Welcome back to the channel everyone today, i want to talk about how melvin capital just went bankrupt and is being wound down. I want to talk about why i think that gay plotkin is winding down melvin capital, what he recently tried to do to escape bankruptcy and, what's likely to happen next, and what options melvin actually have so stay tuned and let's make some money. And now i want to dive straight in with the key information, so bloomberg posted this article, saying that plotkin shuts the melvin hedge fund, which was left reeling after the redditor attack. It says the firm never recovered from the gamestop short squeeze back in 2021.

Gabe said, i now recognize that i need to step away more than a year after gabe plotkin's melvin capital management was grievously injured in a short squeeze by amateur traders that organised on reddit, the 7.8 billion hedge fund is giving up and shutting down. Plotkin's, abrupt decision announced in a letter to clients on wednesday ends his attempt at a long shot, comeback funded by some of wall, street's biggest players, aka ken griffin from citadel securities. The effort showed initial promise last year, but unraveled in recent weeks, as he racked up new losses and frustrated backers with a short-lived plan to re-impose fees. Gabe plotkin wrote in a letter to investors saying the past 17 months have been an incredibly trying time for the firm and for you are investors i have given everything i could, but more recently that's not been enough to deliver the returns that you should expect.

I now recognize that i need to step away from managing external capital. Now i think it's important to talk about what gay plotkin has been trying to do over the last few weeks to avoid bankruptcy. Melvin capital are obviously still holding their original gamestop short position and have likely also received additional offloaded short positions from other funds like citadel securities in stocks like amc, bbby, blackberry and the many other shorted companies. In that short basket, melvin have obviously been trying to figure out a way to offload all of these shorts into the market without bankrupting their fund, but gabe plotkin has obviously realized that there's simply no hope.

Nazim tweeted saying cascading liquidations are about to start on wall street. They were hoping for an economic meltdown and a market-wide recession to try and push or cover their short positions. At the last minute now, there's obviously two main forms of selling pressure. You've got natural selling pressure where retail investors and other investors sell their shares and you've obviously got unnatural selling pressures of funds and firms increasing their short positions to push amc and gamestop down over the last nine months.

These hedge funds have been shorting more and more and more amc shares to obviously push the price down. They've been creating more and more synthetics. Now these funds, like melvin capital, can't push the price of amc down to say two dollars per share or a dollar per share and then cover their short positions, because they'd have to first cover all of the new shorts they created to push the price down and Then cover their original shorts, for example, if melvin and citadel created an additional billion synthetic shares to push the price of amc down to a dollar per share and then cover their shorts, they'd have to first cover this new billion synthetic shares, pushing the price back to 10 to 15 and then cover the original shorts. If melvin and citadel covered that first billion synthetics, it pushed the price of amc back from a dollar to 10 to 15 dollars, then melvin said they would have to cover the additional synthetics they've created over the last nine months, pushing the price of amc back to 72 dollars per share at that point.

They could then cover their original shares and original synthetics and original shorts, but at that point it would cause the amc squeeze and would definitely bankrupt. Melvin and citadel melvin and citadel were hoping for this economic meltdown, and they were hoping that retail investors would panic and sell all of their amc shares, naturally pushing the price down to under a dollar per share. At that point, citadel and melvin could cover all of their synthetics after the apes have sold all of their shares. Both this current market crash and current recession isn't causing the apes to panic and sell their shares and instead is causing melvin's collateral to drop drastically, meaning they're unable to get out of the abyss.

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They've now come to realize that melvin can't escape from this abyss, they've created because retail aren't going to sell their amc and gamestop shares and therefore citadel and point 72 have withdrawn the majority of this 2.75 billion dollar investment. On top of that, obviously, the market is crashing, which is obviously crushing gay plotkin and melvin capital's overall fund falling an additional 23 through to april this year. Melvin capital have obviously been left high and dry and are very very quickly approaching. This margin call position and therefore going to close down the fund and return money to the investors, but i personally believe there's additional reasons as to why gabe plotkin is closing the fund now and isn't waiting a few more months to see if the apes panic sell.

