Home https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Business https://server7.kproxy.com/servlet/redirect.srv/sruj/smyrwpoii/p2/ Melvin Capital, a hedge fund focused on the Reddit board, closes GameStop’s short position

Melvin Capital, a hedge fund focused on the Reddit board, closes GameStop’s short position

Melvin Capital closed its short position at GameStop on Tuesday afternoon after suffering a huge loss, hedge fund manager Andrew Ross Sorkin told CNBC.

GameStop, the most hated stock of hedge funds, was targeted at an army of retail investors who joined forces against short sellers in online chat rooms. In the Reddit “wallstreetbets” forum with more than 2 million subscribers, rookie investors are encouraged to accumulate in GameStop’s equity and call options, creating massive short pressures on stocks.

CNBC could not confirm the amount of losses that Melvin Capital took on the short position. Citadel and Point72 have invested nearly $ 3 billion in Gabe Plotkin̵

7;s hedge fund to strengthen their finances. Plotkin told Sorkin that the speculation about bankruptcy was untrue.

Shares of GameStop have more than doubled this week to nearly $ 150 in cash, raising its January earnings to 685%. The stock cost only $ 6 four months ago.

Shares of the brick-and-mortar video game trader gained about 60% in the preliminary market on Wednesday, trading about $ 93 after appearing more than 100% earlier in the futures market.

Against the backdrop of GameStop’s explosive rally, short sellers have accumulated losses of more than $ 5 billion so far in shares, including a loss of $ 917 million on Monday and $ 1.6 billion on Friday, according to S3 Partners.

Short selling vendor Andrew Left of Citron Research said on Wednesday that it had covered most of its short position in GameStop at a loss. Earlier, he said GameStop would return to $ 20 a share “quickly” and called for attacks on the “angry mob” that owns the shares.

Investor Michael Bury said in an already deleted tweet on Tuesday that trading with GameStop was “unnatural, insane and dangerous” and should have “legal and regulatory implications.” Bury shot fame by betting on the housing bubble and was included in Michael Lewis’ book The Big Piece.

The Securities and Exchange Commission declined to comment.

Social Capital’s Chamath Palihapitiya was among those who jumped the stock market, saying in a tweet on Tuesday that he had bought GameStop call options, betting that stocks would rise. His tweet seems to have intensified the rally in the previous session. The stock ended the day with a 92% higher value of $ 147.98.

After the closing bell on Tuesday, Elon Musk commented on the mania, linking it to the chat room of Reddit “wallstreetbets”. Tesla’s CEO tweeted his 42 million followers “Gamestonk !!” The comment seems to have helped send GameStop shares, which rose in extended trading on Tuesday.

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