Reddit vs Wall Street: Have the Titans Had It?

Who would have thought that a great anonymous mass of small investors would bring the best and brightest in Wall Street to their knees? Wall Street’s short losses have topped $70 billion but the users of Reddit (often referred to as “Redditors”) were quick to “meme” this piece of news simply as follows:

This article will seek to contextualise the story so far, present prominent players as well the mechanics underlying this debacle that Wall Street’s gilded investment mavens woke up to find themselves in the midst of and then provide some measure of an epilogue to an event that, while largely over, will likely continue to develop over the next few weeks.

Contents
  1. “Diamond Hands!”
  2. TANSTAAFL (or “There Ain’t No Such Thing as a Free Lunch”)
  3. “HOLD THE LINE!”
  4. “TL;DR”

“Diamond Hands!”

Reddit is not like Twitter or Instagram. While prime users of the latter often use these platforms to position and monetise themselves as brands, Reddit is completely anonymous. Real names are seldom offered, profile pictures are considered to be anathema and discussions are structured into “subreddits”: groups where Redditors gather to discuss a vast variety of topics, from the mundane to the esoteric. Many of the most popular subreddits also have evolved their own vocabulary.

One such subreddit is “wallstreetbets” (r/wsb) which describes itself thus:
Members here are referred to as “Degenerates”. While we won’t expand what “FD” is an acronym for (we’ll leave that to the reader to find out), “FD” is slang for out-of-the-money options expiring within a week while “Buying FDs” in the case of the above screenshot simply means “Members Online”. The logic of that might be hard to follow for some but not impossible.

In September 2019, user “deepf—ingvalue” claimed that GameStop (ticker: GME) might be undervalued at its then-price of around $4 per share and started to post his investments on GameStop in r/wsb. Gamestop’s business model of physical stores stacked with video games, gaming accessories, and a discounted buyback of used games was already crumbling in the face of online marketplaces for both games and gaming equipment. His claim was buttressed by reports that Scion Asset Management headed by Dr. Michael Burry (a former physician-turned-trader portrayed by Christian Bale in the film “The Big Short”) owned a 2.4% stake in GME at the time, which itself is regarded as one of the earliest instance of momentum in the stock’s run.

deepf—ngvalue posted a screenshot of himself investing $53,000 into GameStop stock over the preceding few months:
Despite wide derision from other r/wsb members, deepf—ingvalue continued to post updates on his investments in GameStop both on r/wsb and on YouTube where he goes by the name “RoaringKitty”. On YouTube, he laid out his case for investing in GME even further, which largely centered on GME’s growing online sales and the fact that it was shuttering stores (thus leading to reduced costs and increased per-store revenue).

While his investment value rose to around $150,000 in the next few months, he lost close to $60,000 of it by July 2020 as markets continued to hammer GME in 2020. deepf—ingvalue continued to hold his calls (an action referred to as “Diamond Hands” in r/wsb):
In addition to his insistence on the stock’s inherent potential, Ryan Cohen – an entrepreneur who built Chewy.com into a pet-supply giant and sold it for more than $3 billion to PetSmart – purchased 10% of GME in September 2020 and sent the stock soaring by 28%. The rally for GME began and r/wsb celebrated deepf—ingvalue’s “diamond hands”, whose investment’s valuation rose to nearly $2 million by December 2020. GME closed at $18.84 on December 31, 2020.

Meanwhile, the r/wsb members also glommed on to the fact that GME was the most shorted stock in the entire stock market with a short interest of nearly 140% of its available shares.

Shorts for Newbies

The percentage of shares shorted compared to the float is referred to as the “short interest”. It is calculated by taking the total amount of shares shorted and dividing it by the total amount of shares available for trade (‘float”). Theoretically, the maximum amount of a company’s float that could be shorted is equal to the float itself.

“Short-selling” involves borrowing shares from someone who owns it, selling them, and waiting to buy those shares back at a lower price. However, shares can be lent more than once. If a short-seller borrows shares from one brokerage and sells to another brokerage, the second brokerage could then lend those shares to another short-seller. This results in the same shares counted twice as “shares sold short.”

Short interest data on NYSE- and Nasdaq-traded stocks can be found in the Short Interest Tracker on MarketWatch. Nasdaq offers a breakdown by issue for a rolling 12 months that is updated twice a month via its Monthly Short Interest Tool. Ortex offers real-time short interest data through its platform for a fee.

