In recent weeks, any reference to Wall Street went through inflating values rather than bearish positions. So far the story that has been presented to the whole world and echoed by the media, but… could there be anything else?
For the well-known bearish activist investor Carson Block there are more pieces to the puzzle than what has happened in recent days. Some pieces that are yet to be revealed but that would show that these bowel movements in the US stock market have not been so spontaneous or so innocent.
Block maintains that the parabolic increases that have been seen, especially in , seem to him to be an operation orchestrated by some ‘hedge funds’ to weaken others and not so much on social networks.
“I’ve been wondering, is there any coordination from other hedge funds with all of this?” Block admitted in an interview with Bloomberg. “What is that coordination? Did they cross the line? That could be interesting,” she said.
For now, Block’s is not a proven theory, but if he was right, what looked like a historic retail uprising last week would have been more like a convenient smokescreen to cover up a bloody infighting between hedge funds.
The list of casualties in this tough stock fight is growing, and if it started with the funds and Maplelane Capital as victims of this violent ‘short squeeze’, other funds managed by firms ranging from David Einhorn’s Greenlight Capital to Renaissance Technologies, They have joined the fallen in combat.
What is still not so clear is who benefited from these falls being on the other side. To shore up his suspicions, Block has claimed that his firm, Muddy Waters Capital, was the victim of what he believes was a minor hedge fund-induced short squeeze on shares of GSX Techedu in the weeks leading up to the frenzy surrounding to GameStop.
Precisely because of this ‘attack’ and others like it, Block had to hire a full-time trader to monitor the stock option markets and adjust positions to more actively manage risk. “It’s a commercial game, it’s flow-based, it’s technical,” he said. “We’re going to do whatever it takes to survive.”
Block, on the world of investment: “We are going to do whatever it takes to survive”
Block also agrees with the growing feeling that financial markets are overvalued and small investors will be hurt when the bubble finally bursts. He blames the Federal Reserve for injecting too much liquidity, allowing too much credit extension and too much leverage.
Unlike many short traders, Block is decidedly transparent with the names of the companies he believes are scams and is betting against. In fact, he himself mocks those who accuse him of being part of the Wall Street ‘establishment’. If I were in there, he wonders, “why would Goldman Sachs and Credit Suisse have turned down my business?”
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