Welcome back to the channel everyone today, i want to talk about why citadel are currently very, very scared and why they are so so close to being margin called so stay tuned and let's make some money, but before i dive into the video, if you haven't already Be sure to sign up to moomoo using the special thomas james, investing promotion which, by the way guys it does end soon. Not only do you get a free stock with up to 350 dollars and not only do you get a second free stock with a guaranteed value of 50, but you also get a third free stock with another guaranteed value of thirty dollars. On top of that, so that's at least eighty dollars in guaranteed free shares just for signing up with moomoo and depositing at least a hundred dollars. You can sell those free shares and basically get two entirely free shares of amc linked in the description below, and i want to dive straight in with the key information.

So i am very excited right now. Do you want to know why? And it's because citadel is scared. It's obvious. The recent legal filings have shaken them and i want to talk a little bit about how this relates to the mother of all short squeezes.

As some of you, baby apes seem to have a set of blinders on with respect to the larger implications here, so let's break it down in this post. I want to briefly discuss a few things: the actual legal filing citadel's twitter storm and what it could mean. A rundown on margin calls and a reminder of who pays for the mother of all short squeezes. Now i don't really want to talk too much about the legal filing, as i have covered it in some of my previous videos, but one thing that i did find very interesting is that apex clearing actually filed to dismiss this lawsuit, but on september 23rd, that dismissal Was denied and then we've also got citadel tweeting like an angry teen girl, which again, i also don't want to talk too much about as i've covered it in my previous videos, but the main meat and potatoes of what i want to talk about today is.

Is ken griffin in citadel stupidly leveraged? I want to look at an article. I came across from february this year on the site wall street on parade in it. The authors note that ken griffin gave incorrect or perhaps intentionally misleading information to congress when he was asked about the assets of citadel a congressman asked ken griffin how much money was managed by his hedge fund and griffin replied. We manage approximately 35 billion dollars of assets.

The congressman then suggested that citadel was systematically important, but ken griffin quickly responded with this. I believe that our hedge fund would not be in the category of systematically important with 30 something billion dollars of equity of equity. It's simply not at the scale or magnitude of a jp morgan, bank of america or wells fargo and therefore, in his first response, griffin said that citadel managed 30 something billion dollars of assets. But in the second response he changed that to 30 something billion of equity.

Now, according to the form adv or the 13f, the griffin's hedge fund citadel advisors filed on january 15, 2021 with the sec. His hedge fund is managing not 35 billion dollars, but 235 billion dollars to be very specific, 234 billion, 679 million 962 503 and therefore, while citadel only has 30 something billion of equity. Ken griffin is leveraging that money and borrowing lots more money, and he has lots of loans from external parties and therefore he's managing 234 billion of assets, and therefore it makes it highly likely that other large institutions and banks, like jpmorgan, goldman, sachs and citigroup, are providing Margin, loans that have helped citadel advisors, leverage, its equity from 35 billion to 235 billion, and, as you can see by this graph here, it means that citadel is leveraged 8.1 times more than its assets under management. But how exactly does this all tie together? Well, we can see that the market cap of amc is around 19.56 billion dollars, let's round up to 20 billion dollars, but we also know the float is sold many times over.

So let's say the true value of those synthetic shares out there totals to around a hundred billion dollars. So that's assuming the float is sold five times over. So assuming there's two and a half billion synthetic shares, or maybe two billion synthetic shares and the original 500 million real shares two and a half billion total shares. Now, obviously, we know that citadel aren't the only player in this game.

They aren't the only hedge fund. That's shorting amc and they aren't the only hedge fund or institutional market maker. That's creating those synthetic shares. But let's assume that citadel is doing most of the damage, let's say: 50 or 60 billion, for example.

So we've got citadel's total assets under management of 235 billion dollars, maybe 50 billion of that is segregated for their amc short position, which leaves 170 585 billion for all of their other long positions and all of their other short positions as well. Now we know the rest of that cash from their 13f is tied up in a number of stocks like tesla, amazon, apple, facebook, nvidia and many many more so typically, if you're trading a stock and you're long on a stock with no margin that stock has to Fall by a hundred percent to zero for your position to be liquidated, but obviously, if you're trading on margin, let's say you're only using a 2x margin. That means the stock only has to fall by 50. For you to be liquidated now, if you're trading on an 8.1 times margin like citadel, is that means your long positions only have to fall by a mere 12 for the entire fund to be liquidated.

So if there was say some kind of event around the corner, like a market crash that might cause tesla, amazon, apple or nvidia or many others to fall by 12, then citadel would be in a lot of trouble and would be margin called now. We also know the s. P 500 is already down by 5.3 percent over the last couple of weeks and therefore it actually doesn't really have too much further to fall before citadel, actually end up getting liquidated. Now, on top of this, some of their stocks, like apple, have already fallen by 10.1 and therefore citadel is actually very, very close to being liquidated.

