When an account became fully levered, but losses continued to mount, the brokerage firm could force the liquidation of a portion of the account to meet margin requirements. For the last several days, there were numerous evidence of forced liquidation hitting the market. Today, it looks like somebody big were liquidated at around 10:00AM. One of meme stocks impacted, GME. The market buy pushed the stock up 32% at one point. Many of the other favorite shorts rallied, while the favorite longs dropped.
Some are pointing to Tiger Global as a possible suspect. They had a rough year, lost -44% as of April 2022. The poor performance led to a flood of redemption requests. As the fund continue to take money out to meet redemptions, it's possible they didn't sell enough, and hence the margin call. Tiger will have to continue closing of its positions until they raise enough cash to satisfy redemptions.
Of course, it might or might not be Tiger. It's possible they, whoever it is, still didn't close out enough of their positions to satisfy redemptions. As such continued pressure could occur. We could watch the market action over the next few weeks to gauge if they are done. Could be a huge buying opportunity when they are complete. Should probably even buy prior to completion. Since once it's done, we could see a huge market rally.
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