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The Almighty Buck

Profile of Keith Gill, Who Drove the GameStop Reddit Mania (wsj.com) 131

Posted by msmash from the king dept.
The investor who helped direct the world's attention to GameStop, leading a horde of online followers in a bizarre market rally that made and lost fortunes from one day to the next, says he's just a normal guy. From his profile by The Wall Street Journal: "I didn't expect this," said Keith Gill, 34 years old, known as "DeepF-ingValue" by fans on Reddit's WallStreetBets forum and "Dada" by his 2-year-old daughter. He said he didn't set out to draw the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors. "This story is so much bigger than me," Mr. Gill told The Wall Street Journal in his first interview since the unboxing this week of a volatile new stock market game. "I support these retail investors, their ability to make a statement." To many of them, Mr. Gill -- who until recently worked in marketing for Massachusetts Mutual Life Insurance -- is the force behind the triple-digit gains in shares of the videogame retailer GameStop, up more than 900% this year through Thursday. On Wednesday, the stock jumped 135% to $347.51, a record, before plunging to $194 a share Thursday as online brokerages clamped down. At the start of the year, GameStop shares went for around $18. Many online investors say his advocacy helped turn them into a force powerful enough to cause big losses for established hedge funds and, for the moment, turn the investing world upside down.

Mr. Gill posted a screenshot of his brokerage account Wednesday, showing a roughly $20 million daily gain on GameStop shares and options. "Your steady hand convinced many of us to not only buy, but hold. Your example has literally changed the lives of thousands of ordinary normal people. Seriously thank you. You deserve every penny," replied one Reddit user, reality_czech. The next day, Mr. Gill posted another screenshot -- showing about a $15 million loss. After Thursday's market close, his E*Trade brokerage account, viewed by the Journal, held around $33 million, including GameStop stock, options and millions in cash. "He always liked money," said Elaine Gill, his mother. As a child, she said, "he would get money from those scratch tickets that people didn't know they'd won. People would throw them on the ground... A lot of times there was still money on them." Mr. Gill's online persona -- he goes by "Roaring Kitty" on YouTube -- has drawn tens of thousands of fans and copycats who share screenshots of their own brokerage accounts. Mr. Gill said he wasn't a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks. He never expected to have a legion of fans debating his identity online, or millions of dollars in his trading account, he said. He was just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb.
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Profile of Keith Gill, Who Drove the GameStop Reddit Mania More

Profile of Keith Gill, Who Drove the GameStop Reddit Mania

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  • Getting the attention of Feds is ridiculous (Score:5, Insightful)

    by UnknowingFool ( 672806 ) on Friday January 29, 2021 @01:04PM (#61006072)
    Certain parts of Wall Street like the hedge fund managers are calling for federal investigation. To me that is ridiculous; he noticed a weakness in the trading strategy of certain hedge funds and exploited it. If he was a competing hedge fund manager or a Wall Street player like Warren Buffett, they would be celebrating what he did. But since he is an ordinary guy, he cannot be allowed to do this.
    • He did more than find a weakness in someone's trading strategy; in order to take advantage he had to mobilize an online community to help him. That's what got the Feds' attention. With that said, is what he did so bad? As you say, guys like Buffett have the means to pump the stock price all by themselves, seems only fair that a bunch of small traders can get together and do the same thing.

      • [I]n order to take advantage he had to mobilize an online community to help him.

        One could say he created a grassroots pooled fund [investopedia.com].

      • And what is different about mobilizing unknown strangers on the Internet as opposed to Jim Kramer going on the financial TV shows (like his own) and talking up a stock? It is merely a different medium.

      • Thing is, if large companies start doing pump-and-dump, regulators can try to control them and make certain practices illegal (often after the fact). Here, they're investigating ... how they could control large groups of individuals who are not a single legal entity. Because if they can't, there will be more of those events.

        And I agree with the question "with that said, is what he did so bad?". Is that going to deter hedge funds from shorting in the future ? If so, is that a bad thing ? Or are we going to

        • Re:Getting the attention of Feds is ridiculous (Score:4, Informative)

          by UnknowingFool ( 672806 ) on Friday January 29, 2021 @01:47PM (#61006256)
          The problem was not the principle of shorting in itself. The problem was that it was "over shorted." I am not sure that is the right terminology. To short a stock, the trader has to "borrow" shares of that stock to sell now with the promise that they will replace those shares later. However there is no real requirement that the entity lending out those shares actually had to own the shares. They could also "borrow" shares to cover their contract. What Gill noted was that GameStop short contracts required 30% more shares than issued stock shares. This would certainly cause a feedback loop when those contracts came up. But the one thing to note is that shorting is extremely risky strategy without a lot of regulation.

          • Probably, yes. I had originally written "deter hedge funds from massively shorting" but I wasn't sure about the term either.

