What You Need To Know This Week — January 30th, 2021
What You Need To Know This Week
A weekly recap to keep you informed on the most important events this week impacting markets, business, tech and the global economy.
ONLINE BROKERS CUT OFF RETAIL TRADING AS RECORD VOLUMES CAUSE LIQUIDITY CRUNCH
Popular trading app Robinhood was forced to suspend trading and raise $1 billion of emergency capital from investors because of the liquidity crunch caused by recent record trading volumes from individual investors. The recent frenzied trading in so-called “meme stocks”, such as GameStop and AMC Entertainment, has led to a cash crunch at online brokerage firms, as record trading volumes are forced to put up cash to cover the trades until they settle. Robinhood’s emergency fundraise came together in mere hours after a clearinghouse asked the company to cover a dramatic increase in deposits for Thursday’s trading. Existing investors, including Sequoia Capital and Ribbit Capital, stepped up quickly to provide the capital such that Robinhood didn’t become insolvent. The company also borrowed approximately $500 million from its banks this week.
NOTED SHORT SELLER ANDREW LEFT SWEARS OF SHORTING, TRANSITIONS TO LONG-ONLY INVESTING
Vocal short seller Andrew Left, the founder of Citron Research, announced that he would no longer publish short recommendations on stocks. After more than a decade spent as an activist short seller, which included a stint as a key critic in unveiling fraud at Valeant Pharmaceuticals in 2015, Left decided to hang up short selling after becoming the victim of online harassment for short selling GameStop stock. Left stated that he would “take the skepticism and mentality of short selling and apply it to the long side.”
ELECTRIC VEHICLE COMPANY FARADAY FUTURE TO GO PUBLIC THROUGH SPAC PROPERTY SOLUTIONS ACQUISITION
Special purpose acquisition company Property Solutions Acquisition announced a business combination with Faraday Future, a California-based global shared intelligent mobility ecosystem company. The deal values the electric vehicle company at $3.4 billion, including approximately $1 billion of capital raised for the combination. SPAC Property Solutions shares traded up 65.5% this week on the news. It is one of the largest SPAC positions in the Accelerate Arbitrage Fund (TSX: ARB).
Notable Insights, Articles, Podcasts, and Tweets
Listen to MicroStrategy CEO Michael Saylor discuss why he decided to put the majority of his company’s treasury into bitcoin and why he will never sell.
Reddit traders represent “a new force in the market”, according to Accelerate CEO Julian Klymochko. How can regulators dampen the rampant speculation? “Raise rates”.
Some of the biggest winners of the retail-triggered stock market short squeeze? Company insiders. For example, BlackBerry executives have cashed out millions of stock, while its CEO could be in for a $200 million pay-day due to the share price rally.
Meet Keith Gill, also known as Roaring Kitty or DeepF — ingValue, is the leader of the WallStreetBets forum that has taken the market by storm. The message board has been used to conduct a “corner” on GameStop shares. Gill has turned his initial $50,000 investment in GameStop to well over $46 million.
Is Elon Musk now bullish on bitcoin? His Twitter profile appears to indicate his interest in the cryptocurrency.
The Harvard, Yale and Brown endowments have been accumulating bitcoin in their portfolios. Once Yale sets the standard, most other endowments follow.
The populist equity market uprising that has fueled triple-digit gains for AMC Entertainment is spurring significant returns for hedge funds Silver Lake Management and Mudrick Capital Management.
Senvest Capital, a Montreal-based hedge fund, was one of the biggest winners from the GameStop short squeeze, banking a $123 million windfall from a long position in the batted retailer.