Wales tweeted saying the sec has launched a search through 100 plus personal mobile phones of top wall street deal makers as it widens its probe into secret messaging through platforms such as whatsapp. It says the sec is targeting up to 30 top bankers and traders at each major bank. It contacts to provide personal mobile devices to be examined by lawyers after these crackdowns on bill huang and bill huang's employees currently snitching, and the fact that bill huang is snitching himself on morgan stanley and the short sellers. I think g plotkin is trying to buy this time and get out while he still can gabe plotkin, obviously realizes.

There is a massive crackdown happening right now, and people are actually going to be going to jail. As a result, gabe plotkin is going to try and get out now close down the fund and hopefully avoid prison time. Not only do we have bill huang snitching. Not only do we have bill huang's, employee snitching, but we've now got the sec doing an investigation into a hundred plus mobile phones on wall street.

We know that it's very likely that gabe, plotkin and ken griffin have been having secret conversations about the creation and transferring of those synthetic shores. I think gabe plotkin is trying to get out while he still can before the sec requests access to his phone and effectively close down the fund and run away as the firm unwinds plotkin has outlined, plans to return, invest. The cash melvin has already materially reduced the fund's exposure and will not be charging management fees as of june 1st, at least 50 percent of investor cash will be redeemed by may 31st and the rest by june 30th, and now i want to talk about what's likely To happen to melvin capital and, what's likely to happen to amc as melvin unwinds, obviously, as the firm unwinds plotkin outlined, plans to return, invest the cash to return cash to investors. He obviously has to sell off his long positions and cover his short positions now, obviously, to return that investor cash he has to formally close all of the positions in order to formally wind down the company, not just close the real short positions, but also close those Synthetic shorts as well now, obviously, if gabe plotkin closes all of those positions, including those synthetic shorts, it theoretically would cause the amg squeeze as all of those synthetically, shorted shares would have to be bought back at whatever price we're willing to sell at.

But i do think that melvin capital have one potential final way to kick the can a little further. You may remember this tweet from my other video, where cashkael asked peter han if citadel had actually transferred their short position onto melvin capital. Obviously, this is something that has been rumored for a long long time that peter han also agrees with. He said, i think, it's likely in some fashion that citadel did transfer their short position into melvin and therefore, theoretically, at the same time, there's nothing that stops melvin capital from transferring their short position onto another unsuspecting hedge fund.

Now, i guess the only problem that gabe plotkin may run into is finding somebody stupid enough to take on this giant gamestop and amc synthetic short position that would most likely bankrupt the fund when amc and gamestop squeeze now, if melvin capital can find another hedge fund To offload their short position into theoretically melvin capital can wind down, sell off their long positions, transfer their short positions and close down without causing the amc and gamestop squeeze. But obviously i do think it will be very, very difficult for gay plucking to find somebody stupid enough to take on this giant toxic liability. Personally, obviously, i'm hoping that gay plotkin can't find anyone stupid enough has to bear the full weight of the liability of those gamestop and amc shorts and ends up potentially being liquidated in the process and losing all of his investors. Money when amc and gamestop squeeze.

Now. Obviously, i don't want investors to lose money because that's real people losing millions and millions of dollars that they haven't really had any say over. But i do want melvin capital, obviously to be liquidated when they close that amc in gamestop shorts, causing that amc and gamestop squeeze now it seems like seeking alpha, may know something. We don't because they've just posted a new article, saying that another short squeeze is coming for amc and gamestop.

They said amc posted a strong quarter, one 2022 earnings report. They recently disclosed a 6.8 stake in national center media, which it received for free and the amc short interest currently sits. Around 21 they've talked about amc's strong quarter, one earnings, the great box office films that have came out so far and the brilliant ones that are yet to come out later this year and also spoke about the large investments that have recently been made into amc by Bridgewater associates and goldman sachs, and also some recent amc investments into highcroft mining and obviously this stake in national center media. Now i wanted to quickly touch on the market.

This morning, we've seen crypto down again with bitcoin down nearly three percent solana down 10: an avalanche down 17 and we're also seeing the pre-market futures for the s p, 500, the ftse 100 and many more stocks, also down as well. It seems after a very heavy red day yesterday the market is looking to extend its losses and potentially set new recent lows again. I just think this is going to amplify the current market crash even further, and we could see the s p. 500 fall below that 380 region down towards that 350 region, so guys be sure to leave a comment down below and ding that notification bell, because that way you'll be alerted.

When i upload a new video cheers.