Throughout this entire saga, a couple of hedge funds who reportedly held a substantial portion of the shorts against GME – namely Melvin Capital and Citron Research – published a number of YouTube videos detailing why they believed GME stock would go down in value. This diagnosis was buttressed by the fact that GameStop had to comply with COVID-19 restrictions and close most of its physical stores through a large part of 2020.

Neither of these facts went unnoticed by the r/wsb members. Across r/wsb and their associated Discord channel, they worked out a strategy: short sellers have to buy back the shares they already sold. If the share price increases, they lose money. Furthermore, buying shares to cover shorts would also increase demand and therefore increase the stock price. A 140% short interest implies that every floating share would have to be traded in 1.4 times to cover the short positions. If no one is willing to sell the stock, the stock price further increases. This recursive self-referential process is referred to as a “short squeeze”.

The tool of choice for many of the r/wsb members and their allies was Robinhood.

Note: Following an investigation of public records and social media posts, Reuters revealed on January 28, 2021 that deepf—ingvalue’s true identity is Keith Gill, a Chartered Financial Analyst formerly employed at Boston-based insurer MassMutual.

TANSTAAFL (or “There Ain’t No Such Thing as a Free Lunch”)

“Gospodin,” he said presently, “you used an odd word earlier–odd to me, I mean…”
“Oh, ‘tanstaafl.’ Means ‘There ain’t no such thing as a free lunch.’ And isn’t,” I added, pointing to a FREE LUNCH sign across room, “or these drinks would cost half as much. Was reminding her that anything free costs twice as much in long run or turns out worthless.”
“An interesting philosophy.”
“Not philosophy, fact. One way or other, what you get, you pay for.”
– “The Moon is a Harsh Mistress”, by Robert Heinlein.

Robinhood is a FINRA-registered broker dealer in the US founded in April 2013 with a stated mission to “provide everyone with access to the financial markets, not just the wealthy”. The founders are a typical American success story: Vlad Tenev was born to Bulgarian parents, both of whom worked for the World Bank in New York, while Baiju Bhatt was born to Indian parents in the US. They met at Stanford University and went on to found a high-frequency trading (HFT) firm Celeris in 2010, which they abandoned in January 2011 to form Chronos Research, which sold low-latency software to other trading firms and banks. In 2013, the duo co-founded Robinhood which, following a funding round in May 2018 that increased Robinhood’s valuation to $6 billion, made them both billionaires.

Vlad Tenev (L); Baiju Bhatt (R). Image Credit: The Wall Street Journal

Unlike traditional full-service brokerages that have higher commission fees but offer a wider range of services including market research and investment advice, Robinhood offers commission-free brokerage with no minimum account requirements. Users can also trade fractional shares — a piece of a single share as opposed to units of shares. As a result, Robinhood’s Total Addressable Market (TAM) is significantly larger and, on average, less knowledgeable about investing than the average customer of a full-service brokerage: the average Robinhood customer, for example, is 31 years old, while the average Charles Schwab customer is around 50.

Rather than risk overwhelming its users by presenting them with data processed by professional trading tools, Robinhood keeps its information streamlined. Robinhood also significantly “gamifies” its app. New accounts receive a free stock — a single share of a company determined at random. While the gift is unlikely to be a stock of Apple or Tesla, new users reportedly have a 98% chance of receiving a stock valued at between $2.50 and $10. When account holders make their first deposit, they receive a congratulatory message saying that funds have been made available immediately so they can start trading, and so forth.

This “gamified” approach is suggested as the reason why Robinhood gained 3 million new users in the first 4 months of 2020. “Pandemic day traders” traded nine times as many shares as E-Trade users and forty times as many shares as Schwab users during Q1 ‘20. They also traded eighty-eight times as many risky options contracts as Schwab users during that period.

However, the media narrative of inexperienced investors making risky decisions due to “gamified” apps such as Robinhood has been largely debunked by the National Bureau of Economic Research (NBER). While some users did invest in exotic instruments during the initial months of the pandemic, Robinhood investors principally held stocks with large persistent past share volumes and dollar volumes, making them invest overwhelmingly in large rather than in obscure stocks.

