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Victims
: The head of the Citron hedge fund,
Andrew Left
, was distressed by the attacks.
Photo: BRENDAN MCDERMID / REUTERS
The anonymous rebels are not squeamish in their choice of words.
"To all the big fucking hedge funds, this is a message to you," one of them writes in the "WallStreetBets" forum of the Reddit portal, of course under a pseudonym.
"We fucking own you now. Fuck you Melvin Capital. Fuck you Citron Research."
What is happening here is being taken over by ordinary people.
"That will go down in history."
In the Reddit forums, for example, people write who, according to their own statements, have invested several thousand dollars in shares of the video game retailer Gamestop - and have been driving the prices of the actually ailing company into absurd heights for days.
Gamestop's stock, actually a small cap, has risen 700 percent since the beginning of the year, and the company is now worth more than ten billion dollars.
A similar pattern can be observed in a number of other stocks, including some healthy companies: in the USA at AMC, Blackberry or Marcy's, in Europe at Nokia or the German Varta.
The common pattern of these flash mob traders: They invest against the short positions of well-known hedge funds, which bet on falling stock prices.
For example, the hedge funds Melvin Capital and Citron, which were addressed directly in the Reddit forum, got into trouble this week due to the continued price increases of Gamestop.
The $ 13 billion US fund Melvin Capital had to be supported with $ 2.75 billion from the investment houses Citadel and Point72 to avoid the largest hedge fund bankruptcy since 1990.
And Citron boss
Andrew Left
was forced to send a video message.
"Everyone thinks this stock sucks," he defended his short strategy.
"People only buy it for one reason: to them, it's a game."
The playing area on which the angry investors cavort is an area of the chat platform Reddit called "WallStreetBets".
In this segment, which was established in 2012, supposedly up to 2.5 million gamblers exchange highly speculative stock picks.
The forum moderators have just emphasized in a statement that there is no concerted action for or against individual shares.
But the fact is: Gamestop and all the other values have been pushed here in the past few weeks.
Class struggle, power intoxication and greed
One can only speculate about the real motives of the Reddit users.
It is probably a mixture of class struggle, intoxication for power and simple greed.
If you read the comments in the forums, the investments are stylized as an uprising against Wall Street: ordinary people against the supposed "Masters of the universe", motto: We down here against those up there.
Technically equipped with inexpensive trading apps such as Robinhood or Trade Republic, many investors have come to the stock market in the past few months.
In the logic prevalent in the forums, hedge funds that bet on falling prices spoil ordinary people's winnings.
The other investors should by no means believe the mainstream media, which only wanted to generate sympathy for the hedge funds, that short bets are nothing more than "domestic terrorism".
If their forum "WallStreetBets" were closed, one of the spokesmen writes under the pseudonym "WSB Chairman" on Twitter, "You'd better bring down every single Wall Street hedge fund that continuously uses gangster tactics to make quick money."
Since even
Elon Musk
(49) liked the tweet, it circulates proudly in the scene.
"The Jesus of the bourgeoisie keeps our backs free," cheers an anonymous user on Reddit.
Professional investors are surprised at such connections.
"The generation of gamers is hunting hedge funds with Elon Musk," explains
Baki Irmak
on Twitter.
The investment expert worked for Deutsche Bank and its fund subsidiary DWS for a long time before setting up the Digital Leaders Fund.
His conclusion: "It's a game, stupid!"
And thus to the second motif.
The cross-references and posts in the forums suggest, in addition to the alleged class war, a kind of playful hunting fever.
The users drive each other in the forums with ever new course intermediate results that reflect their power in the markets.
So on Wednesday the exorbitant price jumps of the AMC share before the start of trading were posted: "You are psychopaths, people!"
On the one hand, playful traits are revealed here.
For example when "WBS Chairman" heats up the community shortly before the official stock market launch and speaks as if to computer gamers.
"Ten minutes left until the game starts. Do you have your controllers?"
Or shortly afterwards: "Let the Hunger Games begin".
Or when others proudly post that the hashtag #SaveAMC is the most trending topic on Twitter this Wednesday in the US - #SaveAMC is an allusion to the fact that small investors are defending AMC shares against speculators who are on falling prices bet.
The call to push the hashtag #OccupyWallStreet also fits into the playful approach.
On the other hand, the common hunt reveals a kind of intoxication with one's own power, coupled with a strong aversion to "mainstream media", to the official authorities such as the SEC or against Big Money in general, which is strongly reminiscent of the counter-movements in others as well social areas.
In addition - possibly the third motive - the greed of the investors.
The mob investors can certainly earn money with their community actions.
The stocks in question are small enough that the mass of retail investors can really trigger price increases.
Individual stocks are now being pushed in a targeted manner via the social networks, in which professional investors hold a counter position.
According to a Reuters analysis, the 20 small-cap companies in the Russell 2000 Index with the largest bets against themselves have so far increased by an average of 60 percent this year.
Nasdaq boss is alarmed
Hedge funds with larger short positions in individual stocks could be forced to buy more stocks in view of the price increases - a classic squeeze out.
So the mob investors can make significant profits if they get out on time.
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Not like this: Nasdaq boss
Adena Friedman
Photo: Javier Rojas / imago / ZUMA Press
Many market participants are therefore already calling for an investigation into the cases.
Stock exchanges and supervisory authorities should be careful whether the chats and social media activities are targeted attempts at manipulation, said
Adena Friedman
(52), CEO of Nasdaq, the American TV broadcaster CNBC.
She can even imagine drastic steps.
Should your folks see a significant surge in chat on social media and unusual trading activity at the same time, they could temporarily suspend the affected stock from trading in order to investigate the matter and bring in the SEC.
How long will the hunt go on?
He has never seen anything like this before, says
Eric Kuby
, chief investor at North Star Investment Management in Chicago.
"But this is something that will not last long because it is completely disconnected from any economic reality."
In any case, it is completely irrational and will certainly "end very badly".
And
Matthias Scheiber
from Wells Fargo Asset Management in London is already reminded of the new economy bubble in view of the exaggerations completely decoupled from reality: Even in the early 2000s, short-term distortions were experienced that were triggered by private investors.
lhy / Reuters