A London-based hedge fund that suffered losses betting against US retailer GameStop during the first meme stock rally in January is shutting its doors.
White Square Capital, run by former Paulson & Co trader Florian Kronawitter, told investors that it would shut its main fund and return capital this month after a review of its business model, according to people familiar with the fund and a letter to investors.
White Square, which at its peak managed about $440m in assets, had bet against GameStop, say people familiar with its positioning, and suffered double-digit per cent losses in January.
The move marks one of the first closures of a hedge fund hit by the huge surges in so-called meme stocks. Retail investors, often co-ordinating their actions on online forums such as Reddit’s r/WallStreetBets and in some cases deliberately targeting hedge fund short sellers, drove up the price of stocks such as GameStop and cinema chain AMC Entertainment in January and again in recent weeks. GameStop, for instance, soared from less than $20 at the start of the year to more than $480 at its January peak.
That led to big losses for some funds, including US-based Melvin Capital, run by Steve Cohen protégé Gabe Plotkin, and Light Street Capital, run by Glen Kacher, a former Tiger cub who worked at Julian Robertson’s Tiger Management. However, the funds remain in operation, and shortly after its losses Melvin received a $2.75bn investment from Cohen’s Point72 Asset Management and Ken Griffin’s Citadel.
More from Steve Bannon, on Tim Pool.
YES!
NOOOOOOoooooow, whatcha gonna do when they come for you…
Beauty eh!
As a former stockbroker of mine once said, the market giveth and the market taketh away.
I personally prefer the newer…
“We can remain r*tarded longer than you can remain solvent”
It’s an interesting case in “deeper pockets” vs “wider risk spread”. Some people are gonna get hella burned by it (FIFO are the winners), but that’s collateral damage in the market-manipulation war against the hedge funds. Destroying vulnerable companies to pad your bottom line is evil, and I would argue it’s anti-capitalist/-free-market.
Sweet schadenfreude.
“There are way too many fish in the pond with the same strategy of long-short,” he added. “The traditional edge is being arbed away [eroded by other investors], there’s an oversupply of capital.”
Translation: When everyone tries to short the same stocks, the peasants and peons go after us.
Later on they say some investors pulled their money from the hedge funds and put it into conventional “passive investing” funds.
Ive turned 20k into 45k in 3 weeks playing with AMC. Fun times.
depending on how you are playing in that 3 weeks, you may end up with a tax bill that eliminates your gains because of the 30 day rule.
Glorious!