/biz/ - Business & Finance

>>51020186
Partly. They got screwed because they shorted more shares than the amount of shares that actually existed (short ~140% of float at their peak)
There was zero possible way for them to cover 1:1 because they were short 40% more shares than the amount that existed kek
They were incredibly greedy and exposed themselves to an ignorant amount of risk. Probably the last time in history any fund/individual shorts greater than 100% of the float.
Yes you can get burned but is also the reason why people like Michael Burry made out like a bandit in the ‘08 financial crisis and had a movie staring Christian Bale made after his short play.

https://www.theatlantic.com/magazine/archive/2020/07/coronavirus-banks-collapse/612247/
https://pastebin.com/4iWeaRHu (pastebin)
> CLOs bundle together so-called leveraged loans, the subprime mortgages of the corporate world. These are loans made to companies that have maxed out their borrowing and can no longer sell bonds directly to investors or qualify for a traditional bank loan. There are more than $1 trillion worth of leveraged loans currently outstanding. The majority are held in CLOs.
> A couple of midsize banks—Banc of California, Stifel Financial—have CLOs totaling more than 100 percent of their capital. If the leveraged-loan market imploded, their liabilities could quickly become greater than their assets.
>So what sort of debt do you find in a CLO? Fitch Ratings has estimated that as of April, more than 67 percent of the 1,745 borrowers in its leveraged-loan database had a B rating.
>Banks do not publicly report which CLOs they hold, so we can’t know precisely which leveraged loans a given institution might be exposed to.
>Meanwhile, loan defaults are already happening. There were more in April than ever before. Several experts told me they expect more record-breaking months this summer. It will only get worse from there.
so, how do we profit off of this incredibly bearish news, /biz/?