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Welcome to the channel. Today I want to tell you how Ken Griffin lied about Melvin Capital. Of course, we, retail investors, know that we are not responsible for the losses of these pension funds. But today I want to show you how Ken Griffin outright lied, because these pension funds lost almost nothing from their investment in Melvin.
So stay with us, and let's make money. And now I want to jump straight to the key information. Here's an article from Pension Pulse that says, "I can say that the Reddit community Wall Street Bets actually helped the Ontario Teachers Pension Plan as it sold a 16.4% stake in U.S. shopping mall owner Macarich for $500 million after the company's stock skyrocketed," according to regulatory filings obtained by Bloomberg News.
It says: โGood move. The largest share of teachers in Macarich had been dragging down the portfolio's returns for years, and they needed to get rid of these shares. But did teachers really invest in Melvin Capital? The author of the article says: โI donโt know. Just like I don't know if CDPQ or CPPIB did it, and frankly, I don't really care.
If they lost money there, it would hurt. But in terms of their overall hedge fund portfolio, it's nothing in the long run. But he said: โ The one thing I would like is for the big Canadian pension funds to approach the SEC to advise them on how to develop better rules to make sure that hedge funds or bank trading departments are not engaging in questionable activities , such as excessive shorts of low- trading stocks.โ They said the GameStop saga exposed the absurdity that is happening in the stock market.
And this not only repels small and large investors, but also scares them. The SEC has to make sure that everyone follows the rules and that everything is done fairly. So what does the author mean when he says that from the perspective of their overall hedge fund portfolio, this is nothing in the long run?
Well, this report from the National Association of Pension Funds shows that UK pension funds currently invest only a small proportion of their assets in hedge funds, representing less than 2โ3% of total investments . Now I think there are some large pension funds in the US that invest a larger portion of their total portfolio in hedge funds, but, again, most pension funds invest less than 10% of their total portfolio.
Most pension fund assets are invested in bonds and notes. They are invested in real estate as well as in general S&P 500 trackers. Only a small portion of the total pension fund is invested directly in specific hedge funds. And even then, these 2โ3% are not invested in one single hedge fund. They are distributed among perhaps 5โ10 different hedge funds.
So, the pension fund's direct exposure to Melvin Capital is likely only 1-2% of their total portfolio. And any losses from direct investments in Melvin will likely be offset by gains from other sources, such as the real estate market. Obviously, if a hedge fund suffers a 50% loss on 1% of its assets, that's only a 0.5% loss for the entire portfolio.
And of course, if he gets 7% returns elsewhere on his entire portfolio through investments in bonds and real estate, that's a total of 6.5% returns per year. This section on the modern hedge fund industry states that an estimated $1 trillion is now invested in over 7,000 hedge funds worldwide. The most developed market is obviously the US market.
But if you take $1 trillion and divide it by 7,000, it turns out that a maximum of about $142 million is invested in one individual hedge fund . That is, the entire collective pension market probably only invested $142 million directly in Melvin Capital, which is a very small fraction of the total size of their fund, as Melvin was valued at over $10 billion at one time .
Therefore, pension funds actually make up a very, very small portion of Melvin Capital's total fund size . And again, if we look a little deeper at WallMine, it asks, " What kind of clients does Melvin Capital Management actually serve?" It says: "Melvin Capital Management's single and largest client group is the pooled investment vehicles with seven clients and $5.98 billion in assets under management." And again, if we look at this table, we see that pension funds and profit-sharing funds have actually invested quite significantly in Hoskin Partners, the NWQ investment company.
But if you look at Melvin Capital Management, the entire size of their portfolio is made up of these pooled investment vehicles, not pension plans or profit-sharing plans. Therefore, it is quite possible that no pension fund currently invests in Melvin Capital . So, Ken Griffin's claim that teachers and other pension funds lost money investing in Melvin is factually incorrect.
Another thing I found very interesting while researching was that Gabe Plopkin was actually accused of insider trading. Guys, if you haven't already , be sure to sign up for Mumu $17,500 worth of free shares. Mumu and Futu have also officially stated that they do not accept payment for order flow, so Mumu is a great choice for buying AMC shares.
Mumu was also recently voted the best trading platform because it is incredibly easy to use and very easy to configure . It says that while working at SAC Capital, which was owned and managed by Steve Cohen, Plotkin received illegal insider information, according to federal prosecutors. Reuters identified Plotkin as the so- called Portfolio Manager โBโ in the SECโs civil lawsuit against Michael Sternberg, a fellow SAC manager who was arrested on charges of trading Dell stock based on insider information.
