Welcome back to the channel everyone today, i want to talk about how melvin capital is literally going bankrupt right now, so stay tuned and let's make some money - and i want to dive straight in with the key information so mark cody's, tweeted, saying it's clear that melvin Capital is closing its doors and the stupidity of having the cartoon network carrying his water. Somebody replied to mark asking if a fund's position gets liquidated before they close or after they close the fund and basically asked how it all works. Mark cody replied saying that melvin capital just has to unwind its trades. Okay, obviously melvin capital has shorted gamestop and amc and therefore to close the fund.

All they have to do is buy back their amc and gamestop shorted positions and buy back all of those shares to close out of their full position, and then they can close. The fund now, obviously this is very good news that melvin capital is going bankrupt right now and is going to close their fund and therefore is going to cover their amc and gamestop shores. So today i want to talk about what impact this is going to have on amc and gamestop, and whether melvin capital really has any way out of this, and what's actually going to happen over the next few months. Pip and sammy also tweeted, saying that melvin capital is effectively folding and then speculated that this could mean that the department of justice would have to warn future investors to steer clear and that this could form part of their ongoing rico investigation.

He then said that obviously point 72 and citadel bailed them out months ago last year, back in january of 2021 and then said that right now the dtcc doesn't want to pony up the funds and it's effectively forced melvin capital to close their doors. This and potentially the june deadline as well. Now i do think it's very very possible that melvin capital is having to close its fund as a result of the ongoing rico investigation, and i do think it's also because the dtcc doesn't want to pony up the funds for the squeeze just yeah. We know the dtcc has this insurance policy, which is the assets of all of the funds that make up that dtcc membership group, but those funds don't want to pony up the cash just yet and therefore they're going to let melvin capital liquidate themselves.

First marcotte's tweeted saying for any of those wondering what my issue is with gabe potkin is that his greed and his arrogance actually broke the stock market. He said he doesn't deserve to be in business, yet alone deserve a fee for his reckless behavior. The fact that his pr flax play with the cartoon network, aka cnbc, is another red flag mark, also tweeted saying: if melvin capital doesn't reorganize, then the sac and citadel do not get any fees. He said this is a complete sham and he asks for what exactly? Are you really paying those fees for he said you're, better off shorting, the qqq aka shorting, the s, p, 500 or god forbid, giving your money to the wall street cynic.

He said at least he's a responsible adult and he said that his packers suck, but he can at least short stocks. He followed that tweet up by saying that shorting stocks is exactly what got gay plotkin into the mess that he's currently in smart coders is saying that by shorting stocks, gabe plotkin has got himself into a massive mess and has actually broken the stock market, and he Said that's why he doesn't deserve to be in business, yet alone deserve a fee for his reckless behavior, and this is why the dtcc, the sec, the fbi and the department of justice is basically forcing melvin capital to close its fund and unwind its short positions. Something else that i thought was very important is when mark cody says that if cnbc is running the story, it means he's already finished. Aka melvin capital is already going bankrupt and is already in the process of winding down the fund.

Charles payne also tweeted about this saying that melvin capital, the hedge fund, creamed by gamestop, where he's shutting down and starting a new fund very coincidently ryan cohen, also replied to this tweet with a poop emoji. Something he's been using very regularly to describe bcg and those other consulting funds and activate short sellers. Brian cohen obviously already connected the link between bcg citadel and other hedge funds, short sellers, like melvin capital, so if you've been living under a rock for the last few days and haven't yet heard, what's happening to melvin capital, this article was posted a few days ago By cnbc it says, embattled hedge fund, melvin capital, weighs unwinding current fund to start a new one, moonroof also just increased their offering of free shares up to six free stocks, valued up to 3 500, each that's potentially up to twenty one thousand dollars worth of free Stocks that you can get just for signing up with moomoo, using the link in the description below and making your first deposit, mumu and future have also just announced that future does not accept payment for order flow, and therefore you don't have to worry about your trades. Going through sketchy, dark, pools or being given to citadel room also recently won the award for being the best trading platform at the fintech breakthrough awards.

Mimu is very easy to use it's incredibly customizable and it will help you to trade like a pro moomoo also has tons of technical indicators and advanced charting tools, mooney publishes daily short selling data position, cost distribution and much much more so guys be sure to sign Up to moomoo, using the link in the description below and make your first deposit to get all of these free shares. It says melvin capital, the embattled hedge fund, run by its once high-flying founder, gabe plotkin has been discussing a novel plan with its investors, under which the firm would return their capital while giving them the right to reinvest that capital in what would essentially be a new Fund run by plotkin, and it says plotkin according to people familiar with its plans, has committed to keeping his new fund at or below five billion dollars in capital and returning to a focus on shorting stocks. Now this is where i think that melvin capital could escape from fully closing their short positions. But let's read through the rest of the article first and then i'll cover why i think that melvin capital may escape for now.