Robinhood’s impact on the US brokerage landscape cannot be understated. In October 2019 – following the success of the likes of Robinhood – Charles Schwab, E-Trade, and TD Ameritrade announced they would no longer levy commissions on ETF, options, and stock trading (which is now the norm). However, despite the rise of niche brokers and advisory services being made available to investors for (often) little to no cost, Robinhood ended 2020 with 13 million users.

The company’s revenue comes from three main sources: interest earned on customers’ cash balances, selling order information to high-frequency traders (a practice known as “Payment for Order Flow” or “PFOF”) and margin lending. Now, the average Robinhood account is worth between $1-5,000. Prior to E-Trade’s acquisition by Morgan Stanley in 2020, the company’s average brokerage account was estimated to be worth around $69,000. Morgan Stanley’s average account value is even higher, at approximately $175,000.

Given the vast difference in scales as well as the large numbers of small-scale investors using its services, it stands to reason that the first and last sources likely wouldn’t be massive revenue generators for the company. It was revealed by investigations by the U.S. Securities and Exchange Commission (SEC) and other parties that the company earned under half of its revenue in 2017 from PFOF, and roughly half in 2018. Notably, the company did not disclose this piece of information to its users until October 2018 – more than 5 years after it commenced operations.

PFOF is certainly not unique to Robinhood; most full-service brokerages pursue this practice as well. PFOF has brokerages direct third parties known as “market makers” to execute trades on their behalf. In the case of Robinhood, the process would be:

  • An investor places an order to buy or sell stock
  • Robinhood passes that order on to a market maker such as Citadel Securities, Virtu Financial or Two Sigma Securities, which actually executes the trade. In return, the market maker pays Robinhood for those orders
  • The trade is executed by the market maker, which profits on the transaction by buying shares at slightly lower prices than the price at which those shares are sold.

The SEC holds the view that market makers “generally have more information and processing power than retail traders and brokers”. So, in theory, this is a mutually beneficial proposition: the brokerage is absolved from handling the complexities of trade execution while the market maker gains access to vast volumes of trades.

But PFOF, which was pioneered by disgraced Ponzi scheme financier Bernie Madoff, is a controversial practice. SEC Rule 605 states that market makers are legally bound to provide the best possible quality of execution for each trade. “Quality of execution” refers to how close the fill price — the actual cost of a security, as opposed to its theoretical price — is to the bid or asking price of that security. But while market makers are legally compelled to seek the best possible execution of trades for their clients, they are not compelled to provide the best possible price. This can result in market makers executing trades at prices that are profitable for them, but may not be in the best interests of the investor. This practice is known as “front-running” or “tailgating”. While definitively stated to be illegal and unethical in almost all cases, this is often difficult to prove when the volume of data is massive due to multiple brokers running very large books from multiple parties.

In fact, Robinhood paid $1.25 million in 2019 to settle regulatory claims tied to PFOF. The Financial Industry Regulatory Authority – an agency that reports to the SEC – stated that Robinhood didn’t take sufficient steps from October 2016 to November 2017 to ensure it was getting the best prices for customer orders. In 2020, Robinhood faced a civil fraud investigation from the SEC over the same charges, which it settled by paying a $65 million fine.

In 2020, Robinhood made a little over $600 million in 2020 from PFOF.
Interestingly, while PFOF is typically paid on a per share basis, Robinhood receives a fixed rate per spread which is higher than the average rate the other major brokers receive. Robinhood has a larger pool of customers that trades often because it pays no upfront transaction costs. It is calculated that a $1,000 trade could yield Robinhood roughly 26 cents, nearly 60 times that earned by full-service brokerages. For comparison, here are the PFOF earnings of Robinhood versus other major full-service brokerages for Q1 and Q2 of 2020:

However, while PFOF accounts for just 3% of Schwab’s revenues and 17% of E-Trade’s revenues, Robinhood remains heavily dependent on PFOF. It also bears mentioning that Robinhood currently commands one of the highest rates on equity trades of any brokerage, at 17 cents per 100 shares. By comparison, Schwab makes 11 cents per 100 shares.

Robinhood’s “gamified” app with its fractional trading facility became one means through which the r/wsb members amassed their forces against the “Titans” of Wall Street.

“HOLD THE LINE!”

What started as a strategy to benefit from a short squeeze became a little more than that: it became a battle between two groups. The r/wsb members – by and large never really identifying as proletarians and never less than aspirational with regard to making money – saw their ranks of allies bolstered by those who grew up in the recession of 2008, i.e., a time when Wall Street received massive taxpayer-funded bailouts while ordinary Americans received little to nothing for the tragedies that unfolded in their lives for years. Many saw this as payback time. Many opened brokerage accounts for the first time. And they categorically refused to sell.

