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Financial Times;

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.

“Be less Coke”.

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Whatever the complexities are on both the GameStop and AMC dramas, the subreddit has become a powerful force and, to hedge funds and institutional short-sellers, a menacing one. Its political ethos is fascinating because it is, at once, vague, heterodox, trans-ideological, defiant, hilarious and anti-establishmentarian. However one tries to define it, it is far more than merely mercenary. It has a purpose beyond profiteering and is driven by collective action, which are two of the factors that make it so unpredictable and uncontrollable and therefore alarming to institutional power.

An interview with r/WallStreetBets founder Jaime Rogozinski