Since this is a really great post, I want to add some additional explanation of the situation as it relates to the hedge fund itself.
There are a lot of types of hedge funds. Some mange company assets, some manage large amounts of individuals savings (think 401k, retirement funds, etc. en mass).
This is NOT one of those hedge funds. I was worried that this was going to destroy some average citizens, so I did some research. First of all, Plotkin, the founder, has been involved in insider trading before. That should give you an idea of the business practices going into this.
This hedge fund, Melvin Capital, manages $12.5 billion for 7 individual clients.
Not 7 companies. 7 individuals.
This is a company built with the sole intention of making billionaires richer by artificially manipulating the stock market and gaming the system.
They just got called out for it this time.
Hedge funds shorted more than 100% of all shares of gamestop, to do this that means they had to sell more shares than actually existed.
The hedge funds never actually owned these shares to begin with because they were short selling so they never actually paid for them.
Redditors saw this and decided to buy up all these shorted shares to gamestop a company that wasnt failing that the hedge funds would then be forced to buy back as they never actually owned the shares.
The beauty of this is if you knew what to look for you could’ve seen this coming too. It isn’t mystical, it isn’t magic. They made these billionaires pay back more than what they basically stole by being greedy, this is a good thing.