Memes like these helped rally the cause further

Starting around November 2020, GME had been making a steady climb up the charts. Then, on January 21, Citron Research declares that GME should be worth around or less than $20 and mocked those holding the stock.

By around January 25, the stock skyrocketed more than 1,200% to the near-$500 range in its highs. Melvin Capital, with its very large short positions, ends up losing 53% of its investment and has $2.75 billion in emergency funds injected into it by Citadel, its partners and Point72 Asset Management. This was reportedly lost as well. Melvin makes press statements claiming that they have covered their shorts by now. r/wsb is not convinced; they reason that the volumes traded weren’t high enough to cover all the shorts. Elon Musk – no ally of short-sellers – voices support to r/wsb. Stock prices rally upwards.

On January 26, GME opened at $354 per share (up more than 1,550% from December 31). Billionaire investor and CEO of Social Capital Chamath Palihapitiya – a vociferous defender of r/wsb’s actions on GME – buys $125,000 worth of February $115 GME call options after asking his 1.3 million Twitter followers what to buy. GME soars more than 300% throughout the day.

By January 27, brokers struggle to meet demand for GME. Meanwhile, Facebook disables the 157,000-strong “Robinhood Stock Traders” group founded by 23-year-old Allen Tran of Chicago. Discord bans the “r/WallStreetBets” server on grounds of hate speech. New groups on Facebook and new servers on Discord spring up almost immediately.

On January 28, several brokers including Robinhood block or severely restrict trading activity on GME and other “meme stocks” (by now, almost 50 other stocks including AMC, BlackBerry, Nokia and Palantir experience similar behaviour due to “hold” actions; all of these companies have significant short interest). GME records a high of $483. Chamath Palihapitiya closes his position in GME and announces he’s now going to donate both the profits and principal to David Portnoy’s Barstool Fund for struggling small businesses.

On January 29, Robinhood allows “limited buys” of “meme stocks”. GME surges again while the apps of brokers (including Robinhood) were downrated to 1 on the Play Store by hundreds of thousands of users. Google wipes these ratings off and restores their prior ratings. In retaliation, usage of DuckDuckGo – a rival to Google with significantly reduced tracking and monetization of user behaviour – skyrockets.

The boards of r/wsb lit up with messages like this

On January 30, some Redditors booked a digital billboard in Times Square through TPS Engage (a Romanian startup) to run a 15-second ad ten times over for a total price of $18.71. This was the ad:
After being posted on different subreddits (but not r/wsb since new users are automatically blocked from posting by the bot), this image became the #2 most upvoted Reddit post of all time. TPS Engage’s website immediately crashed due to over 40,000 people browsing, creating accounts and submitting campaigns in less than a minute.

On February 1, Vlad Tenev was grilled by Elon Musk over Robinhood’s actions in a freewheeling chat on Clubhouse – an invitation-only voice chat app between thought leaders and invitees. Vlad states that on January 28, the company received a file from NSCC (National Securities Clearing Corporation) at around 3:30AM Pacific Time stating that they have to deposit additional funds due to factors such as the volatility of Robinhood’s clients’ trading activity impacting the VaR (value at risk) of the company’s total portfolio in the stock market.

Who is the NSCC?

The NSCC was established in 1976 to sum up transactions in stocks in a centralized area, rather than settle them individually. This helps avoid the need for multiple invoicing and payment settlements among various parties. Today, this corporation serves as a seller for every buyer, and buyer for every seller for trades that settle in U.S. markets. The NSCC helps reduce the value of payments exchanged by an average of 98% daily.

The NSCC is a privately-held company where the CEO is under the supervision of 20 members of the board of directors. Two board members are selected by “preferred shareholders” ICE and FINRA, while 14 are from international clearing agencies.

The demand was for a total of $3 billion, which was $1 billion more than what the company had raised in venture capital. Robinhood COO Gretchen Howard reached out to NSCC and negotiated this down to $1.4 billion. The company’s team then proposed that the risk be managed through the day by “marking” volatile stocks that were driving the activity as “position closing only”. At 5:30AM Pacific Time, the NSCC responded that this would be acceptable and lowered the demand to $700 million, which was promptly paid. (A company blog post confirmed that the initial $3billion demand was at least ten times as much as its typical deposit)

24 hours later, Robinhood raised an additional $1 billion in capital and relaxed some of these limits. As the days passed, these relaxations continued.

