The aftermath of the Gamestop incident in the market may not be shortlived, if this WaPo/Bloomberg article is to be believed. I found this particularly interesting, even if I don’t pretend to do short-selling:
Short sellers — funds that borrow a stock and sell it, betting that the price will have gone down by the time they have to buy it to give it back — have become the target. Such firms usually would unveil a new position to great fanfare, expecting to cast a cloud over the company’s shares. The scrum this year over GameStop — in which retail traders went head-to-head with short-selling firm Citron Research — suggests that could become a thing of the past, and in fact, Citron’s Andrew Left announced on Jan. 29 that the firm will no longer publish short selling research. A hedge fund or short-seller advertising a bet against a stock might now be the equivalent of waving a red flag to r/wallstreetbets’ herd of bulls: a signal to charge in with call options and force a move higher. The predators have turned prey.
What catches my eye and my thought is false advertising by firms that they’re taking short positions, when their position is actually long. It could be as simple as a whisper campaign, nothing official but definitely there. Wave the red flag, ride the share price up, then get off. It’s a bit of a reverse of the old pump ‘n dump, but only executable by reputable, but perhaps disliked, firms.
And now I’m seeing a market niche for marketeers striving to make your investment firm just a little bit disliked…
