[fractionalhare]

With respect, you haven't thought this through. Given there is "so much riding on this", why do you think a hedge fund would concoct a nefarious, extremely uncertain scheme to get people to think they closed instead of actually closing?

You agree they're motivated by money, right? They would have lost literally all their money, even with the additional investment, if they were still in when GME soared to $400. They would also be aware of that fact.

[bluGill]

Because closing their position is not what any sane shorter wants to do. The bottom line of GameStop sucks baddly. Anyone who can add to their shorts stands to make a fortune in a few months after this all calms down.

Though they might have seen what was happening and exited at 50 to reenter at 300. That would be incredible foresight.

[qeternity]

Why do you think short squeezes happen? It’s not because shorts are being insane and covering. They are literally forced to. You have buying for reasons that aren’t commercial and that’s why short squeezes are so bloody.

[bluGill]

They are forced to because the lender of the stocks is afraid that they don't have enough money to buy back if things go even higher. If you can prove you have enough money at current prices then you are not forced to sell. GME is not a big company, even at current prices there are several funds that could afford to have a significant short interest from the bottom without getting a call.

edit: originially I said they could carry 200% short, but that is not true. The biggest funds I can find could alone have shorted 30% of a GME at $3 and be okay at $300, but going much above that price or percentage of GME shorted would be a problem.

[drcross]

These are naked shorts, more shares are shorted in GME than exist in the company.

[fractionalhare]

That is not what naked means. Naked short sales are short sales without an executed or agreed upon borrow between the borrower and broker. You are referring to short interest higher than 100% of the float (total shares in circulation), which is mundane because it happens organically when a lot of people want to short the same thing and start borrowing shares which were already sold short.

It seems entirely unsurprising to me that a brick and mortar retailer selling digital goods in the middle of a pandemic would be a hot short target for many different funds, thereby organically pushing short interest over 100%.

[qeternity]

As the other commenter notes, you do not understand what a naked short is.

[drcross]

>why do you think a hedge fund would concoct a nefarious, extremely uncertain scheme to get people to think they closed instead of actually closing?

Because they haven't closed their positions, and that information would tip shareholders into thinking they might release some profit before the price levels out.

>They would have lost literally all their money, even with the additional investment, if they were still in when GME soared to $400

No. Not if their positions haven't closed.

If you really think this through, why would they actually announce they have covered the shorts instead of simply reclaiming a short position?

[flunhat]

> If you really think this through, why would they actually announce they have covered the shorts instead of simply reclaiming a short position?

This is paper thin logic. If they hadn’t said anything publicly, you and others would be commenting, “See! Melvin Capital hasn’t said anything, so they’re still shorting GME.” It is incredibly common for investors involved in public battles over a stock to announce they’ve closed a position, see Bill Ackman and Herbalife (https://www.investopedia.com/news/billionaire-bill-ackman-du...)