Also, on February 1, deepf—ingvalue posted on Reddit that his position in GME has lost $5 million, leaving his position at $35million.
However, he continues to hold the line.

On February 5, Robinhood removes all trading restrictions on GME and other “meme stocks”. Reddit lit up with exhortations to keep buying and holding. Redditors also alleged that a high volume of new users are attempting to shift the conversation into selling “meme stocks”. R/wsb was also briefly locked when a group of former moderators briefly took over, dropped a large number of the current moderators and allegedly started scrubbing the various message boards; they were swiftly removed and the dropped moderators were reinstated.

Billboard in Portland, Oregon on February 5, 2021

GME went up 19.2% on February 5 relative to the previous day after rising as much as 77.6% earlier in the day. With their ability to buy the stock restored, many GME bulls took the opportunity to acquire more shares.

To set a constant reminder to Wall Street of what happened in January 2021 (and what, the Redditors promise, will keep happening), a fundraiser to take over billboards in Times Square (such as NASDAQ) for months during high traffic hours is underway. The $10,000 fundraiser is at almost 40% of its goal as of February 6, 2021

“TL;DR”

As Redditors repeatedly stated (often ad nauseum) that this wasn’t about money, this was about sending a message. The message was directed at Wall Street: they’re as vulnerable as the common man in the free markets that they so cherish.

These Redditors, however, are a small part of a new generation of investors who – as opposed to those that are typically catered to by full-service brokerages – are seen to have a pronounced disinterest in index-based ETFs in favour of single stocks. In terms of strategies, there is an outsized interest in options contracts albeit with a solid interest in cash positions, i.e. stock ownership as well. It is also likely that they share a (best case) neutral opinion of Wall Street “Titans” or (worst case) have a deeply negative opinion.

These investors are spread across the globe, as supported by the fact that similar actions were seen on the European and Asian GDRs of “meme stocks” as well as the US-listed stocks themselves. Interest in the GDRs or outright foreign ownership of US-listed stocks drove a number of “meme stocks” into the leaderboards of European brokerages in the end of 2020 and January 2021.

The events of January 2021, on the surface, didn’t seem to add up to much, relative to other events in Wall Street. Analytics firm Ortex estimated on January 28 that Wall Street’s short-sellers have lost more than $70 billion in the year to date (YTD). Shorting GME was estimated to have cost $1.03 billion, while shorts on Bed, Bath & Beyond (a “meme stock”) were looking at a $600 million loss.

However, it bears noting that the largest losses were estimated to be from Tesla, which tops the list of most shorted names (in value) with $47 billion worth of bearish positions, followed by fuel cell maker Plug Power. Neither Tesla nor Plug Power was a “meme stock”. Also, Ortex data showed that as of January 27, there were loss-making short positions on more than 5,000 U.S. firms (and not just “meme stocks”). Credit Suisse attributed this to the liquidity triggered by waves of monetary and fiscal stimulus and advised its clients that this liquidity is expected to increase after the next round of government stimulus.

On February 1, Ortex revised its estimates of losses and reported that hedge funds have lost $12.5 billion on GME over January. Given that most short positions were likely centered around GME being worth less than $20 and GME (as of February 5, 2021) closed at $63.77 with after-hours trading pushing it to $66.31,it would be a fair assumption to make that some short positions on the likes of GME and other “meme stocks” were rolled forward via complex structured deals that might continue to bleed for a little while.

In Europe, retail investors targeted the most shorted European names including Pearson and Cineworld, likely with the same strategy as with “meme stocks” in the US. Pearson shorts had estimated losses of $208 million, followed by Nokia at $205 million. Short-sellers booked US$28 million losses on their bets against Cineworld.

However, attributing all of the $70 billion loss to the actions of r/wsb and their allies would be premature.

It also bears noting that Wall Street is by no means a monolith that exclusively targeted the likes of GME with short positions. Richard Mashaal and Brian Gonic’s New York-based hedge fund Senvest Management LLC made $700 million after investing in GME in September 2020 and riding the wave until January 2021. The company reportedly became curious after a compelling presentation by its new CEO George Sherman and investor Ryan Cohen at an investment conference in January 2020. By October 2020, it owned more than 5% of the company. It exited its stake because of a tweet fired off by Elon Musk on January 26, which helped extend the short squeeze and sent GME surging another 157% when the market reopened the following morning.

