Short answer: the people doing this think it's going to fuck short sellers over.
The longer answer involves trying to make a coherent story by people who are financially illiterate trying to read moderately advanced modern finance textbooks to explain why they were unsuccessful in fleecing Big Bad Finance™ by somehow finding a way to trigger financial apocalypse. The more you try to understand it, the less sense it is going to make.
I'd rather say they are trying to prove some things to the general public.
People new to the stock market assume that when they buy shares through their broker, they own the share. They also often buy shares in hopes that the stock price will go up.
However, more often than not, a broker will hand out an IOU when you "buy" a share, and then proceed to rent out the share to short sellers. You buy a share in hopes that the price will go up, but that share is then used for the opposite.
Buying a share through the company's registered custodian prevents this.
They also want to show the general public that even when 100% of a company's shares are bought, owned and locked down - short sellers are still able to generate phantom shares to move the stock price down.
> However, more often than not, a broker will hand out an IOU when you "buy" a share, and then proceed to rent out the share to short sellers
There are specific stock lending programs, but can you back up the claim that brokers are silently lending shares from the portfolio of people who did not opt in to such a program?
Good question. What that quote from the recent filing is describing is the result of investors using the "Direct Registration System" (DRS), which is a system for book-entry ownership [1][2].
Given the example of risk HN user /deified/ shared regarding suspicions of brokers clandestinely distributing IOUs without investor knowledge where they should, in fact, be purchasing real shares, DRS offers the ability to move shares from one's broker to the company's transfer agent.
In effect, what DRS seemingly provides is a far more robust chain of trust and custody, as well as a more concrete level of assurance that shares in one's account are, in fact, real (and not IOUs).
In this case, the 10-K filing provides direct evidence that investors are consistently moving their Gamestop shares out of their respective brokers, to Gamestop's transfer agent, a company called Computershare (or purchasing shares directly via Computershare).
A conclusion one could possibly draw from this is that hundreds of thousands of Gamestop investors have collectively agreed that they can no longer trust their brokers, they are fed up with the true reality [and limitations] of "beneficial ownership", and are instead registering their Gamestop shares with the transfer agent (Computershare). All to the tune now of 25% of the total outstanding shares. As far as I'm aware, behavior of this magnitude has never before occurred.
Should that percentage continue to climb, it will be interesting to see what effect (if any) it will have on Gamestop's share price, assuming true supply and demand and real price discovery is still a fundamental part of how our markets function.
Ian released a video [3] this past December 2023, related to this topic.
what does this mean? what is the significance?