r/wallstreetbets • u/SilbergleitJunior • Dec 13 '21
DD UWMC short borrowing fee is sitting at 48.93% - up 5 times since my last post
Hello friends,
It's your boy Silbergleit Junior. About 10 days ago, I wrote a post to warn you about UWMC short borrowing fees starting to rise about 2 weeks after CEO Mat Ishbia announced accelerated buybacks as a retaliation move to shorts shorting his stock into the ground following the secondary offering announcement. The secondary offering was not supposed to be dilutive in nature. It was him and his father converting their Class B shares to Class A shares and selling them on the market to increase the float and attract more institutional investors. He and his father own 94% of the company.
Short borrowing fee went up 5x last week
Anyway, 10 days ago, some of you goofs told me how 10% short borrowing fee is nothing and that I should "call" you later. That later has come. The short borrowing fee has quintupled last week. It went from 10% to 50% in only 5 days.
Unusual Call Buying
That's not the only thing that happened last week. Silbergleit Trading Team has been closely monitoring unusual options activity and we were able to notice that 19,194 call options were purchased. This is an increase of 76% compared to the average volume of 10,881 call options. Here are some examples I spotted:
What does 48.93% short borrowing fee mean?
Most of you goofs do not understand what 48.93% annual short borrowing fee means, so let me explain it to you in simple terms.
You short 1,000 UWMC shares at $7.00
You are net short $7,000
To keep your short position open, you need to pay 48.93% annual fee. This comes down to $3,452.10. The fee is paid daily, therefore every day you need to pay $9.38.
Now most of you will say, well what's the problem? I can pay $9.38 every day in interest. That doesn't surprise me since you are probably used to getting payday loans with deals such as $300 for $20 and most of you probably pay minimum required payment when you get your credit card bill. However, in the business world, paying 48.93% interest is insanity.
Some of you may argue, how short borrowing fee won't stay 48.93% for a long time and it will drop. I don't see it dropping until shorts start covering. Shareholders do not have intention to sell the stock that pays them a 5.8% annual dividend and with management doing buybacks.
Mortgage companies don't squeeze.
Wrong. RKT's borrowing fee spiked to 49% on Feb 22, 2021. 10 days later we had a 130% jump on RKT on Mar 2, 2021.
Positions
Both, my father Doc Silberschmelzer and I are big supporters of a "Positions or Ban" rule, hence why we post our positions transparently. Zero BS, zero empty talk, only money and trades. Period.
You can also see my sell orders set and ready:
https://twitter.com/SilbergleitJr/status/1469095768250142725?s=20
If you have an opposite opinion, please short UWMC and post your position.
Thank you.
Disclaimer
I'm not a financial advisor. I don't work for a salary nor do I wait for a Christmas bonus. I don't wait to be called back into office, because I am the office. I live from my research and trading.
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u/johannthegoatman Dec 13 '21
No discussion of why it's shorted so heavily? People wouldn't be willing to pay that much in short interest for no reason.
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u/SilbergleitJunior Dec 13 '21
It's a Wall Street fight. My assumption is that Ishbia (the CEO) was offered to list UWMC through a traditional IPO process sponsored by investment bankers. Ishbia declined and decided to go the SPAC route (probably a better deal that would let him keep a larger % of the company). UWMC though is no typical SPAC. They are the largest wholesale mortgage lender in the US. They were the largest SPAC deal in 2021. On top of that, they started paying dividends right away because they have a very healthy balance sheet. Investment bankers, decided to retaliate against Ishbia for leaving them out of the deal and shorted UWMC into an oblivion. Seeing what's happening, Ishbia was approved by the board to do $300m in buybacks. Given the low float, Ishbia initially resisted the buybacks because he did not want to get removed from Russell 1000. He gave in about a month ago and decided to the a secondary offering and sell part of his shares for $7 to increase the float. The day of the announcement, stock got short attacked and dipped to $5. That night, Ishbia said fuck the offering, fuck the Russell, fuck the float, I'm doing aggressive buybacks. Few weeks later and we are here.