Seoul-based Must Asset Management had presented a rosy view on GME in a Bloomberg interview on March 2020 and held a 4.7% stake in the company as of April 2020. On January 25, however, CEO Kim Doo-yong told Bloomberg that the company’s view on GameStop have turned less bullish on account of the stock’s high volatility and more-than-ten times surge since March 2020. He also declined to reveal Must’s holdings in GME but instead stated that it has increased its stake in US-listed Kaleyra Inc (KLR) to 5.2%.

PlusTick Administration in Charlottesville (Virginia), which runs a hedge fund managing about $120 million, gained 20% in January, mostly due to rallies in BlackBerry and Macerich which were both “meme stocks”.

Similarly, New York-based hedge fund Mudrick Capital Management LP made $200 million on another “meme stock” AMC in the month of January 2021. The fund’s holdings were principally in AMC’s debt, which rallied in January’s final week as AMC’s share value soared. The fund additionally made about $50 million writing and promoting name choices on AMC and GME shares it owned.

“It is not just little people on the long side here. There are huge players playing both sides of GameStop,” said Thomas Peterffy, chairman of Interactive Brokers Group to the Wall Street Journal on February 3.

Reddit CEO Steve Huffman stated on February 1, “The big change I see coming is the fulfillment of the promise of the internet. What we’re going to see over the next 20 years is the democratization of economics, not just what we’re seeing on Wall Street Bets”. Hedge fund billionaire and Bridgewater Associates founder Ray Dalio said of the GameStop frenzy on February 3, “Is this a big thing? It doesn’t come close to these other big things. How should wealth be distributed? Why doesn’t capitalism achieve the goal of being good for most people and how do you engineer it that way, while increasing productivity and its efficiency? That kind of engineering is the big thing and I don’t think they’re paying enough attention to that.” Dalio had argued in 2019 that the economic system does not serve the interests of most Americans. He also said he believes in more protections for individual investors.

Seemingly sympathetic towards the short-sellers’ predicament was Senator Elizabeth Warren of the ruling Democratic Party, who had long been touted by the media as being hawkish on Wall Street greed. “We need an SEC that has clear rules about market manipulation and then has the backbone to get in and enforce those rules,” said Senator Warren on January 27. “To have a healthy stock market, you’ve got to have a cop on the beat.”

With regard to the short-selling “Titans” of the industry:

Melvin Capital founder Gabe Plotkin, personally worth at an estimated $300 million, has seen his company lose 53% of its value due to its short positions in GME while in the midst of a $44 million plan to expand the 1935 Miami Beach house he bought for $12 million by replacing the adjacent property with amenity courts, a new 1,316-square-foot cabana, a children’s playground and open space. Some speculators opine that he likely would be hard-pressed right now to justify his expenses. Plotkin’s neighbours Dan Loeb (founder of activist hedge fund Third Point) and Cindy Crawford (veteran of many a magazine cover and fashion ramp) were not approached for comment by the media.

Melvin Capital ally Point72 led by Steven A. Cohen slid 10% in January, according to a source with knowledge of the fund’s returns. Point72 declined to comment to the media.

Citadel’s Melvin investment had an immaterial impact on its flagship multi-strategy hedge funds, according to a source, who added that it made up about 1% of the losses incurred by its Kensington Global Strategies Fund and 3% of the losses incurred by its Wellington Fund for January. Citadel declined to comment to the media.

On January 29, outspoken activist short seller Andrew Left announced that, after 20 years, his company Citron Research will no longer publish ‘short reports’ on companies whose value may fall. Citron, he said, will focus instead “on giving long side multibagger opportunities for individual investors.”

Activist short seller Hindenburg Research outlined a negative view of health-care software maker Clover Health Investments after four months of investigation on February 4. Hindenberg CEO Nate Anderson says his firm isn’t planning to give up short-selling any time soon. However, in light of the climate around short selling, Hindenburg isn’t currently short Clover Health stock. They simply state that their published research – which also accuses Chamath Palihapitiya of misleading investors about Clover – is meant to prove a point.

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The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.


Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

By clicking you agree to the Terms and Conditions displayed.

