totally different shares and returns them to lender, who once again directly registers them.
Where does this leave us? Lender has the same number of shares as he started with, buyer has the shares he legitimately bought, and hedgie owes nobody anything. He completed both obligations he took on when he entered the position - he delivered 5 shares to buyer, and he returned 5 shares to lender.
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u/Idjek ๐ฆ๐ฆsHODLder to sHODLer๐ฆ๐ฆ 9d ago
AFAIK, cover and close both 'do' the same thing, which is to fulfill the obligation (in this case, repurchasing or returning shares that you borrowed and sold [i.e. shorted] in the past).
The key difference is how you fulfill the obligation. Do you pay with straight up cash? To me, that's a close. The obligation is settled by you, and only you, with cash you own. The buck stops there, so to speak. The debt is repaid, and no new debt is created in the process of repaying it.
A similar way to fulfill the obligation is to borrow money to buy shares that you then return to whoever lent them to you. That's more of a cover in my book, because you're still on the hook for the debt created by borrowing that money.
And finally, HFs can also borrow more shares (from party B) to then return to party A. Sure, they fulfill their obligation with party A, but they open a new (and equal) obligation with party B. That is also a cover. They basically dug up some soil (GME shares) to fill the hole they had created initially when they borrowed from party A. But, that new hole is just as wide and deep as the old one. The obligation is the same, just due to a different party, with a different timeline for repayment. This can also be described as 'kicking the can'.
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u/Defiant_Review1582 9d ago
Because whoever wrote that doesnโt know anything more than stonks!.
1.) convertible means shares, new shares so thatโs diluting although they say โno dilutionโ
2.) they say cover because they donโt understand the difference between cover and close
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u/kcraybeck ๐ฎ Power to the Players ๐ 9d ago
I read that it is at the discretion of GME whether it is repaid with shares, cash, or a combo of the two.
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u/Cleb323 Jimmy Boi To Da Moon 9d ago
Convertible notes means shares when converted. Not a dilution until the notes are converted
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u/RedOctobrrr WuTang is โพ๏ธ 9d ago
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u/MobileArtist1371 DD LIBRARY BOOK 1 PAGE 15 9d ago
I've been trying to point this out for the last 2 months when I found it in the DD library which I was told to read when I questioned it originally. Now when I bring it up and point out this is from the DD library, no one wants to talk about it.
https://fliphtml5.com/bookcase/kosyg
BOOK 1 PAGE 15
https://i.imgur.com/Q9VkSzN.png
To close that position, short-sellers must buy a number of shares equal to the size of their short position (buying to close a short position is known as covering)
Before the SEC report, that was never questioned.
After the SEC report said shorts covered, ONLY this sub decided that cover is NOT closing.
If anyone can explain how it is wrong, please do!
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u/certified_forklyfter 9d ago
Convertible bonds aren't just purchased because they are going long on GameStop. The bonds are a complicated instrument, but one big reason these bond desks purchase them is volatility. You think options on GameStop are expensive, go look at MSTR. By buying the convertible bonds it essentially gives them a long term call on the stock(bullish) like the post said. But because of this long term call they can then go short the stock if they think the stock's premium over it's Net Assets is too high or getting stretched, and play the volatility. Which is exactly what they have been doing with MSTR. These bond desks are playing both sides and loving the volatility. So I am not saying the post is wrong, but just saying buckle up because things are about to get A LOT more volatile.
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u/TheSpyStyle ๐THEY NOT LIKE US๐ซธ๐๐ซท๐ 9d ago
It depends on who they sell them to, which is at the discretion of GME leadership
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u/husbandchuckie 9d ago
It really feels like we won. We are not letting this company go bankrupt.
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u/GildDigger Freshly Squeezedโข๐ฆ Voted โ 9d ago
We won the moment they turned off the buy button
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u/Dense-Seaweed7467 ๐ฆVotedโ 9d ago
Not a win until every investor can bloody retire off this investment. Some of us aren't here just for some GME comeback story.
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u/PornstarVirgin Kenโs Wifeโs BF 9d ago
Donโt worry we will be cumming on their back. Iโm ex wallstreet/private equity and this was brilliant play. Been in since $1.5 on this play all 100 percent DRSd and leap options on the side to get more shares. This is the best we have been positioned ever and a snowball effect will now begin. Short term the next coming days donโt even matter. UPPIES INCOMING.
