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Judd Legum Profile picture
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28 Jan, 13 tweets, 5 min read
1. If you turn on CNBC, you'll hear a narrative that reckless retail investors from Reddit are destabilizing the stock market by driving up prices for GameStop and other stocks.

This is BS.

Follow along if interested.

popular.info/p/the-merry-ad…
2. Market instability was created by hedge funds and other "sophisticated" investors that SHORTED MORE GAMESTOP STOCK THAN WAS EVEN AVAILABLE FOR SALE

Retail investors are exploiting instability created by the hedge funds

They didn't start the fire

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3. The primary "victim" of the retail investors, hedge fund mogul Gabe Plotkin, worked SAC until 2013.

What happened in 2013? SAC pleaded guilty to insider trading and paid a $1.3 billion fine.

Plotkin then left to start his own firm.

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4. Plotkin made massive returns by doing a lot more shorting than most hedge funds & no one complained

But this week he was bailed out by his old boss, SAC founder Steve Cohen, and another hedge fund mogul, Citadel's Ken Griffin to the tune of $2.75B

popular.info/p/the-merry-ad…
5. Cohen & Griffin now own a significant piece of Plotkin's firm. So they have an interest in Plotkin navigating out of his current predicament. They also may have exposure themselves.

This is where things get interesting.

popular.info/p/the-merry-ad…
6. We now see retail trading platforms -- including TD Ameritrade, Schwab, and Robinhood -- RESTRICTING TRADES OF GAMESTOP AND OTHER STOCK.

Why are they doing this?

They say its to protect their customers.

But is that really what's going on?

popular.info/p/the-merry-ad…
7. Restricting trading on these stocks will make it easier for Plotkin (and his new investor Griffin) and others to get out of this jam

Griffin is pays these platforms tens of millions of dollars for the right to handle their "order flow"

Let me explain

popular.info/p/the-merry-ad…
8. When retail investors want to make a trade, these platforms let Griffin fulfill it.

"Citadel Securities accounts for 40 of every 100 shares traded by individual investors in the US, making it the number one retail market maker"

popular.info/p/the-merry-ad…
9. So Griffin is both a major business partner with these platforms AND potentially will benefit from their current actions restricting the trading of this stock.

This warrants further investigation.

popular.info/p/the-merry-ad…
10. Griffin, who recently purchased the most expensive home in America, is only in business because of government bailouts.

In 2008 he had massive exposure to AIG and relied on Morgan Stanley for lending. He survived only because they got bailouts

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11. It's a free market until the hedge fund moguls start losing money. Then SOMEONE NEEDS TO DO SOMETHING.

For updates on this story and more accountability journalism, sign up for the newsletter.

popular.info/subscribe
12. Here is Robinhood acting in a way that benefits Griffin its other business partners.

We need to explore why they are doing this.

popular.info/p/the-merry-ad…

13. I'm just a journalist so don't take it from me. Here is a financial expert making the same point.

popular.info/p/the-merry-ad…

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More from @JuddLegum

Judd Legum Profile picture
29 Jan
1. One thing we can leader from the GameStop situation is the nature of @RobinhoodApp and what kind of business it is in.

It is free to use and free to make trades.

So how does it make money?

It sells trades generated by its users to hedge funds and others
@RobinhoodApp 2. @RobinhoodApp is selling what is known as "order flow."

Robinhood's biggest buyer of order flow is Citadel, which is also one of the hedge funds that bailed out Melvin Capital, which shorted a lot of GameStop stock
@RobinhoodApp 3. How much does Citadel pay @RobinhoodApp for order flow. Luckily, this information is publicly available through a required SEC disclosure.

In September 2020 alone (last month available) Citadel paid Robinhood more than $30 million for order flow

cdn.robinhood.com/assets/robinho… ImageImageImage
Read 6 tweets
Judd Legum Profile picture
28 Jan
1. By allowing SELLING but not BUYING of GameStop, retail trading platforms like @RobinhoodApp are manipulating the stock price.

The question is, who benefits?

popular.info/p/the-merry-ad…
@RobinhoodApp 2. Important to understand is that @RobinhoodApp does not charge retail traders to trade stock.

Those small-time traders are not its customers.

It uses those trades to generate trades which it then sells to hedge funds like Citadel to fulfill.

popular.info/p/the-merry-ad…
3. So hedge funds, not small-time traders, are @RobinhoodApp's real customer

It needs the small-time traders so it has something to sell. But it's the hedge funds that pay the bills

Sign up for the newsletter for updates and accountability journalism

popular.info/subscribe
Read 4 tweets
Judd Legum Profile picture
27 Jan
Getting attacked repeatedly by the @TexasGOP for noting that its new slogan, "We Are The Storm," is a QAnon mantra.

The party claims its a reference to a "British author who writes books about running."

Which makes perfect sense.

popular.info/p/the-texas-re…
@TexasGOP Previously the @TexasGOP didn't mention this British running author and claimed it was derived from Psalm 29.

So the party is a bit of a moving target on this issue.

popular.info/p/the-texas-re…
@TexasGOP But I noted the @TexasGOP's denial of a QAnon link in the piece itself. And I also explained that, even if these explanations are true, it doesn't mater.

QAnon looks for signs, or "bread crumbs," of mainstream support. The Texas GOP is providing one.

popular.info/p/the-texas-re…
Read 4 tweets
Judd Legum Profile picture
27 Jan
1. Since electing Allen West as chairman in July, @TexasGOP has gone completely off the rails

*Adopting a QAnon slogan

*Floating secession

*Undermining the election results

But corporate America is going along for the ride

Follow along if interested

popular.info/p/the-texas-re…
@TexasGOP 2. @TexasGOP regularly receives 5-figure checks from corporations.

Popular.info contacted 38 major corporate donors to the Texas GOP.

Only ONE, @lyft, criticized West's conduct and said it would not donate in the future.

popular.info/p/the-texas-re…
3. Several corporations reiterated that their political donations were paused without commenting on West or ruling out future donations to the @TexasGOP

@GM
Bristol Myers Squibb (@bmsnews)
@Microsoft
@HP
@SouthwestAir
@UnionPacific
@CVSHealth

popular.info/p/the-texas-re…
Read 6 tweets
Judd Legum Profile picture
26 Jan
1. Senate Republicans do not want to defend Trump's conduct because he incited a riot that killed 5 people

But they also don't want to convict Trump because Trump is still popular with the GOP base

So they've invented a third way: IT'S UNCONSTITUTIONAL

popular.info/p/threading-th…
2. This argument is appealing politically, but legally it's bunk.

The Constitution's text does not limit impeachment to sitting Presidents.

It also explicitly says the Senate can try ALL impeachments. And Trump was impeached.

popular.info/p/threading-th…
3. It's also happened before. In 1876, War Secretary William Belknap ran over to the White House and submitted his resignation to avoid impeachment and trial. It didn't work. The Senate conducted a trial more than a month after his resignation.

popular.info/p/threading-th…
Read 5 tweets
Judd Legum Profile picture
26 Jan
UPDATE: @Google says its PAC will "it will not be making any contributions this cycle to any member of Congress who voted against certification of the election results"

popular.info/p/three-major-…
@Google 2. This is significant because @Google, like dozens of other companies, announced a pause of all political giving while it conducted a review.

Google's move makes it harder for other companies not to act

popular.info/p/three-major-…
3. We will continue monitoring all these companies.

The ones that have made pledges.

The ones that are still reviewing the pledges.

The ones that haven't said anything.

For updates and accountability journalism, sign up for the newsletter.

popular.info/subscribe
Read 6 tweets

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