Plotkin was allegedly sent several emails by Sternberg and others containing insider information. I can't say that I'm surprised that Gabe Plotkin is being accused of insider trading or that he actually engaged in it. This is apparently why he became the perfect tool for Ken Griffin and Steve Cohen, and the perfect guinea pig for the GameStop and AMC fiascos.
Gabe Plotkin is clearly not afraid to get his hands dirty. He is not afraid to engage in insider trading, and therefore almost certainly not afraid to create and hold synthetic short positions. It also said that after the " short squeeze" of GameStop shares, Melvin Capital reported that it was the subject of at least nine separate lawsuits regarding its conduct during that period.
Now, even though Gabe Plotkin has already closed Melvin Capital and is returning money to investors, that doesn't make these lawsuits go away. These claims will still be investigated and litigated. I also wanted to show you this excerpt from Bloomberg that demonstrates how deep Ken Griffin's control really goes.
I wonder what you think of Ken Griffin's comments, John. I haven't seen them all, but I know you've studied them carefully . Did we learn anything new? He said something interesting about retail traders and Wall Street Bets going after a certain hedge fund, and how it was ugly because it was about encroaching on teachers' pensions, which blew up Twitter.
I have to say, it didn't quite resonate with me. Tom, this is so political. Thank you to Francine Laqua for raising this highly sensitive topic. This is a great interview to explore and delve into such questions. I think you did brilliantly. I will refrain from commenting, as will Mr. Pharao, because we want to work on Monday.
Now this is really So, I think Jonathan hit the mark. Even he doesn't think Melbourne Capital is responsible for the loss of investors' money, but he doesn't want to talk about it too much on Bloomberg because, as Tom says, they would like to work on Monday rather than be laid off on the weekend. Jonathan and Tom clearly understand that if they say anything negative about Ken Griffin like that, he can fire them on the spot and maybe even destroy them.
So they actually won't say anything bad about Ken Griffin on air because they want to keep their jobs and their lives. And I find it just ridiculous how deep this corruption goes and how much control Ken Griffin has over the mainstream media. And not just over those worthless news sources like Market Watch or Motley Fool, but even over the biggest media outlets like Bloomberg, CNBC, and many others.
But regarding the broader market, the chief investment officer of One River Asset Management said: "If we can't bounce back after seven weeks of declines in a row, something is seriously wrong." The CIO said, "If we can't bounce back after seven weeks of declines in a row, there's something seriously wrong with this market." But it takes number three or stage three of the market crash before a major bottom is reached.
And the market is still stuck somewhere in the second step or the second stage of the crash. So, the director of One River Asset Management believes that the market crash will continue until the bottom is reached. And Jerome Powell said that achieving price stability and restoring it is an absolute necessity.
This is what we must do, because the reality is that the economy does not work for workers, businesses, or anyone without price stability. This is, in fact, the foundation of the economy. And he said: โIf this requires going beyond the generally accepted neutral level, we will not hesitate to do so.
We will act until we feel safe, where we can say "yes", the financial conditions are at the right level. We see that inflation is decreasing." As Mac 10 tweeted: โThis current decline is twice as fast as 2008. In 2008, it took 9 months and minus 15% to reach the point of collapse." And he says that now the market has fallen by more than 20% in just 4 and a half months.
And he says that soon things will get so bad that 2008 will seem like a good time. And I think this chart or graph really shows what the current recession looks like and how it's shaping up compared to other recessions in the past. Al tweeted, showing 90 years of " bear" markets visualized by the magnitude of the decline and duration in trading days.
We see here in red the current decline, which has been going on for 96 days, which effectively puts it in the middle between all previous bear markets. Some bear markets only fell 20-25%, but some officially fell as much as -62%. Some of them lasted 30 to 40 trading days, as we saw in 2020. But some lasted up to 439 trading days, as we saw during World War II in 1940โ1942.
Of course, I expect this current decline to continue, both in terms of the scale of the decline and the number of trading days. Right now I expect the market to fall 30โ40 %, but I could be surprised and the market could fall 50โ60% or even more. As for AMC, as Corey tweeted, according to Coming Soon Net, industry experts are predicting that Doctor Strange: In the Multiverse of Madness will gross between $900 million and $950 million worldwide .
To date, the Doctor Strange film has grossed over $800 million worldwide: $342 million domestically and $461 million overseas. Rotten Tomatoes also reported that Netflix is โโallegedly considering a 45-day theatrical release for Rian Johnson's "Knives and Blades 2." Netflix apparently stated that their subscriber base is shrinking and movies are performing worse than before.
So they are now in talks with cinema chains like AMC to show the films exclusively. Netflix original movies are exclusive to AMC theaters and other networks. This is probably what Netflix needs to win back its customer base and secure bigger box office, but it's also great for AMC because it means AMC is winning, and even Netflix wants to show its movies in AMC theaters.
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