| Author | Source |
|---|---|
| u/luridess |
u/luridess on her way to đŚ, đŚ, & đ LLP
[Update: Thank you all for the kind words and comments. Iâve responded to some of you at the bottom of my post in order to keep the conversation going so that everyone can see it]
INTRODUCTION:
The Gamestop Saga is an ever-evolving story. We have all come such a long way from when we first got involved by buying our first stock, posting memes, and wondering what the heck is going on.
Weâve begun to dig deeper, look further, search for missing pieces, and connect the dots in order to paint a picture of what appears to be happening with Gamestop, Wall Street, naked short selling, and hedge funds.
What began as individuals posting their thoughts/DD back in February and March, has now turned into a global hivemind where people from all around the world are coming together to collaborate in an effort to share knowledge, and data. People who only know each other by their respective usernames are working together to collect and gather information and they are sharing it with the rest of the world for no reason other than to share information.
I think whatâs fascinating is not just the quality of the DD being posted, but the fact that the DD is coming from various angles: technical analysis, FTD cycles, dark pools, HFT, SEC filings, and US regulatory rule changes are some angles that come to mind.
Each of these angles tells part of a story. Each one is a chapter unto itself.
What Wall Street is so desperately afraid of is the power of the r/Superstonk hivemind to post their collective chapters here so that together we can create a book and tell a story.
WHEN WAS GAMESTOP SHORTED BY HEDGE FUNDS?
For a few weeks now, Iâve been trying to find the answer to this following question:
âWhen did Hedge Funds first start shorting GME?â
Being a lawyer, Iâm not good with stocks or the stock market in general. I asked around, but no one really seemed to have an answer. I didnât know where to go or what to search for, really, nor do I have any subscriptions to Bloomberg terminals or stock sites that provide this kind of data.
It was only when u/HomeDepotHank69 posted his DD today, which is another excellent collaboration by a number of r/Superstonk users, that I was able to get the answer (or as close to the answer as possible) that I needed in order to share my chapter of the Gamestop Saga with the community.
SI by the charts
Below is a chart that the quant apes gathered from Ortex showing the SI of the meme stocks over time. Many of you will say that this is inaccurate because the real SI is hidden. While we have many instances of that being true, this is the best concrete data that we can gather (much better than Fintel and FINRA), so itâs what we must use to avoid speculation. So, yes these numbers are probably an understatement but thatâs a good thing because we do not want to speculate. If we can find significant results on incomplete data, our thesis is strengthened:
[Credit to u/orangecatmasterrace]
MY PREVIOUS SEC LEGALESE TO APE SPEAK POSTS:
In my previous SEC Legalese to Ape Speak Posts, I shared information, made several thoughts/comments, went on a few rants, and also made a few predictions. That was my attempt to try and explain what I was seeing/reading and try to interpret it to plain-English.
I also shared my interpretations/thoughts/comments, as well as a few predictions, based on things that I was not seeing in Gamestopâs 10-K SEC filings.
A number of my theories turned out to be true.
My initial post had a side-by-side chart comparing Gamestopâs 2020 and 2021 SEC 10-K filings. I posted it as a table directly to reddit, so it was difficult to properly format/colour code/merge rows/boxes.
This time around, I made an excel spreadsheet and Iâve screenshotted it and uploaded it as pictures for you all, both to save text space but also to make it easier to follow along and read.
I now present to you my Magnum Opus:
How Gamestop is using its SEC 10-K filings to fight back against targeted Naked Short Selling
Gamestopâs SEC 10-K Filings: A side-by-side comparison of 2018-2021
(empty boxes means that the risk factor was not present in that yearâs SEC 10-K filing)
[Image 1]
[Image 2]
[Image 3]
[Image 4]
[Image 5]
[Image 6]
What does the side-by-side comparison tell us?
Well, a lot, actually.
But the most significant piece of the puzzle is the last image with the Itemized List of Credit Risks/Indebtedness.
As we all know by now, the strategy of a short seller is to never cover their shorts.
They achieve this by forcing a company into bankruptcy through stock price manipulation.
From 2017-2019, Gamestop was at risk of going bankrupt, making it a huge target for vultures hedge funds. They could smell blood, and as the chart provided by u/orangecatmasterrace in u/HomeDepotHank69âs DD showed, they started shorting Gamestop back in 2018, after their 2018 10-K SEC filing.
This went on for 3 years. It appeared as if things were getting worse for Gamestop:
It was in debt;
It was failing to attract key personnel;
It removed stock dividends;
It was falling behind to competitors like Amazon and Steam.
To Hedge Funds, it seemed like Gamestop was bleeding profusely, and this emboldened them to short the stock even further - they were gambling on what appeared to be a sure-fire win.
Gamestopâs 2021 10-K SEC Filing Changed the Game:
In my first post, I commented that:
In 2021, Gamestop changed their Business Risk Factor title from âRisks Related to our Businessâ to âRisks related to our ability to grow our businessâ;
In 2021, Gamestop completely removed their âRisks Relating to Indebtednessâ;
In 2021, Gamestop included, for the first time, âRisks Related to Our Common Stockâ and:
confirmed that âa large proportion of their stock has and may continue to be traded by short sellersâ
referenced a possible short squeeze in the future
I theorized some possible reasons for this in my first, second and third posts:
Gamestop no longer sees bankruptcy as a reasonable or forseeable risk factor in 2021
Gamestop is no longer in debt
Gamestop is confirming that its stock was shorted and may still be shorted
Recent events have shown that my theories were accurate.
