The Blubber

Dan Loeb is mad at memestock sellers, per Bloomberg.

The meme-driven crowd has, once again, resurfaced, propelling stocks upward and inflicting losses upon short sellers, reminiscent of the chaotic early days of the pandemic. Companies such as Tupperware Brands Corp., Nikola Corp., and Yellow Corp. have witnessed substantial surges, leaving short sellers with staggering losses amounting to approximately $435 million within the past sixty days. Loeb, though seemingly unaffected by these abrupt market fluctuations, conveyed a clear message to his clients through a recent letter: his days of significant speculation against individual stocks have come to an end.

Loeb, the CEO of Third Point LLC, elucidated, “The prominence of fundamental analysis is increasingly diminishing as we observe the prevalence of monitoring daily option expiries and engaging with Reddit message boards. This shift is evident through various short squeezes and manipulations witnessed in heavily shorted stocks such as AMC and Gamestop in 2021, as well as other instances this year.” He added, “While we haven't completely abandoned short selling, our strategy involves a gradual reduction in our exposure to short positions in specific stocks, in favor of adopting market hedges and short baskets.”

During the early months of 2021, the meme-stock phenomenon led to one short seller after another falling victim to the collective efforts of retail investors. These investors wagered against Wall Street experts who had adopted bearish stances on companies like GameStop Corp. and AMC Entertainment Holdings Inc. This period was marked by excessive speculation, which was equally conspicuous in the exuberance surrounding blank-check IPOs and the fervor for digital currencies.