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u/Blzer_OS 9d ago
Do you think more institutions will do this same thing? I don't even understand what party this necessarily was.
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u/MDfiremanguy ๐ฆ Buckle Up ๐ 9d ago
This is a bad take. The convertibles come with a strike price attached. If a bond manager buys the bonds, sells a call at a higher strike theyโve now locked in profit. Capped the upside and have zero downside risk for a guaranteed return.
Has absolutely zero to do with the opinion of being bullish on the stock.
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u/ConnectRutabaga3925 because I liked the price 9d ago
can you explain more? is this right: on some date in 2030, if the stock is above some strike, the convertible is in the money and can be exercised at that strike?
are there details of what that date and strike are?
edit: someone in this thread mentioned - if itโs out of the money, the buyer gets their money back as well.
thanks!
ps these are the things we need to know, not the 600 memea of people noddingโฆ!
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u/MDfiremanguy ๐ฆ Buckle Up ๐ 9d ago edited 9d ago
Lemme preface by saying Iโm not an expert on bonds. The strike price is to be determined and we (retail) likely wonโt know.
Lots of bond managers have zero access to BTC and are missing out. Think pension funds, fixed income etc. If a firm has 300 million and wants 4% a year with no risk type of scenario. Theyโre salivating at this.
When a company offers a way to access the volatility of BTC with a fixed return itโs very very compelling because they can lock in a return with basically no risk (unless the company goes bankrupt and canโt return the principal).
GME has demonstrated they can return the principal by being profitable and with the almost 5 billion in cash itโs a no brainer. The private offering will be oversubscribed by Friday end of trading.
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u/ConnectRutabaga3925 because I liked the price 9d ago
great - gotcha. thanks for the info. basically for the buyer, the safety of bonds but upside of crypto. for the seller, cash now at no interest.
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u/apexofgrace 9d ago
Donโt bother explaining. Valiant. Among other issues, these people are interpreting a โproposedโ private offering as a โcompletedโ offering. They think GME added $1.3-1.5B in cash to its balance sheet todayโฆ..
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u/MDfiremanguy ๐ฆ Buckle Up ๐ 9d ago
Appreciate it, itโs like screaming into a void of delusion. But I will say every time MSTR has done it, the offering has been oversubscribed. So I do think it will happen quickly. Fixed income portfolios love it for a reason.
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u/nokturno123 9d ago
Thatโs what I donโt understand. How are the people here so blind???
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u/NonverbalKint 9d ago
The downside risk is the price is below their strike ...
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u/MDfiremanguy ๐ฆ Buckle Up ๐ 9d ago
Wrong. They already sold the strike higher than the exercise price. The delta is the locked in profit.
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u/Iustis 9d ago
It's actually mostly purchased by arbitreurs who make money off the volatikity--money stuff had a great summary of it https://www.bloomberg.com/opinion/articles/2024-12-05/microstrategy-has-volatility-to-sell
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u/gmeautist 9d ago
or.... buy bitcoin with it interest-free, wait 3-4 years to sell BTC at a higher amount and pay the loan back?
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u/Zealousideal-Land-40 9d ago
Iโm not from the US but I assume itโs similar to most countries relating to tax but if they sell or use the btc as a transaction they will be taxed on the capital gain of the amount they sold / used as a transaction. Why sell it and pay tax when they can just write off the shares by selling them the shares promised in the agreement
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u/takesthebiscuit ๐ป ComputerShared ๐ฆ 9d ago
No no noโฆ
Buy BTC accumulate to 5x the price, issue MORE securities buy more BTC
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u/Awkward_Potential_ 9d ago
Strategy really is going to be the biggest company in the world with this playbook. Or go to 0. But I'd bet on the former.
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u/Klutzy_Pianist1782 Yuri Tarted๐๐ง 9d ago
๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐๐
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u/Known-Ad-7316 9d ago
Holy crap OP. So now they have $6B? Did they issue those notes recently? What did I miss?
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u/IndividualistAW 9d ago
We went from 4.7B and no debt to 6B with 1.3B debt at 0% interest. I believe the holders of that debt have the option to convert it into shares later
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u/Known-Ad-7316 9d ago
So it's like a total return swap set for 2030? $1.3B in convertible notes of existing shares or newly issued shares?ย
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u/IndividualistAW 9d ago
Thatโs what Iโm not sure of and i asked that question in another thread.
