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- Monday - August 8, 2022
Monday - August 8, 2022
Mother Squeezer
August 08, 2022
Today's newsletter will take 4.99 minutes to read.
DRS UPDATE: 51.419*% (estimated percent of shares direct registered)
*source: Computershared.net
How do you make time go fast on Monday?
Throw a clock! /joke
A lot of people have a hard time getting going on Mondays. We must be freaks, we can't wait to get started!
Wow - what a week last week was. We ended it strong and come into this one with a lot of velocity!
Good Morning! This is Mother Squeezer, the fun newsletter bringing you updates and insights about our favorite Activist Investor, Ryan Cohen, and our favorite stocks - GME and BBBY.
We're not sure what surprised us more, BBBY closing up over 30% or GME closing $5 over max pain. Sure, we expected a typical uptick after open but both stocks reminded us that sometimes you need to throw trends out the window. Harold and the short sellers can't be happy.
We imagine this is what the short sellers are looking like this morning
Bed Bath and Beyond
BBBY pumped higher right out of the gate again on Friday. The r/wallstreetbets force is not one to underestimate. Momentum in the subreddit appears to be growing. The stock showed strength all day quickly bouncing back after the measly selloffs that occurred a few times throughout the day. Volume was incredibly strong. Over 52 million shares were traded. That's almost 4x over average volume! We ended the session a dime and three pennies below the high of $8.29, closing at $8.16.
Yet again, the borrowable shares never appeared en mass during the trading day. There was never more than 30,000 available. There was 60,000 shares at its peak over the weekend available to borrow of which 58,000 were borrowed already. The cost to borrow is 5.76%.
There doesn't seem like a whole lot is there to slow BBBY down today, let's see how high it'll run!
GameStop
This is how you make momma proud. GameStop closed up 4.33% ending the day at $40.02. On Friday, we exceeded the average trading volume for the second time last week. There were just shy of 8 million shares that were exchanged, coming in at almost double the average trading volume of 4.85 million shares. This was an impressive performance for such a manipulated stock.
There were 250,000 shares available to borrow at its peak on Friday, We ended the trading day with 200,000 available. Today, we're starting out with 30,000 available. We're closely watching to see if these shares get borrowed and are used to attack the stock price. Prepare for another battle!
On Friday, after market closed, GameStop released this statement:
On July 6, 2022, GameStop announced a 4-for-1 stock split in the form of a stock dividend, effective as of July 21, 2022, for stockholders of record on July 18, 2022. Tax information related to this stock split can be found here.
GameStop Guidance for International Stockholders with Split-Related Questions
GameStop has notified its transfer agent and the Depository Trust Company (“DTC”) that some of our valued stockholders in international geographies are still trying to determine if they have received the proper stock dividend associated with the Company’s recent 4-for-1 stock split. Please note GameStop has already distributed the shares of common stock required for the stock dividend to its transfer agent, which has confirmed it subsequently distributed the appropriate number of shares of common stock to DTC for allocation to brokerage firms and other participants. We recommend that stockholders using a brokerage firm contact that firm with needs or questions. Stockholders may want to make their brokerage firm aware if they recently moved shares to the Company’s direct registered list, as we have been informed this move could impact a firm’s distribution of shares.
We appreciate your investment and enthusiasm. Although we are not able to engage with individual brokerage firms, we are monitoring this situation and will keep you informed of any relevant updates we obtain through our transfer agent or DTC.
We commend GameStop for doing this. There is a lot of confusion right now due to how the brokers have handled the split. GameStop makes it abundantly clear that the issue lies solely on the DTCC. Shots fired!
This is most likely a direct result of all the synthetic shares out there, which leads us to talk about FTDs. More on this below.
Did you know?
As of July 14 2022, there were over $32 million worth of GME shares that failed to deliver. The next FTD update will be available next week.
FTDs
No, not something you need to get tested for. We're talking about Failures to Deliver. There's a lot of talk with GME and BBBY about the shear numbers of FTDs and the correlation with naked shorting.
Investopedia gives us this definition:
Failure to deliver (FTD) refers to a situation where one party in a trading contract (whether it's shares, futures, options, or forward contracts) doesn't deliver on their obligation. Such failures occur when a buyer (the party with a long position) doesn't have enough money to take delivery and pay for the transaction at settlement.A failure can also occur when the seller (the party with a short position) does not own all or any of the underlying assets required at settlement, and so cannot make the delivery.
So what does this really mean? Simply put, it's theft. If you were to go into WallyWorld and "fail to deliver" this would mean you walked out without paying. How are the "bad guys" able to get away with this? Good question. Simply put, it's not enforced.
More from Investopedia:
Failure to deliver is critical when discussing naked short selling. When naked short selling occurs, an individual agrees to sell a stock that neither they nor their associated broker possess, and the individual has no way to substantiate their access to such shares. The average individual is incapable of doing this kind of trade. However, an individual working as a proprietary trader for a trading firm and risking their own capital may be able. Though it would be considered illegal to do so, some such individuals or institutions may believe the company they short will go out of business, and thus in a naked short sale they may be able to make a profit with no accountability.
Subsequently, the pending failure to deliver creates what are called "phantom shares" in the marketplace, which may dilute the price of the underlying stock. In other words, the buyer on the other side of such trades may own shares, on paper, which do not actually exist.
This is why we direct register our shares (DRS). Once they are removed from the system that allows this type of behavior to continue, they can't be used against us. We're unsure how this is all going to play out, but having your shares in your name and held by a transfer agent, which for GME is Computershare and for BBBY is American Stock Transfer & Trust Company (AST), let's us sleep with ease and operate in a state of bliss as we wait for things to unfold.
Pre Market
GameStop is trading up about $1.66, up to around $41.29, an increase of about 3.17% and Bed Bath and Beyond is surging, trading up $2.64 to around $10.80, up around 32.35% in pre market.
Ryan Says
He's back! Immediately after GameStop issued a statement Friday after market close, Ryan Cohen tweeted this:
Ask not what your company can do for you – ask what you can do for your company
— Ryan Cohen (@ryancohen)
Aug 5, 2022
We're not positive what he is referring to here. Our best guess is he's asking everyone to reach out to their broker for clarity and to remedy the dividend split confusion. The statement released by GameStop is speculated to be a paper trail that may end up with GameStop suing the DTCC for their blatant mishandling of the dividend split.
Have a great Monday and we'll be back in your inbox tomorrow morning!
Spread the Word
We love Ryan Cohen and think he's the greatest Activist Investor of our generation. We are passionate followers of his moves and words and would love for others to know more about this great leader. We feel strongly that life is all about learning who to follow. If you have someone that needs more RC in their life, share Mother Squeezer with them!
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Financial Disclaimer: None of this is meant to be financial advice. We love Ryan Cohen, RC Ventures, GameStop and Bed Bath and Beyond, and like learning and sharing these insights and commentary.
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