More than 6,000 Malaysians have joined a new Reddit community that plans to buy “undervalued” stocks in local glove makers in a bid to pull a stunt similar to the historic GameStop stock surge that cost a hedge fund billions of dollars.
One of the nine moderators of the Bursabets subreddit, only known as Mod Revenant, told Coconuts today of their belief that the current value of glove industry shares, hit by the same kind of short selling that plagued GameStop, were too low. In their new group, members such as Glovefan1205 are already talking about buying and holding shares from industry players such as Malaysia’s largest glove manufacturer, Top Glove.
“In my perspective, there is no justifying the currently low prices of our glove shares,” Mod Revenant, who spoke on condition of anonymity, said. “If you showed this stock to anyone, they’ll understand how under-valued it is.”
The stock exchange enthusiast thinks that Malaysia’s market is “constantly being manipulated by larger financial entities.”
A day after Bursabets was formed and drew 6,400 members, shares of local glove-making companies rose 3% to 9%, with Top Glove leading the rise. After closing at RM6.21 (US$1.53) yesterday, Top Glove shares opened at RM7.05 this morning on the Bursa Malaysia stock market.
Redditors from r/WallStreetBets earlier this week flipped the game on short traders, delivering billions in losses to hedge fund Melvin Capital by snatching up shares in video game retailer GameStop. At its peak, GameStop shares rose by about 1,700% thanks to the “meme stock” buying frenzy. To date, there are more than 5 million members of the WallStreetBets subreddit.
Short sellers essentially bet against a stock. They sell borrowed shares onto the market, then take a profit by buying them back after the price falls, after which they return them to their owner. While it sure sounds cheating, it is entirely legal, if dastardly.
Shares worth RM1.7 billion from Top Glove and its competitors were shorted during the first trading week of the year.
The GameStop phenomenon showed Bursabets’ moderator that “retail investors have a lot more power than we have been led to believe.” He also thinks that the subreddit could be the next default platform for locals to discuss all things related to Malaysian stocks in a positive and non-toxic environment, unlike other parts of the internet where he has seen “constant bashing, trolling, spamming, with traders hoping that other traders would lose all their money.”
“When we discuss, share, and work together, we can accomplish a lot more and create a much more educated group of investors for the future,” he said. “The reason why it’s called Bursabets, is because they inspired me. Investing doesn’t have to be a negative experience, and we have a wealth of knowledge from all sorts of investors who are ready to share their information and even dank memes.”
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