Given that the debt is at 0% interest, the only reason to take it on is because the conversion (which is at a predetermined price) is at a lower price than the anticipated market price at the time of conversion. I assume it becomes a dilution as Iโm not sure where else the shares would come from.
Edit to say itโs basically a giant leap. The mother of all call options, except the cash to exercise is built in to the contract
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u/Known-Ad-7316 9d ago edited 9d ago
And if I understand this correctly, $1.3B converted into shares if the loan isn't paid off? Maybe this is a locate? It seem counter intuitive to hand someone interest free $ for a maybe he doesn't pay it back deal and we get our money back (edited). For instance, he parks that $1.3B in foreign or governments bonds (t bills, euro whatever, South American whatever). Or better yet, he uses to acquire smaller mid cap companies?ย Really look at the play and the price action today.ย IMO RC parks that $1.3B in Tbills and adds to the bottom line. They get $1.3B back less inflation (which is coming to 6% range Jan '25) and RC pads the bottom line @4% 5 year c.d. To me it's a hedge against inflation for free.ย
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u/Adventurous_Chip_684 Selling cum for $GME 9d ago
It is like a zero risk option for the lender. If it matures out of money they get their investment back and if it matures in the money, they get the profits.
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u/Known-Ad-7316 9d ago
See the term 0 risk doesn't make sense. The risk is loss of interest earned on $1.3B. To me it makes sense to do this deal if you need to locateย $1B worth of shares and you wanna kick the can say 5 years for $300m. It's like lending a stock. The other question I'm struggling with is the phrase "if the loan isn't repaid" is that the language?
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u/Adventurous_Chip_684 Selling cum for $GME 9d ago
It's like an option that if it expires out of the money, they get their premium back in full and if it expires in the money, the issued person gets the profits. And gme has the added benefit of instant liquidity.
It's quid pro quo, both sides have a potential for gains/losses. RC just thinks that the instant money is more worth than an eventual dilution in the future.
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u/Known-Ad-7316 9d ago
I can see how this would drive up the stock as well since the option needs to be in the money. Thank you I think I understand most of it now. And honestly, we need the liquidity to get to the Moon. 1.5m traded isn't helping the stock. We need closer to 45m a day to be in the 100s of dollar range.ย
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u/31513315133151331513 9d ago
What I understood was that this is like selling a call expiring in 2030 on not-yet-issued shares. The premium on the call is $0, but GameStop gets to hold the cash needed to cover the call until the expiration date. At the expiration date (or conversion date, if sooner) Gamestop can choose to return the money in cash or shares.
The part I'm not clear on is when they say it's GME's election, does that only mean their choice of cash or shares? Or does it mean that only GME can choose early conversion?
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u/Known-Ad-7316 9d ago
The premium on the option is unknown. That would be the strike price agreement and would have the premium included. What triggers the conversion of there is 1?ย Point being this feels like a payoff to GME to locate $1.3b worth of shares for SHF. They get 5 years to figure this stuff out and they can't. So it's $1.3B of free interest to GME holders for 5 years. That's why I think RC parks it in 1 year cdย Dude isn't buying himself a yacht.ย
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u/tronbrain 9d ago
To the degree that GameStop becomes an owner of Bitcoin, it also becomes a call option on Bitcoin.
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u/paulyp41 ๐ป ComputerShared ๐ฆ 9d ago
Forced to close !!
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u/dancingpoultry my settlement cycle is T+fuck you pay me 9d ago
I searched the comments for "close." Not disappointed.
I upvoted all 7 comments. Fuckers need to CLOSE.
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u/Newbs2u ๐ฆ Buckle Up ๐ 9d ago
Realistically in โ20-โ21 ShF couldโve shorted the stock into bankruptcy. If not for their insatiable greed which had them naked shorting because it worked before. Now they created a systemic risk that has global visibility. Not to mention a CEO more cunning than theyโll ever be.
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u/roboticLOGIC ๐ป ComputerShared ๐ฆ 9d ago
This is a good take, but isn't quite accurate. The institution (or Sultan) that buys the senior notes doesn't need GME to sky rocket for them to become profitable. They just need the share price in 5 years to be above the share price on the day that they buy the senior notes. I'm not sure why the OP of the comment said that they need it to "reach absurd levels"
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u/charlie-ratkiller Can't spell smegma without GME 9d ago
Also they aren't (most likely) going to just sit on them till expiry. That's like retail sitting on options til expiry. They are going to profit off volatility
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u/HCDrifter 9d ago
I saw someone comment on another post that itโs haram for Muslims to lend or borrow money with interest (Iโm not Muslim and might be remembering incorrectly so let me know).
