DoubleLine’s CEO, Jeffrey Gundlach, known as ‘The Bond King’, provides insight into the short pinch and how investors got here, as well as the political and financial division in the U.S.
Government stimulus checks aimed at protecting the US economy from the economic slowdown caused by the COVID-19 pandemic are the main culprits for the volatility in the shares of companies like GameStop Corp., according to the billionaire fund manager. Jeffrey Gundlach bonds.
| Ticker | Safety | Last | change | Change % |
|---|---|---|---|---|
| GME | GAMESTOP CORP | 325.00 | +131.40 | + 67.87% |
GameStop Corp. shares have risen 1,545% since January 12, after a group of investors joined the WallStreetBets message board on the Reddit discussion site to squeeze short sellers who had bet against the company and others like it that they believed to have bad fundamentals.
GAMESTOP STOCK TOTAL SELLER’S SHORT LOSSES MORE THAN $ 19B, TELL FIRM DATA
“I think government stimulus resources are really the cause,” said Gundlach, CEO and chief investment officer at Los Angeles-based DoubleLine Capital, which has $ 148 billion in assets under management, Charles Payne told FOX Business in an exclusive interview on Friday.
The United States government on December 29 began sending checks for $ 600 to most Americans, making the second round of direct payments since the beginning of the COVID-19 pandemic in March 2020.
The first batch fueled a day-trading craze that has not yet subsided, as Americans have more time to monitor their investments while working remotely.
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The work of the domestic environment and the increase in volatility led to an increase of more than 50% in the number of families that carried out transactions last year, according to Charles Schwab, and an increase in the volume of negotiations. Last year, then SEC President Jay Clayton expressed concern about the increase in retail trade, telling FOX Business’ Maria Bartiromo. “I want to make sure that our retail investors know that there are risks involved in leverage of all kinds,” he said. The SEC is monitoring current developments.
Gundlach said 2.1 million investors organized themselves on the message board and gathered $ 20 billion in purchasing power, which was a decisive blow to short sellers who had built up a position equivalent to 150% of the outstanding shares .
The money allowed investors, or speculators, to “stack” hedge funds, forcing them to cover their short bets on substantial losses, Gundlach said.
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The hedge fund Melvin Capital received an injection of $ 0.25 billion from two other hedge funds on Monday, after suffering accumulated losses of almost 30% in the year.
“Hedge funds can do whatever they want, but if they act recklessly, they will end up winning over the problems of their activity,” said Gundlach.