(Part 1) The inner workings of an investment bank

Let's talk about what an investment bank does. It's gonna lay out some foundations and make some pieces clearer on what happened recently with highly shorted securities with the issuance of shares including wealth creation.
(Part 2) Investment banking does three primary functions: underwriting securities, IPO & seasonal offering.

A company wants to issue shares. You need someone to vouch for you to buy a piece of your company. In some way, it's a reputation kind of thing.

This is underwriting.
(Part 3) The investment bank has contacts among people to make offerings worthwhile and they manage this issuance to make sure a company grows with liquidity.
(Part 4) If it's the first time issuing shares, it means a private company would want to go through an IPO (initial public offering). That same company would require an intermediary party to complete this process so it can be featured publicly on the stock market like RBLX.
(Part 5) Investment banking can also do seasonal offerings when a company has already filed periodical issuance with a precedented approval of its shareholders or if there was an existing pool left because insiders have sold their holdings.
(Part 6) There are two kinds of deal with investment banking: "Bought Deal" & "Best Effort".

A Bought Deal is when an investment bank just buys shares outright and resells them on the market with a profit.
(Part 7) A Best Effort is when an investment bank doesn't buy anything but will find a third-party who can purchase shares of said company with involved commission rates.
(Part 8) Just a free lesson on a Sunday morning!

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More from @CringleKitten

12 Jun
(Part 1) So I've been investigating the bond market and lots of smart money from institutions are betting against it. $HYG is one of those prime examples, being a high-yield corporate bond, representing low-par companies.
(Part 2) These institutions betting against these bonds are Citadel, Blackrock, Morgan Stanley, Citigroup, Jane Street, Goldman Sachs, Susquehanna, Bank of Montreal, Barclays, UBS Group, and more!
(Part 3) How does this affect the squeeze? Unfortunately, it is just kicking the can down the road as the bearish market is eventually inevitable but it's gonna help somewhat our cause.
Read 8 tweets
12 Jun
(Part 1) ERRATUM in said recent Part 12.

I somehow used the equity line of $30B instead of $407.641B in AUM as of 03/31/2021 for Citadel. I don't want to use Fintel as they often do mistakes on recent filings.
(Part 2) Even I do mistakes - that's why I hire people to do these calculations and peer-review data (STUPID CAT!)

So Citadel having a 8% capital requirement meaning $32.61B to maintain their assets in place.
(Part 3)

40% short volume x 102.30M short interest x 800$ (share price) = $32.736B

Meaning if Citadel would be the only hedgie to short $AMC, if they are not kicking the can down the road by reloading their shorts, hedging against their bets.

They would go bust at 800$/share.
Read 4 tweets
12 Jun
(Part 1) Here's another cat snippet for $AMC

So we are in the beginning of the end.

Many of us know that the higher the share price goes, the higher the collateral would be needed from short sellers to maintain their positions.
(Part 2) When a short seller hasn't covered their positions when their shorts were at 10$, their losses are absurd on top of covering interests.
(Part 3) That's why short selling is a high risk / high reward alternative in the market - the potential of infinite downside if there's a losing bet.
Read 13 tweets
10 Jun
(Part 1) Let's explore some things. $AMC

Disclaimer: Anything under this thread is not financial advice. All of this is based on my professional experience and content here are for educational purposes.
(Part 2) The squeeze is imminent. Technical analysis doesn't work. Prediction models are haywire and inaccurate. Fundamentals are out of the window. Ortex and S3 Partners aren't reliable.
(Part 3) Lately, I've read talks about the 2nd book system. It is real. The 1st book is held by the company registering transactions between a buyer and a seller. The 2nd book is for validation of such transactions between these two parties through a clearing house.
Read 18 tweets
10 Jun
(Part 1) I don't understand this trend of holdings being held/delayed by a clearing house / market-maker.

The truth is they have been doing this for quite some time.
(Part 2) Let's go back to the basics: retail investors submit their orders through their brokerage services at market prices which take within two business days to settle through a market maker / clearing corporation.
(Part 3) Some of the delays are bound with the amount of buyers and sellers based on supply and demand - but also with the amount of wealth being exchanged. If it's a huge order, that might take some time to be fulfilled completely based on existing partial offers.
Read 13 tweets
9 Jun
(Part 1) Anatomy of the bearish market (in a nutshell)

We're supposedly at the end of the bullish market (RED) with inflated stocks with margin, credit, and debt. Some stocks will undoubtedly melt-up (skyrocket) [this year - highly shorted securities are current plays]
(Part 2) Eventually, once the bearish market in in our doorstep - In order to preserve wealth, investors would be buying gold as fiat currency will lose value for gold to pick up in value. They are inversely proportional.

Nothing is gained. Nothing is lost. All is transformed.
(Part 3) On the first step of the bearish market (PINK), investors would be looking out for the true dip of the stock market / real estate and crypto.

Nobody knows when the market will reach the very bottom so be prepared to average down on your holdings.
Read 10 tweets

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