            That said, there is still a debate about whether shorting is doing any good at all. Elon Musk obviously thinks it's a bad thing, but probably because Tesla faces a lot of short sellers. So why is shorting needed in our economy ? What would happen if tomorrow it became illegal to lend stock ?

            • Shorting is not needed IMO; it a high risk strategy for some people to make money. As long as Wall Street wishes to very little regulation, they will want the ability to do high risk/high reward methods of making money.

            • Shorting is not bad in itself. The whole point of a hedge fund is to... be a hedge. Hedge your bets. Bet big in the stock market, but put a little in the hedge just in case you're wrong. The short is useful to be there as an insurance. The hedge is supposed to lose much of the time, so you write off the small loss on the hedge fund but celebrate that you won big in the mainstream funds; but... then if you lose big on the mainstream fund you've at least not lost everything because the hedge helped out.

              N

          • Since regulations already failed the only solution is to let all of this play out because it's a form of the market regulating itself to eliminate bad strategies. Failure to allow this punishment to occur or even forbidding it from occurring only encourages more reckless shorting in the future because there's an assumption it won't be punished. I'm sure the market would eventually find a new way to correct for this, but it's likely to be more convoluted or clumsy than this kind of direct counter-action.

            T
            • There were no regulations against anything that has happened so far which is what Wall Street wants. Live by the sword, die by the sword.

          • The problem was that it was "over shorted."

            I have read that short interest was 150% of the float, which means that there must have been naked shorting taking place.

            Naked shorting is illegal, so some of these hedge funds were breaking the law. Unfortunately, the SEC has been mostly neutered in recent years, so don't expect any meaningful action from them.

            Expect an investigation, which won't report until everyone has forgotten about the whole incident. The report will be low-key and no one will even notice it

            • Naked shorting is illegal as it relies on shares that do not exist. Over shorting is not. In this case, there seems to be multiple contracts on the same share. Investor A borrows shares from Investor B who has a contract to borrow those shares from Investor C who actually owns the shares. That is not illegal and appears to have happened here. Now if Investor B never borrowed from C that would be naked shorting.

            • Re: (Score:2)

              by hawk ( 1151 )

              >which means that there must have been naked shorting taking place.

              No, it *doesn't*.

              Certain brokerage accounts (such as margin enabled accounts) give the broke permission to lend the shares.

              So Arthur's shares are lent to Betty for her short, who in turn sells them to Chuck. Chuck's shares then get lent to Diane, who sells them to Ed.

              We now have three people "owning" shares, and two owing them, all from one share, without any naked shorting.

              Only Ed, however, if anyone, could vote the share.

              This is the s

        • Re: (Score:2)

          by Shotgun ( 30919 )

          The Epoch Times had the most excellent explanation of shorting that I ever read. The short version:

          I borrow a car from you and sell it, expecting that the market price of that type of car will drop in the future. Then I buy the car back at the cheaper price, give you your car back, and pocket the profits. Things go poorly for me if the price goes up instead of down.

          My problem is with the "I borrow and then sell it". That is a nasty piece of business. Anyone doing this deserves what they get. You've cre

      • Re:Getting the attention of Feds is ridiculous (Score:4, Insightful)

        by LenKagetsu ( 6196102 ) on Friday January 29, 2021 @01:38PM (#61006220)

        Nope, everything he did was perfectly legal, unlike naked shorting.

        • Had to look it up:

          Naked shortingis the illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock, or determine that it can be borrowed, before they sell it short.

        • Re: (Score:2)

          by Mitreya ( 579078 )
          According to Wikipedia, naked short selling isn't explicitly illegal (although I am sure it should be)

          In 2008, the SEC banned what it called "abusive naked short selling"[2] in the United States, as well as some other jurisdictions, as a method of driving down share prices. Failing to deliver shares is legal under certain circumstances, and naked short selling is not per se illegal.[3][4][5] In the United States, naked short selling is covered by various SEC regulations which prohibit the practice.[6]

        • Naked shorting is definitely frowned upon. But why bring it up? No one has shown any evidence that anyone here was naked short.

      • What he did is bad because billions are lost and that money is not coming out of the pockets of just a few hedge fund managers that he decided were criminals. The economy is already highly precarious as it is right now and to throw in this amount of volatility will only hurt. Investors in those funds will lose, retirement funds will lose, jobs will be lost. Popping the bubble is worse than deflating the bubble.

        • The economy is already highly precarious as it is right now and to throw in this amount of volatility will only hurt.

          Please demonstrate where the fate of one stock will hurt all of Wall Street. Bear in mind this was not Apple or Walmart or Tesla. This was GameStop that was valued at $5 earlier this year.

          Investors in those funds will lose, retirement funds will lose, jobs will be lost. Popping the bubble is worse than deflating the bubble.