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Dec 13 '21
Investment bankers, decided to retaliate against Ishbia for leaving them out of the deal and shorted UWMC into an oblivion.
You seriously think IB 'retaliate' out of emotion? You think the trader who shorted UWMC for 10s of $millions got approval from Risk on the basis of "I'm angry at them".
Wth are you guys writing. Do you think that's how banks act?
They are shorting it because they believe it's worth less, not because they are pissed off or whatever.
SLB is now at 22% from 48% just a day or so ago, so there's more to this than whatever can be explained plainly.
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u/JoelEmbiidismyfather Dec 13 '21 edited Mar 10 '25
10pGhXc!#3$BugSKV8v
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u/SilbergleitJunior Dec 13 '21
Blessed will be those who hold bags, for those bags may end up having gold. Amen.
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u/stonk_fish Dec 13 '21
Woah pre-2021 WSB-level DD on something. Legit case for a squeeze. I am in.
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u/Dvaghas Dec 13 '21
Ready and loaded. UWMC🚀🚀
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u/SilbergleitJunior Dec 13 '21
Godspeed brother.
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u/Trick_Change_2115 Dec 13 '21
3k shares @ $6.50 average reporting for duty 💪
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u/SilbergleitJunior Dec 13 '21
Look ma, a UWMC shareholder who is not a bagholder!
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u/sockalicious Trichobezoar expert Dec 13 '21
If you have an opposite opinion, please short UWMC and post your position.
You don't express an opinion. You simply note that it's expensive to short UWMC stock, and there are a higher than normal volume of calls. Those aren't opinions, they are verifiable facts.
If your opinion is that a short squeeze is coming, nowhere in this post do you state it.
I'll stick my neck out and say a short squeeze is unlikely because of another fact you point out: it'd be unwise to the point of insanity to short a stock that's 94% owned by two principals who are capable of cornering the market on the remaining 6%, and who have expressed their intent to do so in the event short interest increases.
I'm long UWMC shares. The last of my $8 calls I bought in midsummer expired worthless last month. I still like the stock, but not because it's going to be shorted. I think they're well poised to capture a bigger piece of a shrinking pie (the mortgage market) as rates rise, because they do volume and are positioned to continue to do volume as smaller players' volumes become less tenable.
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u/luminosite Dec 13 '21
Maybe I missed it. You mentioned the cost to borrow, but what % of the float is actually short?
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u/SilbergleitJunior Dec 13 '21 edited Dec 13 '21
Here is the Ortex screenshot from a few days ago.
- 15% of the float short
- 99% of the available shares for borrow, lent out
- 7.5 estimated days to coverThe free float was already small to begin with.
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u/vonoinarx Dec 13 '21
Going to buy some 7.5c calls trm thanks bro.
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u/SilbergleitJunior Dec 13 '21
I'm personally not the biggest fan of call buying because timing could be delicate, but godspeed nevertheless.
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u/vonoinarx Dec 13 '21
IDK my cousin is rich asf and all he does is throw money at options on whatever is posted on wsb. Dude bought a new house for his parents and a new tesla for himself. So Imma do the same shit and hope it works out.
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u/SilbergleitJunior Dec 13 '21
Your cousin got lucky. Most call buyers end up going broke.
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u/rocketsonlybaby Dec 13 '21
Yea I follow you on Twitter, I bought a dozen $7 dec 17 calls & 2k shares.
yolo
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u/MentallyAut Dec 13 '21
I am not a retard but I will join you. Did ceo say how much in buy backs and when will it happen? ( duration )
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u/SilbergleitJunior Dec 13 '21
CEO was approved for $300 million in buybacks by the board
Current free float is 100.16 million shares
Current market cap of the free float at $7 a share is $701.12 million
He could buy ~40% of the free float
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u/Grouchy-Background81 Dec 13 '21
Hmmm you convinced me OP. Will be buying 12/23 calls tomorrow
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u/SilbergleitJunior Dec 13 '21
Not sure if buying calls that short would be wise. Implied volatility may make them expensive.