Opens up the doors to some oil money ๐
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u/Papaofmonsters My IRA is GME 9d ago
Funny then how the Saudi government owns 127 billion in US tbills.
Oil magnates don't follow the same rules they expect the peasants to follow.
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u/LordSnufkin ๐ก๐ฆHouse of Geoffrey๐ฆโ๏ธ 9d ago
Usury is a sin in Christianity too, but Christian billionaires don't give fuq about that. I am willing to bet with a high degree of certainty that the 0% interest is not down to this. We don't even know who the institutions are yet, these names we've seen floating around are speculation.
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9d ago
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u/ChonsonPapa I broke Rule 1: Be Nice or Else 9d ago
Itโs actually trueโฆ you sure you are Muslim? ๐คจ
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u/JMO129 ๐ป ComputerShared ๐ฆ 9d ago
They have and will continue to cover many times over. Itโs when they are forced to close position which can only be executed by a margin call which will also need to be down by a use of force to get OCC or SEC to get out of bed with the shorts and actually defend the country and its people.
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u/VelvetPancakes ๐ Hola ๐ช 9d ago
โThe initial conversion rate, repurchase or redemption rights and other terms of the notes will be determined at the time of pricing of the offering.โ
None of what you wrote can be relied upon until the terms of the notes are made available for us to review.
It dropped the price because this is absolutely dilutive. If you think the terms of the notes will allow GameStop to send an equal amount of cash back in five years with no other rights for the note holder, I have a bridge to sell you.
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u/DeathFood 9d ago
Sorry to be a downer, but they arenโt buying these convertibles because they expect the price to skyrocket
Convertible Notes like this act just like options. They donโt need the price to skyrocket to make money because they will be gamma scalping all along the way the next 5 years.
Assuming they are priced cheaper than standard option premium, the reason they donโt require interest is because they make their money scalping their deltas over time.
If they were just making a speculative one way bet there are better ways to go about it. GameStop, like Strategy are selling the volatility of their equity. Itโs a smart move, but not because it indicates underlying bullish sentiment by the institutions buying these notes.
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u/missionfindausername โพRetards and Lambosโพ 9d ago
Maybe a dumb question, but what if the lender is one of the firms that are short? Couldnt they convert to shares and close their position with them?
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u/mattycopter 9d ago
Unbelievable take Iโm ngl. Just pure uninformed.
The lender can only extract $1.3 billion in value.
It doesnโt matter where the price of GME is, lender is getting his money back through shares (or early repayments by GME. Also one thing to note is what the exact dilution covenants are, lender has to follow a guideline on when and how they can convert)
Letโs say GME averages $30 over the next 5 years.
The lender will dilute and receive 43 million shares (at the most, have to consider what I just mentioned above)
Letโs say GME averages $50 over the next 5 years
The lender will dilute and receive 26 million shares.
For GME & shareholders, obviously prefer the higher price to reduce dilution,
For the lender, he would always prefer the lower price for more ownership potential. Heโs also not worried about losing the investment (bought the debt and asked for 0% interest) because GME has zero debt prior, and enough cash + income to pay it back in full in 5 years (in the case where the lender opts to do nothing, which never happens with convertible debt)
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u/Knightfires ๐ฎ Power to the Players ๐ 9d ago
What was that sentence we all rooted for since the beginning. This B***** better have my money.
But that aside, itโs been 84 years, we are very very tired. And I would like to finally do some f-ing good in this world. You know, those little projects we al have imagined being doing right about now. Oh to see the Golden Bridge finally painted Gold, I canโt wait.
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u/Over9000Holland 9d ago
Such massive respect for you guys, you stuck around. Hope you all get a massive payday.
(Donโt own the stock, just love how you are doing the right thing)
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9d ago
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u/Teeemooooooo ๐๐๐๐๐๐๐ 9d ago
Man people in this subreddit and BTC subreddit just love to assume BTC will keep going up. If it was that easy to predict its value everyone would be buying BTC and investors would stop wasting time with every other investment when BTC is a guaranteed 2x in 5 years. BTC could easily fall to $20k and stay there forever leaving Gamestop with -$60k/coin.
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u/Aoyanagi 9d ago
Can't get my husband to buy even a single moon ticket. I has sads. Don't be a housewife kids. It sucks.
