Evidence that GME shorts are not covering
And why we cannot trust short interest data.
Short interest - the number of shares that have been sold short (sold high to be bought back cheaper later) but have not yet been covered or closed out, is expressed as number of shares, or percentage of the float (tradeable shares of a given instrument).
It is becoming clearer that short interest data is being inaccurately reported with the hopes of persuading shareholders that there are no shorts to squeeze. Since last Sunday, S3 partners are deceivingly reporting that the short interest has dropped 30M by Friday 29th Jan.
An extremely conservative calculation for 28th and 29th Jan- considering the most ideal situation for the short-sellers, which doesn’t even take into consideration any volume from retail investors trading between each other, produces these results for the 28th Jan:
Shorts added 25M further short positions at an average of $280
While covering 10.4M positions at huge cost.
This likely did not happen for various reasons, including:
We have seen their ability to short-ladder and manipulate the price down. Why would they cover at such huge costs when they know they can wait a few more days to cover for cheaper?
If they did cover, the price would have surged drastically with buy orders and not plummeted as it did through Thu and Fri.
This calculation assumes that 0 volume of trades was executed by retail investors – virtually impossible given the hype at the time.
And lastly, there were very few shares to borrow at the time, only a fraction of the 25M result.
Now on Friday 29th it was a boring day with a volume of 50M, 17.6M of which were shares being sold short, so SI should be at 57.8M + 17.6M = 75.4M. For SI to have decreased to around 27M as reported by S3 on Sunday, it would have required the covering of 48.4M. Go back and read these numbers again.
It is impossible to cover 48.4M shares on a day of 50M volume, where 17.6M shares of this 50M were used to add further short positions. Even if every single share that traded on the day went into the pockets of HFs, the SI would still not tally up.
So how are we getting these numbers?
Short-sellers create an appearance of having closed their short position through the use of deceptive options trades. They write call options (another short position in the form of a bet/insurance) and sell them to Market Makers (MMs), while buying “synthetic shares” against these options as long positions. Synthetic shares are not a part of the original share float of the stock, and thereby the short-seller appears to have bought shares but they actually haven’t, as they cancel out against the short call positions they wrote and sold.
It’s basically a loophole where both short and long positions are drawn out of thin air, allowing HFs to maintain short positions that legally weren’t supposed to have (140% of float), and in fact the shares never get properly located, which trigger alarms and Failure to Deliver Shares (FTDs) that continue to be pushed forward for consecutive days, now at about 40 straight days.
Now everyone is waiting for the next SI report on the 9th February, but I seriously ask you this question: Who is to say that these numbers will not be inaccurate for the exact same reasons that data analysts are reporting?
The good news is, that with the above evidence you can be sure that SI remains very high to this day, no matter what News channels states about short-sellers closing their positions, and no matter what figures they regurgitate in our faces. We can never know the exact figures for sure, and you can be sure that it is far above what they're reporting, and that there still remains a high volume of shorts that have yet to be squeezed.
What can you do about this?
One way to put these HFs in their place is to call an emergency shareholder vote, where every borrowed share needs to be called back to their owners thereby eliminating all synthetic shares. Coupled with a reverse stock split to ensure the legal amount of shares have been issued would take away all leverage from fraudulent short-sellers and force the naked shorts to cover immediately.
Obligatory: This is not financial advice and I am long on GME.