Now, let's go back to the post, the collapse of enron bear stearns and others i'm going to swing your attention back to 2008, and i promise all of this will come together and make sense soon enough. I want you to recall some of the biggest investment fund disasters of all time. Enron lehman brothers and bear should immediately come to mind beyond corruption. All of these firms have something in common with respect to their collapse, namely the improper marking, leverage or restriction to access of client funds.

But another key factor of similarity is what exactly ended up contributing in a huge way to their demise clients running away at the first sign of major trouble. And obviously this is what's known as a run on the banks, when investors take out their money faster than the investment funds can handle it and they can't sell off their positions, quick enough and end up running out of cash, because the investors withdraw everything. Firms tend to get very vocal, very insistent and very loud about nothing being wrong when their clients start asking. What are you doing over there with my money in citadel's case, i would imagine.

The court filings mean a lot more than just speculation about an inappropriate relationship with brokerages to their clients. It likely looks like citadel's house of cards is beginning to falter, and what does that mean for them? The possibility of their money being locked up by lawsuits by investigations or even by bankruptcy, and therefore this is why citadel is getting so so panicked over on twitter, because there's so much public media attention on them lying many of their investors are going to think. Hang on citadel's lying everything is not fine. My money is not safe.

I need to get it out now. So, let's title together, we've got a lawsuit, that's begun to reveal important documents, fully validating and demonstrating the theory that citadel has been engaging in unethical relationships across wall street. We've also got citadel lashing out for the first time in nine months, in a desperate flurry of badly done pr. We've got an overall market.

That's getting increasingly unstable, threatening, citadel's profitable, plays we've also got citadel wound up in some very very problematic short bets that they cannot properly unwind without a major liquidity crisis. We've also got citadel already over leveraged and stretched beyond their means. With an 8.1 times leverage ratio. We've also got apes, who are most definitely not leaving the short bets, especially not with today's move.

So, therefore, you need to recall the squeeze would have happened in january and it was only stopped because citadel and point 72 stepped in and propped up melvin capital. They didn't do this out of the goodness of their hearts. They did it because if they hadn't, they all would have fallen, the domino would have been flicked and the chain reaction would have been set off if melvin capital had to cover their entire short position. Then citadel's short position would have moved negatively so badly against them, that they wouldn't have met margin requirements and would have been margin called now.

Something that also proves just how scared citadel is: is ken griffin and citadel slamming cat striker, with a lawsuit cat planned to pay another flight display company to fly a banner over citadel's headquarters and do many many loops around it. But she's just had a legal letter from citadel solicitors. Basically saying this is a very, very bad idea and they'll sue her for defamation of character. I'll leave the link to this lawsuit down in the description below.

So you can give it a read for yourself, but basically and obviously citadel alleged, that ken griffin and citadel have done nothing wrong and therefore it's defamation of character and therefore it shouldn't go ahead now. I also want to talk about the president of robin hood literally admitting to insider trading in internal communications. That's included in that lawsuit discussed earlier in the video robin hood securities is president and ceo james starwell, who 10th points to as making the ultimate call to pco said in an internal chat on january 26th, i've sold my amc today, fyi tomorrow morning, we're moving gamestop To 100 and position close only just so you're aware, and he also decided on the morning of january 28th, the pco, the top four symbols - amc, gamestop, nokia and blackberry. Despite acknowledging, we aren't paying three billion dollars worth of security.

So therefore, the robin hood security's president fully well knew that they were moving amc in gamestop to position close only and limiting the margin trading on those stocks and therefore he sold his amc shares in advance. As trey says. I can't underestimate how completely insane it is that this happened and that it's insider trading to a t now i also wanted to recap on today's reverse repos, because they are absolutely mad. You can see that for many days and weeks now the reverse repo facility has been fluctuating between 1 trillion and around 1.3 trillion dollars.

Now. Obviously, yesterday this increased massively to 1.4 trillion, but today it increased to 1.6 trillion dollars and the number of parties jumped from 70 to 80 all the way up to 92 individual parties. We've also got a big impact again on the treasury balance, bringing it down from billion dollars back down to around 172 billion, guys be sure to. Let me know down in the comments below what you think about citadel securities being so so close to a margin call and if you haven't already be sure to sign up to moomoo using that special thomas james, investing promotion.

All you've got to do is sign up open, an account and deposit at least a hundred dollars, to get at least eighty dollars in guaranteed free stocks and, as always guys, if you enjoyed this video, be sure to check out some of my others. Alternatively, subscribe to the channel and in that notification bell, because that way, you'll be alerted when i upload a new video cheers:.