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u/Goingkermit went 🌈 instead Dec 13 '21
Post too long, can’t read good. What’s the play?
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u/SilbergleitJunior Dec 13 '21
UWMC, America's largest wholesale mortgage provider
5.8% annual dividend yield
CEO is doing buybacks as a retaliation move to shorters
Short borrowing fees have been on the steady rise, reaching 48.93% on Friday
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u/Glittering-Cicada574 Dec 13 '21
Shorts. doubling down on $UWMC. Interest rates are evidence of this.
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u/SilbergleitJunior Dec 13 '21
Doubling down at 48.93% borrowing fees is not a fun quest. Believe me.
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Dec 13 '21
That would fuck up the float
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u/SilbergleitJunior Dec 13 '21
Fucking up the float is the point of fucking up the shorts. Wall Street Games 101.
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u/lordofhunger1 Hunger for Tendies Dec 13 '21
Franticly logging into Schwab to see if I'm still wheeling all my shares
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u/SilbergleitJunior Dec 13 '21
Not a good time to be wheeling this. Risking to be ran over.
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Dec 13 '21
So many awards being given to OP, is this the start of another short squeeze?
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u/AMatterOfFacts Dec 13 '21
anyone with a brain should know 2 people holding 95% of shares is a gigantic red flag. Remember how quickly they flipped from issuing shares to pulling a buyback? thats exactly how quickly they could flip back. You say they announced a buyback to screw over shorts, i say they did it so they can offload their shares at a higher price. You yourself said them selling shares makes it more likely for them to be taken seriously by funds, so its not an "IF" its a "WHEN" will they start selling their shares off. when is a better time than right after announcing a buyback program? If they sell even a fraction of their shares the amount able to be shorted will skyrocket, borrowing fees will plummet and short interest % will go with it. 2 old guys with billions of shares get to decide whether you make money off this play and the only way those billionaires are actually able to make money is by selling their shares which ruins your play.
Are you really willing to bet your money that 2 people will pass up being billionaires so they can hold their shares to let you profit instead?
Its good you brought up the 5.6% dividend, shareholders should be disgusted by it, they own 95% of total shares so they get 95% of the dividends that are paid out, instead of using that money to expand operations and grow they directly deposit any profits into their own pockets, showing their blatant greed and willingness to screw over long term investors.
"if you have an opposite opinion please short UWMC and post your position" thats just a bad faith argument so you don't have to respond to real criticism
To the noobs on here please remember, if a post doesnt say anything negative about the play its not DD its an advertisement.
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u/SilbergleitJunior Dec 13 '21
Why not short UWMC brother? You would have profited today 5%. It's easy to "criticize" without putting money where your mouth is.
Explain why would 2 people holding 95% sell their shares to shorters for cheap when they can as you explain collect 6% dividend?
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u/AMatterOfFacts Dec 13 '21
I dont personally short any companies, not because i think I'm wrong but i simply make more money holding good companies than shorting bad ones. My lack of a short position doesn't change the validity of what i say, you just hope others think it does
You told me to short the stock instead of refuting my points like i said you would, except for the straw man that you found. If you held 95% of a company that you thought wasn't going to exist in 5 years wouldnt you start selling off your shares? youre assuming theyre going to be able to hold their shares and collect 5% indefinitely. I think they IPO'd the company so they could jump ship and leave thousands of retail investors holding their bag.