Here are just some recent updates, for example:
Gamestop is now out of debt
Gamestop is thriving internationally (ex. updated its global websites)
Gamestop is working on an NFT
Gamestop has hired quality key personnel
Update: Gamestop is updating its e-commerce strategy (Forgot to add this in. This is important. See Image 3, Row 3, and my Update below)
Why would Gamestop do this?
The message that, I believe, Gamestop is sending its investors as well as those hedge funds who have shorted it is this:
Gamestop is not going anywhere.
Shorts must cover.
đđđđ
u/luridess out!
Edits/Updates:
New Observation as further proof that Gamestop is communicating with shareholders and hedgefunds: In 2021, Gamestop very sneakily referenced its e-commerce platform, for the first time, as a possible strategy for retaining customers due to store closures. See Image 3, Row 3. (I forgot to add this in my original post above).
Added e-commerce as another recent update example, which is important given the clues Gamestop left in its 2021 SEC 10-K filing
In response to u/Meegeekâs insightful comment:
Yes I agree with you - 10-K filings are the main communication tool for publicly-listed companies. Normally, these things are very dry and are only read by analysts/lawyers/professionals.
Itâs also obvious that this was the case with Gamestopâs previous 10-K filings.
I agree with you that Gamestopâs 2021 10-K filing is unique.
The fact that Gamestop confirmed that its shares were shorted as of January 31, 2021, to me seems like Gamestop is saying between the lines: We are aware of what is going on, we are aware that we are being targeted by naked short sellers who are betting on us going bankrupt, and we are implementing fundamental changes to the company as a way to fight back. Game on.
This is why we see not only a fundamental shift in risk factors, but also very specific language being used (For example, the addition of âe-commerceâ as possible strategy for retaining customers due to store closures. These tiny few words hinted at what was coming, something that most of us missed on the first read: Gamestopâs fundamental shift in its e-commerce strategy just weeks after filing its 10-K in March 2021)
My theory is that Hedge Funds probably have hundreds of people hired whose sole job is to go through each companyâs 10-K filings and determine, on a year-by-year basis, which companies look like they will go bankrupt in the next few years or so. Then, armed with that information, they go after those companies. The side-by-side comparison of Gamestopâs 10-K filings seems to be a perfect example of that, right up until 2021.
In response to u/readitfanâs comment: I updated the image caption on the Mic Drop to reflect your comment. :)
In response to u/eastrodâs comment:
Thank you. I will certainly take a look at Gamestopâs 8-K after itâs posted and share my thoughts. Iâm subscribed to their SEC Filing RSS feed.
In the meantime, hereâs a link to last yearâs SEC 8-K, filed on June 18, 2020 after their June 12, 2020 shareholderâs meeting.
Hereâs the relevant wording used last year:âOn June 12, 2020, the Company held its annual meeting of stockholders (the âAnnual Meetingâ). At the Annual Meeting, the stockholders voted on: (1) the election of directors; (2) an advisory non-binding resolution regarding the compensation of the Companyâs named executive officers; and (3) the ratification of the appointment of Deloitte & Touche LLP as the Companyâs independent registered public accounting firm for the fiscal year ending January 30, 2021.First Coast Results, Inc., the independent inspector of the elections (the âInspectorâ) for the Annual Meeting, delivered its final vote tabulation on June 17, 2020 that certified the voting results for each of the matters that were submitted to a vote at the Annual Meeting. According to the Inspectorâs final tabulation of voting, stockholders representing 42,886,817 shares, or 66.4% of the Companyâs common stock outstanding as of the record date for the Annual Meeting, were present in person or were represented by proxy at the Annual Meeting.â
In response to u/eastrodâs comment: I COMPLETELY FORGOT ABOUT THAT! Youâre right. Although I didnât know what was going on at the time, I did spot Gamestop slowly trickling shares into the market back on April 15 but no one listened to me đĽ
EASTER EGG UPDATE: Another forgotten Easter Egg that I noticed in Gamestopâs April 15 SEC filing but didnât know what was happening (because I completely forgot about this until u/eastrod mentioned it in a comment below)
I posted this a month ago in response to some of the conspiracy theories out there about me. It didnât gain a lot of traction and so not many people saw what I spotted: That Gamestopâs total share count was higher on April 15 than it had been when it filed its 10-K in March.
In that post, I basically said:
âIf you đŚs do want to spend some time and energy chasing something, maybe you should try to figure out how Gamestop suddenly has 835,950 MORE shares as of April 15, than it did when it filed its 2021 SEC filing.
Could be nothing, could be something. I donât have enough wrinkles to figure that out. Iâm just good at spotting differences.â
My comment was dismissed, and no one bothered to follow up on that SEC filing.
It was only after the fact that we all realized this was Gamestop slowly trickling shares into the marketâŚ