Terms and Conditions

Notice

By selecting ‘Institutional investor’, you affirm either that you are a Per Se Professional Client, or that you wish to be treated as an Elective Professional Client, both as defined under the Markets in Financial Instruments Directive, or an equivalent in a jurisdiction outside the European Economic Area.

This website is maintained by Leverage Shares Management Company, which is a limited liability company and is incorporated in Ireland with registered offices at 2 Grand Canal Square, Grand Canal Harbour, Dublin 2. The contents of this website have been approved under S21 of the Financial Services and Markets Act 2000 by Resolution Compliance Limited. Resolution Compliance Limited is authorised and regulated by the Financial Conduct Authority (FRN 574048).

This website is provided for your general information only and does not constitute investment advice or an offer to sell or the solicitation of an offer to buy any investment.

Nothing on this website is advice on the merits of any product or investment, nothing constitutes investment, legal, tax or any other advice nor is it to be relied on in making an investment decision. Prospective investors should obtain independent investment advice and inform themselves as to applicable legal requirements, exchange control regulations and taxes in their jurisdiction.

This website complies with the regulatory requirements of the United Kingdom. There may be laws in your country of nationality or residence or in the country from which you access this website which restrict the extent to which the website may be made available to you.

United States Visitors

The information provided on this site is not directed to any United States person or any person in the United States, any state thereof, or any of its territories or possessions.

Persons accessing this website in the European Economic Area

Access to this site is restricted to Non-U.S. Persons outside the United States within the meaning of Regulation S under the U.S. Securities Act of 1933, as amended (the “Securities Act”). Each person accessing this site, by so doing, acknowledges that: (1) it is not a U.S. person (within the meaning of Regulation S under the Securities Act) and is located outside the U.S. (within the meaning of Regulation S under the Securities Act); and (2) any securities described herein (A) have not been and will not be registered under the Securities Act or with any securities regulatory authority of any state or other jurisdiction and (B) may not be offered, sold, pledged or otherwise transferred except to persons outside the U.S. in accordance with Regulation S under the Securities Act pursuant to the terms of such securities. None of the funds on this website are registered under the United States Investment Advisers Act of 1940, as amended (the “Advisers Act”).


Exclusion of Liability

Certain documents made available on the website have been prepared and issued by persons other than Leverage Shares Management Company. This includes any Prospectus document. Leverage Shares Management Company is not responsible in any way for the content of any such document. Except in those cases, the information on the website has been given in good faith and every effort has been made to ensure its accuracy. Nevertheless, Leverage Shares Management Company shall not be responsible for loss occasioned as a result of reliance placed on any part of the website and it makes no guarantee as to the accuracy of any information or content on the website. The description of any ETP Security referred to in this website is a general one. The terms and conditions applicable to investors will be set out in the Prospectus, available on the website and should be read prior to making any investment.


Risk Warnings

The value of an investment in ETPs may go down as well as up and past performance is not a reliable indicator of future performance. Trading in ETPs may not be suitable for all types of investor as they carry a high degree of risk. You may lose all of your initial investment. Only speculate with money you can afford to lose. Changes in exchange rates may also cause your investment to go up or down in value. Tax laws may be subject to change. Please ensure that you fully understand the risks involved. If in any doubt, please seek independent financial advice. Investors should refer to the section entitled “Risk Factors” in the relevant prospectus for further details of these and other risks associated with an investment in the securities offered by the Issuer.


Leverage Investment

Leverage Shares exchange-traded products (ETPs) provide leveraged exposure and are only suitable for experienced investors with knowledge of the risks and potential benefits of leveraged investment strategies.

Cookies

Leverage Shares Management Company may collect data about your computer, including, where available, your IP address, operating system and browser type, for system administration and other similar purposes (click here for more information). These are statistical data about users’ browsing actions and patterns, and they do not identify any individual user of the website. This is achieved by the use of cookies. A cookie is a small file of letters and numbers that is put on your computer if you agree to accept it. By clicking ‘I agree’ below, you are consenting to the use of cookies as described here. These cookies allow you to be distinguished from other users of the website, which helps Leverage Shares Company provide you with a better experience when you browse the website and also allows the website to be improved from time to time. Please note that you can adjust your browser settings to delete or block cookies, but you may not be able to access parts of our website without them.

By clicking you agree to the Terms and Conditions displayed.