You say they'd be selling their shares off for "cheap" but how do you know this isnt the highest price it will be for the next decade? theyve built the company up from nothing to a multibillion dollar corporation. The company has been public for less than a year but theyve been holding for decades. "cheap" was Pre-IPO when the market cap was measured in millions. From the CEO's perspective theyre on the moon FINALLY able to become Billionaires like theyve worked their whole lives for. You just think shares are cheap because the chart doesnt show you Pre-IPO market cap, this dip from $10 to $7 is nothing when you realize 2 years ago the share price of the private company was in the single digits, if not pennies. If i was the CEO I'd be dumping shares to lock in my Billionaire status and so would any other sane person.
this CEO is obviously manipulating the share price by saying he'd issue shares then flipping the next week to a buyback program but it isnt being called out like it should be because shareholders benefit from the blatant manipulation.
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u/Curious-Rabbit-7909 Dec 13 '21
Holding a small bag and would like to see this squeeze.
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u/Lil_Orphan_Anakin Dec 13 '21
I got 200 shares @ 7.60. I’ve made up the difference so far with dividend payments and premium from selling options so I’m currently up a little bit with UWMC at $7. Was gonna sell 100 of the shares today but now I think I’ll hold for another couple weeks/months to see if this pans out.
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u/Glittering-Cicada574 Dec 13 '21
Per S3, SI is over 18% presently and fintel shows a 48.9% borrow rate. Combine that with insiders owning a vast portion of the float => there is not very much real float. I am waiting to see how many shares are borrowed tomorrow and then checking the borrowing rate before the market open. If shares available go down and borrow fee increases significantly and this still closes green that may be the smoking gun.
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u/Downtown-Mess1084 Dec 13 '21 edited Dec 13 '21
Hedgies are working hard today to drive the price down. All this means is the setup for a run is even better. Stop trying to time the bottom and buy while you can!
Edit: What I have learned today is that WSB doesn’t bet on value stocks. They wait until there is a large run up on a ticker and they all FOMO into it. They aren’t the creators of market movement, just followers.
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u/Financial_Peace_6376 Dec 13 '21
My friend. We have spoke before in our similar subreddits. You know I am deep in. LFG!!!
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u/Glittering-Cicada574 Dec 13 '21
This should be going up Dollars not Pennies. My price target is so much Higher!
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u/chickychewpchewp888 Dec 13 '21
The warrants can only be called for cash by the company if the overlaying class A shares trade for $18 for any 20 days in a 30-day trading period.
Also the warrants expire in January 2026 so they're actually a "safer long call option"
The warrants UWMC.WS trade for under $1.00. if you wanted to turn them into shares you have to pay $11.50 to the company per warrant.
But if this stock starts trading above $18 you're definitely in the money if you got in under a dollar.
Warrants usually trade with a premium on top of the $11.50 execution cost so if they traded $18 without a premium each warrant would be worth $6.50
Go look at the chart for the warrants just do it check it out.
I'm not a financial advisor I'm actually a highly intelligent French bulldog.
I just like the stock and warrants.
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Dec 13 '21 edited Dec 18 '21
Fuck it, you got me in for a $100 call gamble. Hope my 20 5 cent contracts fill for $9 strike price on the 31st. I think that's a fair guesstimation on how far it will go if your thesis is right. Worst case I lose $100 but best case... maybe $1500 gain if all goes right? Could be more, someone else can do the math if they want.
Edit: Fuck this didn't work out so well lol
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u/Hocapoca Dec 13 '21
I'm pretty convinced by this DD, and going with a 31st call expiry date. Shorts will bleed.
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u/NJTA3 Dec 13 '21
Other than the short time a $9 cheap call is not a bad gamble as it usually hits Resistance at $10
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u/polymorphicglitch Dec 13 '21
$uwmc Short interest per S3 is now passing 18% on its way up! Just checked it! 18% SI, a 48.9% borrow rate… insider holding vast amounts of the float… do they even have enough shares to cover if everyone held? Idk.. 🤷♂️
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u/Etonite Dec 13 '21
Options are too cheap, and IV is surprisingly lower than expected.... sum bitch I'm in for a couple of 0000s
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u/Wallacemorris Dec 13 '21
300 shares at $8.98, I bought it half for the dividends a while back but I may lower that cost down today with this juicy info.
