Wall Street: the revenge of individual shareholders against large investment funds

This is the crazy story that has agitated Wall Street for a few days: the showdown between individual shareholders who have ganged up against large investment funds.

This pack of individual shareholders has bitten the dust at one of Wall Street's big funds, Melvin Capital, which suddenly lost several billion dollars.

He is not the only one.

It is the revenge of the little ones against the big ones.

It all started on Reddit, the social network, where these small individual shareholders decided to launch a coordinated attack on large Wall Street hedge funds.

Why ?

Because they had noticed that these funds kept selling short shares of GameStop, which is a video game distributor in poor health but which they decided to defend.

Short selling is a common practice of these large hedge funds.

For example, you are sold GameStop shares for $ 18 that you don't have at the time but that you borrow, with a bet that you can buy them later at $ 15, and therefore pocket the difference.

Is it this mechanism that these small shareholders have come to stop?

And There you go !

They spread the word on WallStreetBets, a forum on Reddit that has several million subscribers.

They all started buying these shares together to boost prices: GameStop shares started the year at $ 18, soared to $ 483 at the end of last week!

As a result, these large Wall Street firms who had bet on the downside were squeezed and lost fortunes, we are talking about twenty billion dollars!

It has worked so well that these shareholders who act in a pack feel like growing wings.

There is a little libertarian side in there, a revenge side of small carriers, who had been flushed in 2008, against the great funds of Wall Street.

Take a look on Reddit to see the messages that are exchanged: it's festive, vengeful, with a lot of words in F ***, F-words, as we say in English, to show that they have them well eu, these giants of Wall Street who believe themselves to be all powerful and who fill their pockets with them.

Predators have become prey.

These individuals who have gone to the front see themselves as vigilantes.

They are chasing new targets, always the same: stocks that have been sold short by the big firms on Wall Street.

Like Nokia, Blackberry or even French companies like Unibail-Rodamco.

In short, we have to reckon with them.

What changes everything is the power of social networks: when millions of small carriers spread the word, it can cause prices to shift completely, beyond all reason.

But reason is not the most shared thing on social media.