Nine Investors Instantly Make $16 Billion On GameStop Stock 'Squeeze'

[Klaralven]

...

GameStop's financial future isn't all that bright. But it's still a member of the S&P Small Cap 600 index and Russell 2000. As a result, large index small-cap funds and ETFs are forced to own it. That's looking smart now.

Fidelity FMR is the top holder of GameStop shares. It owns 9.5 million shares, through September, or nearly 14% of shares outstanding. Adding that up and Fidelity hauled in a $3 billion gain just this year for its investors.

Similarly, BlackRock scored $2.7 billion and Vanguard $1.7 billion, as they own 12.3% and 7.6% of GameStop, respectively.

https://www.investors.com/etfs-and-funds/sectors/gme-stock-gamestop-investors-instantly-make-16-billion-gamestop-stock-squeeze/

[ret5hd]

1. So Fidelity et al sold their shares?

If not, they ain’t made diddly. Holding shares doesn’t make you money...selling shares (at a profit) makes you money.

[Klaralven]

3. True, if the shares are in index funds, the funds will ride them back down.

But it does make your end of month balance look nice.

[ret5hd]

4. Well, I would suggest selling shares of the fund now...

and maybe buy back in later.

[spooky3]

2. Are they really "required" to own it? These funds try to mimic the performance of

the member firms by owning a sample of the stocks, not every single one.

And, if they are truly required to own it, how can they sell shares to reap gains?

Right, finance experts?

[unblock]

9. If the fund is supposed to mimic an index such as the s&p 500,

Then the only way to safely do this is to own, directly or indirectly, shares in exactly the 500 stocks that make up the index.

So if a fund is supposed to mimic an index that includes one of these wild stocks, then yeah, they have to own it.

They generally only sell it when it drops out of the index (aside from selling some shares of all their holdings when some investors pull money out of the fund).

[spooky3]

11. It really isn't the only way to do it. nt

[unblock]

12. How else?

I mean yeah, you can you futures or options, but these instruments are indirectly based on the same shares.

How does your fund go up when the stock price goes up if you don't own, directly or indirectly, the shares or one of these instruments based on those shares?

[Pantagruel]

5. They usually buy and sell

based on market cap weightings. The astronomical rise in share price will likely force them to sell large portions when they re-balance.

[unblock]

10. If the index is market cap weighted, then the portfolio naturally adjusts properly

If a stock was 1% of the index it's 1% of the portfolio. If the stock triples, it's now 3% of the index and 3% of the portfolio.

[Ferrets are Cool]

6. I am not the brightest bulb, but for them to "make" money, don't they have to be able to sell it

at that price? Otherwise it's just faux profit, right?

[underpants]

8. Me either but that's what I said too. It's part of an index so...

the index will decrease when these stocks come back to earth.

[underpants]

7. Well they haven't realized it yet

They have to sell for the income. Just saying