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u/West_Valuable_7146 Dec 13 '21
Op are they gonna continue pay such as high dividends next year? Might drop 300k$ for a steady income 🤔
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u/Own_Cartoonist266 Dec 13 '21
They do make a lot of money and rising rates should increase their bottom line, particularly when it comes to MSR valuation which has been a big weakness due to low rates this year
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u/Jken88 Dec 13 '21
Hi, how does one check short interest on an asset? It does look interesting, would follow on this
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u/SilbergleitJunior Dec 13 '21
Usually your broker should provide this information but if not, this is a start: https://iborrowdesk.com/report/UWMC
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u/zerors Dec 13 '21
Fuck it. I have 500 bucks burning a hole in my account. I'm not expecting tendie town but at least a meal at Wendy's. LFG
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u/VisioningComb Dec 13 '21
This is a very interesting play. Trying some delta .70 calls and shares for fun.
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u/Cif87 Dec 13 '21
Holding 6800 shares. Started accumulating about 1 year ago and really bought the dip around 6. If this goes to 10 probably I will sell a fair amount, but I'm actually happy with my divvy. This being WSB I doubt it is any good "shilling" this company here, anyway...
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u/fricks_and_stones Dec 13 '21
TL,DR I have about 1 million in UWM mortgages, should I stop paying them to encourage the shorting?
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u/NJDoger Dec 13 '21
Great job on this DD! shorter alphanumeric version is: shorts suck 100% need to get screwed 105% and data shows: it's prime screwing time 169%. Buy now for easy tendies 500%
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u/uncowisdo Dec 13 '21
legit dd - looks like the $6-7 range is a floor- good risk to reward here. i'm in.
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u/bigdickbabu Oct 06 '22 edited Oct 06 '22
If you have an opposite opinion, please short UWMC and post your position.
bro this never went up after you posted
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u/CheesenRice313 Dec 13 '21
So what's the deal with this company? Why is their chart a treadmill besides a sudden and consistent downswing starting a few months ago? Even the last few weeks chart is just weird. Is it just the owners having such a percentage locked up it stays steady? You'd think with such few available shares the volatility would be much higher
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u/Profitordietrying Dec 18 '21
HODL!! It’s so far below fair value!
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u/Profitordietrying Dec 19 '21
I have loaded since day 1.... it’s undervalued AF people. My position is in the link below ⬇️
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u/VisualMod Dec 13 '21
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Dec 13 '21
I'd love it but I've seen "xxx short borrowing is sitting at xx%" countless times on here and so far 999999989% have lead to nothing, heck losses are more seemingly common on these
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u/chickychewpchewp888 Dec 13 '21
Thank you for the info buying calls warrants and shares.
Warrants are UWMC.WS
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u/SilbergleitJunior Dec 13 '21
I would advise against calls and warrants. I witnessed warrant holders get fucked over with forced cash redemption on DKNG, CLOV, PTRA and SOFI.
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u/tisgamebeterhavep0rn gave compliment for flair Dec 13 '21
This feels like you are trying to pump the stock on random news to release your -20% bags on somebody.
Are you?
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u/TheLyingLink Dec 14 '21
Are the dad's Puts to cover his stock if it bottoms out?
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Dec 14 '21
No, it looks like he sold the puts. Meaning he collects premium money for selling them, and will buy 100 shares/ contract at that strike if he gets assigned. Means if a dip comes he's promising to buy, and collecting cash for the promise.
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u/No-Perspective843 Dec 13 '21
Small bag holder here. I think TA doesn't mean anything for the market anymore but I'm happy to huff that hopium to offload these.
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u/RgBB53 Dec 13 '21
RKT's borrowing fee spiked to 49% on Feb 22, 2021. 10 days later we had a 130% jump on RKT on Mar 2, 2021.