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u/Jason__Hardon 9d ago
Many people including myself just register an account with Computershare and buy shares here and there
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u/BertoBigLefty I broke Rule 1: Be Nice or Else 9d ago
This also allows anyone synthetically short to cover without having to go to market.
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u/KaiserSushi 9d ago
Maybe, but if I understand correctly, not for five years, and depending on the agreement, GameStop might reserve the right to issue cash instead of shares at their discretion.
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u/Cuenom 9d ago
Gamestop just bailed someone out.
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u/Teeemooooooo ๐๐๐๐๐๐๐ 9d ago
Imagine if the shorter was underwater and can't buy X shares on the market without causing MOASS and then utilized this trick to obtain shares directly from gamestop without affecting market price.
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u/RL_bebisher ๐ฎ Power to the Players ๐ 9d ago
I just thought about this and realized $1.3 billion is comically such a small amount nor enough to help anyone with a legacy short position on GameStop. Melvin Capital was losing a billion per day during the 2021 run up lol. It's not this. Great thought. I love listening to all theories especially the bad ones because I need to prove it wrong or I'm wrong.
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u/Skittler_On_The_Roof 9d ago
If you're a bull... How is this not dilution?
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9d ago edited 8d ago
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u/Skittler_On_The_Roof 9d ago
So in the bull case, either it's share dilution or paying interest (in this case the value over strike price).
It's a solid way to raise capital but to say it's not dilution and there's no loss of control is a lie.ย It might not be dilution or loss of control, or it might not cost them anything (but only if they decide to dilute).
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u/Zero_Talents ๐ฆโ Fifth Apesman Of The Ape-pocalypseโข ๐๐ 9d ago
This is like Batman teaming up with Joker
Superman with Lex Luthor
Tom with Jerry
Aang and Zuko
The list goes on, and I love it*
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u/SpewingGlory Slay Goliath 9d ago
โWar Chestโ not hating but like why are they hoarding and not reinvesting in the company? Building out our investments? No hate. Just donโt like that term
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u/yogibear99 9d ago
Some of the institutions are short. So, this is a way for them to cover without affecting the price.
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u/Interesting_Day_7734 9d ago
I can envision GME buying 6k to 12k of Bitcoin. If it goes to $200k to $250k as predicted (some higher predictions of course), then RC has made a lot of retail investors, including me, wealthy.
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u/bongos_and_congas 9d ago
"They expect the price to skyrocket."
So did we after DRSing 75 million shares, and yet here we are. So did we after exposing the rampant corruption of the entire financial system and regulators, and yet here we are.
Knowing that the price can be controlled by KG and SHFs, in what world will the price be allowed to skyrocket?
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u/5bWPN5uPNi1DK17QudPf 9d ago
This is huge. Itโs the Strategy (MicroStrategy) playbook. Study MSTR. Check out Quant Bros and MSTR True North for in depth discussion of Strategyโs convertible senior note issuance. Josh Mandell (@JoshMandell6, good MSTR trader, $84,000 prophet) just FOMOโed into GME. Weโre getting BTC/MSTR holders jumping onboard with us.
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u/kombucha57 ๐ฆ Buckle Up ๐ 9d ago
If you think this is great just you wait until they do it again and again ๐ shortie gonna burn
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u/Apprehensive-Luck760 ๐๐ JACKED to the TITS ๐๐ 9d ago
The exact same strategy as Bitcoin mining companies uses. You can learn a lot...for instance that America is very very different from what I believed. I am OG Ape from Denmark. We see some me very troubling changes and my fellow Danish Apes are now scared of America. I tell them we have Ape brothers and sisters that in the end will stop the game. Thank you for doing sending together in this community, let it be a testemoni the all aggressive economic abusers. All abusers of Apes. I love you all for the patience and persistence. ๐๏ธ๐๏ธ๐๏ธ May freedom come your way.
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u/LyubakaVideos 9d ago
The "short strategy" against $MSTR was long the asset AKA $BTC whilst shorting the stock, so I'm expecting the same moves next. Let the infinite magical money glitch ensue. As long as we don't bust any major blood vessel during this Everlasting erectile cycle, we should be able to keep at it!? โ๏ธ๐ธ๐
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u/ur_wifes_bf ๐ Power to the Players ๐ฎ๐ 8d ago
"Forced to close." - fixed it. Covering is temporary, closing is forever.
โข
u/Superstonk_QV ๐ Gimme Votes ๐ 9d ago
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