          Says who? Others are saying otherwise [nerdwallet.com]. Remember the hedge funds that are losing money were short selling which is an insanely risky strategy to base retirement funds upon.

          • It's not just one stock, clearly. Also it will spook a lot of people. Remember, it took just one single investment firm to start the sliced-and-diced mortgage security industry collapsing.

            Yes, putting all your money in a hedge fund is risky. But that's not what hedge funds are for, hedge funds are a backup to "hedge your bets" in other parts of the stock market. Generally if you lose big in the mainstream stocks you can still win something in the hedge funds as a consequence to offset some of your losse

            • It's not just one stock, clearly. Also it will spook a lot of people. Remember, it took just one single investment firm to start the sliced-and-diced mortgage security industry collapsing.

              1) Who are all these spooked people? 2) You do know that it was not only a single, ordinary investment bank that was heavily over leveraged in mortgage backed securities. Lehman Brothers was the 4th largest bank and not the only to cease existing. Please show me how GameStop is that important to the economy.

              Yes, putting all your money in a hedge fund is risky. But that's not what hedge funds are for, hedge funds are a backup to "hedge your bets" in other parts of the stock market. Generally if you lose big in the mainstream stocks you can still win something in the hedge funds as a consequence to offset some of your losses. It's their whole purpose.

              Did you even read the article or what I wrote? How many retirement funds have large amounts invested in hedge funds that have heavily shorted stocks? If the answer is a tiny percentage, then why are you

    • Re: (Score:2, Interesting)

      by PPH ( 736903 )

      he noticed a weakness in the trading strategy of certain hedge funds and exploited it

      Perfectly legal.

      But what Gill did was to rally thousands of others to pile on and perform a short squeeze. At some point, he may have stepped over the line and become an investment adviser. And subject to the laws and regulations governing that profession. Even though he didn't receive direct compensation, he did profit from his ability to direct the activities of others.

      Lawyers will have to make the final decision on this. Congress may be motivated to amend the applicable laws to regulate on-line advice

      • Re:Getting the attention of Feds is ridiculous (Score:5, Interesting)

        by Surak_Prime ( 160061 ) on Friday January 29, 2021 @01:39PM (#61006228)

        That's a garbage argument intended to punish this guy. I'll tell you why: If I walk outside of the building I'm in and stand in the parking lot and yell "Buy shares in Gamestop!" and proceed to yell explaining why, am I suddenly someone's investment advisor?

        Forums like Reddit are like that. He could have put what he was saying up and had it read by one person who ignored it or a million who did what he said. He created NO expectation of a relationship with any given member of his audience, or any fiduciary responsibility to them, so as long as he didn't intentionally lie with intent to defraud anyone or incite crime, he's a private citizen yelling in his back yard.

        Admittedly I'm not a lawyer, though I did go to school for it. But this is totally about him upsetting the professionals' apple carts, not at all about him breaking the law, IMO.

        • Re: (Score:2)

          by PPH ( 736903 )

          am I suddenly someone's investment advisor?

          Maybe. Just like the people interviewed on TV about some business deal who are required to inform their audience of their interest in the company that they are reporting on.

          It would be a really good idea to educate yourself on the applicable regulations before going out into that parking lot. Hint: One-to-one advice is treated far differently than making an announcement to groups of people.

        • Re:Getting the attention of Feds is ridiculous (Score:5, Insightful)

          by ranton ( 36917 ) on Friday January 29, 2021 @02:43PM (#61006434)

          That's a garbage argument intended to punish this guy. I'll tell you why: If I walk outside of the building I'm in and stand in the parking lot and yell "Buy shares in Gamestop!" and proceed to yell explaining why, am I suddenly someone's investment advisor?

          I work in a financial institution which is heavily regulated and not allowed to provide investment advice to our clients. We need to rely on partners for that. We have a team of lawyers who are consulted whenever we add functionality to our portals to ensure we don't cross the line into giving financial advice. Often when we question their determination they don't even refer us to actual laws, but mention conversations they have had with lawmakers, lobbyists, and think tanks who give them advice on how the courts are likely to interpret the law right now.

          All that is to say it is very complicated what constitutes investment advice and what you can be fined or persecuted for. One of our lawyers once told my development team the most important thing is to try not and upset the regulators, because they can probably make whatever you are doing illegal if they try hard enough.

      • Re:Getting the attention of Feds is ridiculous (Score:5, Insightful)

        by UnknowingFool ( 672806 ) on Friday January 29, 2021 @01:51PM (#61006270)
        When did he become an investment adviser? He posted on a forum what to do and made clear his stake. He had no contract with anyone offering his services for a fee. This is no different than any stock tip you get from a random person on the street. From what I see, investment pundits do that every day on financial TV shows. "GE is going to go up this spring. I own shares and will buy more."