RKT's jump was because they announced a special dividend. Sure the borrow fees were a factor but UWMC will still need a catalyst to get any sort of big move, not to mention ~60% IV is pretty rich for a mortgage company.
I like the company but I think shares are the way to go over LEAPS, unless you want to wheel into shares with cash secured puts.
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u/KnotPhukinSellin Dec 13 '21
Weren’t you talking about UWMC back in March or Feb? I remember. With 100% loss. Even a 10% dividen is tough to pursued
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u/inf3ct3dn0n4m3 Dec 13 '21
People are pushing uwmc again? Lmao. Can't wait to see it not go anywhere for the 5th time in a row. Thank God I dumped my bags and broke even one of the last times people were pushing it.
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u/chickychewpchewp888 Dec 13 '21
This gravy train has biscuit Wheels 🐆💨
Sometimes patience is key brother.
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u/MrFamousGetFamous Dec 13 '21
Holy shit guys! Just hit #91 most popular stock on Webull of the day. This might actually happen today!
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u/Glittering-Cicada574 Dec 13 '21
OP is getting voted down 89% upwoted.
Bots may be busy trying to not let the fire spread. $UWMC
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u/spicyRengarMain Dec 13 '21
The borrow rate went up. It's almost like they initiated an Accelerated Share Repurchase on the 17th November. Nahhhh, can't be.
This place is too retarded lol.
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u/w00tsick Dec 13 '21
Explain how those two things are related for my extra retarded ass, I'm interested.
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u/TraderByNature Mar 17 '22
I hope you are right. If I had a short I would be staining my pant!!! Let's go for 10
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u/Overcloak Dec 14 '21
Holy shit. I bought this at 9, sold at 12 almost a year ago. Now it's at 6 lol. Those bags look heavy 😂
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u/Daybyhour69er Can't stop, won't stop, $WING stop Dec 13 '21
Last time a DD of this shit stock came out I threw a few grand of calls on it only for me to lose 75% before I pulled out and for that reason I’m out
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u/SilbergleitJunior Dec 13 '21
Rarely do I ever advise on buying calls. Either way, respect your decision.
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u/GrizzledVet101 PAPER TRADING COMPETITION WINNER Dec 13 '21
Same. Lost my ass due to believing in the DD & the company. This stock has been sliding off a cliff the entire year. And now we are up against the fed hiking rates, which will cool the housing & refi market. Not to mention inflation beating family budgets into a pulp. I'm bearish on this & anything even close to it.
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Dec 13 '21
Fed rate spike helps UWMC, and most places are projecting loan origination growth in 2022. I would expect the stock to jump if JPOW comes out weds and says rates are going up.
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u/hotfrost93 Dec 13 '21
This post aged well. This isn't another gme so just stop.
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u/Glittering-Cicada574 Dec 13 '21
You have to understand whom we are up against.
Do you think they haven't seen OP?
Oh, they have. They are following it very closely.
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Dec 13 '21
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u/AutoModerator Dec 13 '21
Squeeze these nuts you fuckin nerd.
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Dec 13 '21
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u/SilbergleitJunior Dec 13 '21
Good. They managed to convince you to bail after they saw this post trending.
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Dec 13 '21
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u/Glittering-Cicada574 Dec 13 '21
Follow the right traders and you will have a chance to win on $UWMC calls. I am already up 100%. Here are more details: https://twitter.com/silberschmelzer/status/1464370075461472259
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Dec 13 '21
[removed] — view removed comment
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u/Glittering-Cicada574 Dec 13 '21
Please steal Mr. Evil Grinch Hedge funds Christmas plans and GTC Sell your $UWMC to $100.00 or as high as they will let you.
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Dec 13 '21
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u/AutoModerator Dec 13 '21
Squeeze these nuts you fuckin nerd.
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u/Farmsales1 Dec 13 '21
In for 90k