Glucksspiel: wenn hedgefonds milliarden an der borse verwetten

Glucksspiel: wenn hedgefonds milliarden an der borse verwetten

Wenn gamer kreativ werden und durch forenabsprachen einfluss auf das "real life" an der borse nehmen, sind manager von hedgefonds beleidigt. Foto: random retail / cc-by-2.0

The borsen battle over video game retailer gamestop caused a stir in january. "Predatory behavior" unterstellt man nun kleinanlegern, die hedgefonds in die knie zwangen

The stock exchanges are playgrounds where big and small speculators cavort – and all of them are motivated by the goal of taking money out of each other’s pockets. The rough ones have an advantage. But when the small ones get together, they can bring down the big ones, too. The example of the gamestop share from january illustrates this vividly. However, small investors are blamed for using the rules of the stock market to their advantage: a new study of the university of paderborn attests them a "predatory behavior".

In internet forums, small investors had agreed to concertedly buy the stock. While it initially cost around 17 us dollars, it climbed to 483 us dollars in the meantime. Hedge funds that had previously bet on a falling share price incurred enormous losses. According to press reports, they totaled up to 12.5 billion us dollars.

Initially, it was thought that the small investors had rehearsed the uprising against wall street. Peter muhlbauer had written on telepolis in early february that many of these investors had harbored thoughts of revenge against the financial industry. They had – "death-defying" – serious losses in order to achieve their goal. The economists around matthias pelster, professor at the university of paderborn, now want to have shown that it was not a protest against wall street, but the first case "of predatory trading" which can be attributed to small investors. They had realized profits at the expense of a – possibly distressed – large investor.

The game on the stock market is simple to understand: hedge funds, betting on falling prices, borrow shares from a third party; and they then sell the shares, which in principle they do not own. At a certain point in time they have to return the shares. In order to do this, they have to buy them on the market. If they have fallen in the meantime, they buy them cheaper – and the difference is their profit. If, on the other hand, prices have risen, they make a loss.

The small investors had now driven up the share price through their targeted purchases. This in turn led to the hedge funds trying to unwind their betting positions prematurely. But they also had to buy shares on the market again, which tightened the supply even more and drove the price up.

Although pelster admits he can’t say who the retail investors are, he claims they had previously shown a tendency to float and lottery stocks. Pelster continues:

We have been able to observe buying and selling at all times. Although some experts see the retail investors’ behavior as a protest against wall street, their history of high-risk behavior and the early closing of their gamestop positions suggest that participation was fueled to some degree by their desire to gamble.

Elizabeth warren, a democratic u.S. Senator, had already spoken out in january against ticking off small investors in this way. According to cnbc she had said at the time that the stock market had become a casino. Manipulators were driving the market up or down to make profits: "billionaires and some hedge funds are now complaining loudly because they are not the only ones making money when the manipulation works."

To these "manipulators" one can certainly count elon musk. His fan base in the social networks reacts when he gives appropriate "hints" gives. When he in january "gamestonk!" via twitter, gamestop stock soared from $150 to $200. According to cnbc a four billion increase in market capitalization. When he wrote: "i love etsy", the share price of the e-commerce company etsy rose. When he recommended: "use signal", he meant the whatsapp alternative signal. Among speculators, this unleashed confusion – and on the stock market, the price of signal advance, a provider of medical devices, went through the roof.

In recent months, there has been little suspicion that this was not a david versus goliath battle at all, but that the hype surrounding gamestop shares was being used for a battle between the major hedge fund providers.

The so-called neo-brokers such as trade republik, justtrade, gratisbroker or robinhood offer favorable conditions to small investors – in return they sell their data to other securities traders and collect commissions for this. Robinhood, through which the concerted purchases of gamestop largely went, sells its users’ data to high-frequency traders like citadel securities, for example.

Deutschlandfunk nova had reported in early february that when small investors got together to buy stocks in rough style, these high-frequency traders knew sooner than others that the stocks would rise, not fall. Citadel securities did not participate in the bet on falling gamestop prices, probably because the information was available. Instead, the company invested several billion us dollars in the stumbling hedge fund melvin capital, which had bet on falling prices.

That’s the weakness in the study: it focuses only on retail investors, but doesn’t examine how institutional investors behaved.