The staggering concentration of shares of bullied video game retailer GameStop is minting new millionaires and cost hedge funds billions of dollars, at least on paper.
Shares of GameStop rose another 70 percent on Friday in an impressive rally driven by small investors on the Reddit online forum, which has seen its 1,800 shares rise since early January.
The army of small traders who buy the shares pledge to keep their shares to force hedge funds that have bet against it to pay in full to cover their losses, which means many of the new fortunes will be wiped out if when the bubble bursts.
But for now, Robinhood dealers like AJ Vanover, who makes about $ 35,000 a year selling auto parts in Missouri, are making money. Vanover’s Robinhood balance exceeds $ 1 million, according to screenshots he shared with CNN.
Keith Gill, the youtuber also known as “Roaring Kitty,” was one of the leaders of the GameStop insurgency, which promoted the potential of a small coup on its YouTube channel.
On Friday, Gill shared a screenshot of his trading account showing he was raising $ 31.5 million with a $ 755,000 investment he made in shares and options to buy GameStop in July.
Vanover, like many others, has not yet been charged, and his earnings could still be erased. But if he ends up winning the business, he says he hopes to help his parents with his mortgage and continue to invest.
Vanover was out of work this week, quarantining after a co-worker hired COVID-19, but now believes he will not return to his former job.
“I know I’ll make a two-week notice,” he told CNN with a laugh. “So I’ll like it.”
Keith Gill, the YouTuber also known as “Roaring Kitty,” was one of the leaders of the GameStop insurgency, which promoted the potential of a small budget on the Reddit WallStreetBets forum, where users exchange tips and opinions about actions.
On Friday, Gill shared a screenshot of his trading account showing that he was raising $ 31.5 million with a $ 755,000 investment he made in GameStop in July.
“I thought this trade would be successful,” he told the Wall Street Journal, “but I never expected what happened last week.”
He said he would like to continue his “Roaring Kitty” YouTube channel and buy a house. He also dreams of building an indoor track or cottage in Brockton, Massachusetts, his hometown.
The biggest winners of the price action have been the large and long-term shareholders of GameStop.
GameStop’s largest individual shareholder, Ryan Cohen, has seen its value increase by 13% by more than $ 2 billion in the past two weeks, or more than $ 6 million per hour
GameStop investor Donald Foss (left), former CEO of a subprime car lender, has seen his 5% stake in GameStop increase by about $ 800 million and 3.4% (right) of GameStop CEO George Sherman raises about $ 500 million
GameStop’s largest individual shareholder, Ryan Cohen, has seen its value increase by 13% by more than $ 2 billion in the past two weeks. Co-founder of online pet dealer Chewy, who joined GameStop’s board this month, originally paid about $ 76 million for the stake and has seen his net worth increase by about $ 6 million per hour during the last two weeks.
Meanwhile, investor Donald Foss, the former CEO of a subprime car lender, has seen his stake increase by 5 percent to about $ 800 million and the stake of GameStop CEO 3.4 percent , George Sherman, has raised about $ 500 million.
In addition to individual stakeholders, BlackRock, the world’s largest asset manager, could have made a profit of about $ 2.4 billion from its investment in GameStop.
The asset manager owned about 9.2 million shares, or an approximately 13% stake, in GameStop as of Dec. 31, 2020, according to a regulatory filing on Tuesday.
If we don’t assume any change in BlackRock’s position, the value of its stake would be worth $ 2.6 billion now, compared to $ 173.6 million in December.
Hedge funds face billions in potential losses from betting against GameStop
At the loss of the recent price action, there were several hedge funds, which had sharply lowered the shares of GameStop, betting that the price of the shares would fall.
Short-term selling is a way to make money from stocks if the stock price goes down and GameStop had been one of the shortest stocks on the market when the Reddit group targeted it.
As of Friday, investors who bet on GameStop have lost about $ 19 billion, with only $ 10 billion in damage, when GameStop shares rose 135 percent, according to Ortex data provided to Business Insider.
Hedge funds Citron and Melvin Capital said Wednesday they had closed their short positions after suffering undisclosed losses.
Citron Research founder Andrew Left, once called “Wall Street’s Bounty Hunter” and one of the key investors who had bet on GameStop, said Friday morning that he will stop posting “brief reports” and instead focus in opportunities for “a long time.” ‘investments, a term to bet that will increase the shares of a company.
The famous short-selling activist has claimed that he pushed his bets against GameStop after suffering losses of 100 percent as shares rose this week.
Melvin Capital, the $ 12.5 billion hedge fund founded by Gabriel Plotkin, was one of the main targets of the Reddit campaign, after the SEC filing revealed that the fund had a large short position on GameStop.
New York Mets owner Steve Cohen was also exposed to the turbulent situation after his asset manager Point72 helped rescue Melvin Capital
New York Mets owner Steve Cohen was also exposed to the turbulent situation, after his asset manager Point72 partnered with Ken Griffin’s Citadel firm to inject Melvin with a $ 2.75 billion bailout Monday. dollars to help the troubled fund.
In response to a worried Mets fan on Twitter who asked if GameStop’s situation would affect the team’s payroll, Cohen wrote, “Why would one have anything to do with the other.”
Maplelane Capital LLC, a New York hedge fund that started the year with about $ 3.5 billion, fell about 30 percent year-over-year through Wednesday, with its GameStop bearish position a major driver of losses, sources in the Wall Street Journal reported.