No it's not market manipulation. Its counter party risk gone awry and the entirety of the internet finding out about it at the same time.
In my view, hedge funds have implicitly colluded for years on short positions because it's in their best interests not to screw each other over the long haul. Imagine going against Citadel as a fund. Your career is over. The fact the short interest rose to 140% is proof of that.
This trade should have been shaken out sooner, but no one would dare given the powers that be who were backing it. Also, consider the bond holders as true original victims here. Is it right that they had people artificially putting downward pressure on the security of a company that is indebted to them? If you believe in reflexivity, this is depriving lenders of a fair security valuation, which is an asset of sorts, and further driving them towards a delisting or bankruptcy.
> no one would dare given the powers that be who were backing it
But now that it has been done once, more people will be interested in these opportunities in the future. Quoting from Iron Man 2: If you could make God bleed, people would cease to believe in him. There will be blood in the water, the sharks will come.
> In my view, hedge funds have implicitly colluded for years on short positions because it's in their best interests not to screw each other over the long haul. Imagine going against Citadel as a fund. Your career is over. The fact the short interest rose to 140% is proof of that.
Reality says otherwise. Hedge funds get into trouble at the expense of hedge funds taking the other side of the bet all the time. Their entire business model is based around claiming the ability to beat the market by winning zero-sum bets, and in the long run the more funds they screw over the better their reputation and the more fund management fees they collect. Not going against downward pressure on a security if you think the other fund is undervaluing it and the risk is tolerable is literally leaving money on the table.
As for Citadel, they'll be delighted that a fund got into so much trouble it begged them for a bailout on whatever terms Citadel was willing to offer (and used the funds to unwind its exposure to that market).
In my view, hedge funds have implicitly colluded for years on short positions because it's in their best interests not to screw each other over the long haul. Imagine going against Citadel as a fund. Your career is over. The fact the short interest rose to 140% is proof of that.
This trade should have been shaken out sooner, but no one would dare given the powers that be who were backing it. Also, consider the bond holders as true original victims here. Is it right that they had people artificially putting downward pressure on the security of a company that is indebted to them? If you believe in reflexivity, this is depriving lenders of a fair security valuation, which is an asset of sorts, and further driving them towards a delisting or bankruptcy.