I'm really enjoying Keith Gill's second coming. Of major note -- he first appeared with $53k in 2019, kicking off the original GME. His recent brokerage account shows (as of tonight assuming he didn't sell anything) something like $300mm+ of equity value. And a cost basis of like $170+mm. He has been BUSY the last four years. I'm looking forward to the second documentary.

To summarize the internet speculations -- with 12mm shares sold to him through his in-the-money calls, if he chooses to exercise them, and then directly register them, he will likely create some real havoc. Meanwhile 1mm or so redditors are buying retail, options and the underlying. It should be a fun 10 days.

The Gill play would be:

1. Exercise call options

2. Direct register the shares

3. Repeat.

Why would this create havoc? Well, it looks pretty clear that most of these calls have been written naked, that is, someone, somewhere just left the liability for the calls on the balance sheet, and didn't, you know, buy any shares to cover them.

Normally this wouldn't be a big deal -- an options trader would sell close to the bell on the 20th at prices that market makers quote as very close to the value, and there's a whole take-a-tiny-slice-for-the-service-thank-you-ma'am industry that deals with settlement and clearing. In this case, though, the stock is fairly heavily shorted. And GME retail owners speculate that a lot of phantom / fake shares are in play on the market / @ DTCC, the usual place share registries are kept for retail brokerage.

So, what will happen if Mr. Gill requires what is essentially delivery of his shares through direct registration? The idea would be that the naked call writer will need to go purchase shares. Gill purchased in roughly 500k-1mm share blocks, so imagine he starts out and is like, "Thank you good sir, here's your $20mm for my 1mm shares at $20. Please send them. Today."

The seller will then be like "fuck, okay, I need to go purchase 1mm shares ASAP." The proposal is that these naked call sellers will not then be able to call up DTCC and say "yo, my balance sheet is fine, please put 1mm phantom GME shares onto E-Trade's account, ref: Roaring Kitty." Instead they'll have to buy non-phantom, deliverable shares. This will push the price up.

The remaining 11mm shares that are due by the other call sellers will then cost more to buy, and this will trigger additional risk considerations. These sellers may choose to buy some percentage early to cover, or they may wait. But, if they wait, Gill could again be like "I'd like my next 1mm shares, thanks".

All this is business as usual, what's different here is the scale -- this is a pretty large holder, just under the SEC sizing rules where Gill would be considered an insider by virtue of his holdings alone -- and that Gill has a band of retail traders who want, more than anything, to beat the hedge funds selling these calls / doing the shorts.

I'd love to see this play out as described; if it cost some major market movers a few billion dollars and killed an aggressive short or two in the process, it would be a nice "natural consequence" for some of the ways the market works against these smaller players like Gamestop, plus it's amazing theatre, where we get to cheer for a guy named "DeepFuckingValue" on reddit.

Note that to the extent there's value in GME, it is in fact deep value; it comes from being a sort of whipping boy company with a failed model that was a little more resilient than expected; in 2019 it had (from memory) something like -$500mm in net income, and less than a year of cash. Now it has over $1bn in cash and is basically cashflow positive on its balance sheet yield. It still doesn't seem to have a viable retail business. But it has a weird modern form of capital - social capital. And the CEO has leveraged that into, you know, cash capital. I'm sure he's planning additional share issuance over the next few weeks to top up the coffers again.

Very fun.