So it says that, under the terms being discussed, plotkin would unwind his current fund at the end of june. Plotkin would then start what would essentially be a new fund on the 1st of july, with whatever money his investors decided to reinvest, but he would do so without having to bring those investors back to even on their invested capital before he could earn a performance fee. So this deal is not beneficial whatsoever to his investors. At the moment, with his current fund, g plotkin would have to earn his investors 21 before he even starts to charge them a performance fee.

But with this new fund, gabe can charge his investors a performance fee from day one without having to generate them. That 21 gabe can charge this performance fee, even though his investors are already down 21 for the year so far. I think the only reason why his investors would take this deal is if gay plotkin is somehow sweetening the deal. I think the way that gay plotkin is sweetening this deal for his investors, like citadel, is by offering to buy up their dodgy short positions like gamestop and amc shorts.

Gabe plotkin has said that his new fund will focus on shorting and therefore it would make sense for gay plotkin to buy up these dodgy short positions these massively over leveraged shorts in his investors, funds this effectively offloads even more of those short positions from citadel .72 And many others into the new melvin capital fund. Now this part is very good for amc investors. It means that short hedge funds, like citadel, are using melvin capital as the full guy and offloading their short positions into melbourne capital, thereby increasing this moaz timeline and hurrying. It up the reason why i think melvin capital could escape for the meantime is that when gay plotkin closes the current melvin fund, he may not necessarily close his short positions.

He may just transfer them to one of these other hedge funds like citadel and therefore, while melbourne capital may escape closing their shorts in the short term by offloading it to a different hedge fund. It will have to take those shorts back on and additional short positions from other hedge funds and will effectively go bankrupt later down the line. I think this is effectively a fix for some other hedge funds to offload more of their risky shorts into melbourne capital and thereby effectively speeding up the mass timeline. Obviously, when these larger short hedge funds, like citadel, have offloaded their full amc short position into melvin capital, they have no reason to delay their moas any longer.

They can effectively trigger their moas wave goodbye to melvin capital, and some of the short hedge funds, like citadel, will end up surviving. The reason why i think the most timeline is being sped up is because there's a number of things at the moment. That's indicating in this direction line trader tweeted, saying everyone missed where the nscc admitted that in nscc801 they're concerned about a squeeze dislocating the market. He said, i wonder what squeeze they could be referring to and the stark comparison of a squeeze dislocating the market per nfcc801.

It says, while the concept of a fail does not exist in the securities lending market in the same manner as it does in the cash market, to the extent that the final settlement of an sft is scheduled on a particular date but does not occur. That could potentially be a result of a squeeze or other market dislocation whereby the nscc may face increased market risk in the event of the default of either the transfer or or the transferee. As a result, the nscc believes it is prudent to apply the same required fund deposit multiplier to a non-returned sft, as it does to cns fail positions and therefore the nscc is clearly worried about a squeeze or other market dislocation whereby the nscc may face increased market Risk we're also seeing these costs to borrow rates in both amc and gamestop, going absolutely stratospheric, not just the cost, to borrow maximum, but also the cost to borrow average the other day, the cost to borrow for gamestop shut up to 246. It did fall down shortly.

After but has also maintained around 75 for some time now, obviously this cost, to borrow maximum and cost to borrow average, is very, very important, but it's also worth keeping an eye on the cost to borrow minimum, which has also been steadily increasing as well increasing past Seven percent up to eight and nine percent. This obviously means that institutions are charging these shorts more and more and more money to borrow amc and gamestop shares to maintain their amc and gamestop short positions. We're also seeing some massive funds like imc chicago setting aside massive portions of their portfolio on s, p 500 puts preparing for this market dislocation event hang loose tweeted at astro, saying you know how you were talking about the rule of thumb for pretty much all big Time asset managers is to allocate no more than two percent of their overall portfolio into new investments and imc is saying, hold my beer and is allocating over 20 of their 100 billion portfolio. On s p, 500 per options.

We can see that imc chicago manages a portfolio of 101 billion dollars and has recently allocated over 17.97 now up to 21.4 of their portfolio. In s p, 500 puts now. We can also see they've got a massive amount of amazon puts, tesla puts qqquets and also google puts as well. Yes, they do have some tesla calls s.

P 500 calls and amazon calls as well, but you'll notice that in pretty much every single circumstance, the put position is massively outweighing. The call position, mostly in the case of these spy, puts where they have three times as many per options and over three times the size of their portfolio percentage in these sp. Why puts again that is obviously showing that massive massive hedge funds, managing hundreds of billions of dollars, are preparing for that amc squeeze and for this market dislocation event and market crash, and that is why fox business is already publishing articles saying that the us economy is Probably already in a recession guys be sure to, let me know down in the comments below what you think about melvin capital going bankrupt right now and also what you think about the coming market crash and as always guys. If you enjoyed this video be sure to check out some of others, alternatively, subscribe to the channel and ding that notification bell, because that way, you'll be alerted.

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