    • Re: (Score:2)

      by PPH ( 736903 )

      If he was a competing hedge fund manager or a Wall Street player like Warren Buffett

      Warren Buffet and some hedge fund managers are subject to different trading rules than small traders. Once they buy or sell over some threshold of the outstanding shares of some company, there are reporting and other regulations that apply.

      • And Gill did not? He actually posted how many shares he had multiple times. As long as he fills out the correct IRS tax forms regarding profits and losses I do not see what else he had to disclose.

        • Re: (Score:2)

          by PPH ( 736903 )

          I do not see what else he had to disclose.

          Then he should have talked to the SEC. There are numerous reports one has to fill out once one meets certain conditions. Apart from tax forms.

          • And what are these reports that an ordinary investor must disclose. Please state the form and the regulation that requires it.

    • Multiple boats (Score:4, Insightful)

      by Okian Warrior ( 537106 ) on Friday January 29, 2021 @01:34PM (#61006200) Homepage Journal

      Certain parts of Wall Street like the hedge fund managers are calling for federal investigation. To me that is ridiculous; he noticed a weakness in the trading strategy of certain hedge funds and exploited it. If he was a competing hedge fund manager or a Wall Street player like Warren Buffett, they would be celebrating what he did. But since he is an ordinary guy, he cannot be allowed to do this.

      Laugh all you want, but also realize that he hurt a lot of people who own multiple boats.

    • Good. Let them call for the investigation. And let it play out.

      He did nothing wrong. Robinhood did, by restricting access, but him not at all. This was just the free market at work. I know several hedge fund managers, and not a one is a person I'd have in my house. Many of them view Wall Street as their private play-thing, how they make money on the backs of hard working people; they're modern Gordon Gecko's. They're used to it because they took the time it takes to understand how to manage the m

    • > But since he is an ordinary guy, he cannot be allowed to do this.

      Don't worry - they will 'find' ties to Putin this afternoon and file lies with the FISA court over the weekend. Clinesmith just got probation, so the gloves are completely off now.

    • As pointed out by Chamath Palihapitiya

      I don't know how you can run a typical hedge fund strategy and make money anymore because for example when you looked at Gamestop you know a normal person would say how you can have a 136% short interest. How you can be short 40% more shares than actually exist in the world? To a normal person that doesn't make any sense, but to a Wallstreet mathematician that's the game that's been played for years and that game came undone.

      But, yup, let's blame WallStreetBets for taki

  • The bigger story isn't about the particular exploit he's doing here with shorting and forcing them to pay for that. Though that is awesome, in both the classical and modern sense of 'awesome'.

    The bigger story, as he alludes - is that it is possible.

    Because of automation and communication.

    This is the story that's going to repeat.

    Automation can't do everything - but people are drawn to expand what it CAN do.

    It's what we programmers and technical folks in general have been doing all this time - changing indus

  • and demonstrating it's just gambling, but none of this rise in the stock price is going to do a thing to improve conditions for the workers in the stores, Game Stop is still going down the drain, they closed over 400 stores last year, the store workers still make $12-15 an hour or so (which is more than I make working in a library). All this does is give money to the board and the shareholders. Now, screwing over a hedge fund? I'll laugh my ass off at that.

    Those hedge fund people just need to keep te

    • Those hedge fund people just need to keep telling themselves "Past performance is no guarantee of future returns" as they clean out their desks before the power gets turned off.

      You're certain these Hedge Funds are being held by wealthy individuals only? I know an attorney that represented an evil hedge fund during the great recession fallout. Yeah, the hedge fund managers are pieces of shit, but they're managing money for retirement accounts. The overpriced legal team was defending them against catholic nun charities, various municipal retirement accounts, your local firefighters and garbagemen, etc...primarily working class retiree funds, various pensions, etc. Remember when

      • They are overpaid terrible people, but I hate to concede that their work has value.

        A fund manager's only job is to manage risk. Naked shorts are obviously very risky positions. Be angry at the fund managers fucking over the pension funds instead of the WSB people.

  • There are several stock touts on the financial pages and this Reddit group is really no different from, for example Motley Fool, Zacks and others.

  • and a plastic kiddie slide on the front lawn of a Boston suburb

    Um, best move that to the back lawn with a fence and a security guard now that you've pasted online a screen shot of your tens of millions.

  • Get it right you coke-sniffing pederast crooks.

  • “ just a dad with an online hobby and a plastic kiddie slide on the front lawn of a Boston suburb” is a punchline - literary license. It serves as comedic relief even if its not true for the unbelievable story facts present.

    I’m with unbelievable and the handle “DeepFuckingValue” moniker by which he asserts prognostications. GameStop was a perfect storm not of his making. He knew enough to see the light through the crack in the system. He owns that much. Kudos.

    Hive mind latched-

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