October 6, 2022

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Student Jake Freeman made $110 million trading Bed Bath & Beyond meme

Student Jake Freeman made $110 million trading Bed Bath & Beyond meme

Suspension

A 20-year-old college student went to Bed Bath & Beyond just in time, raking in nearly $110 million in favorite Mimi stock after its stock price quadrupled and before the most vociferous stakeholders signaled plans to sell the whole thing.

Jake Freeman, a mathematician, had amassed a 6.2 percent stake in the distressed homeware chain in July. he is Bought 4.96 million shares at $5.50 each through a holding company he created based in Wyoming. On Tuesday — the day the stock soared above $27 a share before closing at $20.65, up 31 percent — he sold everything.

The Financial Times reported that his holdings were worth over $130 million at the time, and brought him an estimated net worth of around $110 million.

His timing was impeccable: within 24 hours, the activist investor Ryan Cohen has indicated that he intends to sell the 9.8 percent stake acquired through venture capital firm RC Ventures. It was Cohen’s interest in Bed Bath & Beyond that lit up online message boards like Reddit p/WallStreetBetsThis led to an increase in the share price. So when reports surfaced on Wednesday afternoon that Cohen was Foot Form 144 with the Securities and Exchange Commission – Notice of Intent to Sell Stocks – Stock slipped into after-hours trading. It closed Thursday at $18.55, down 19.6 percent, and fell another 35 percent after hours.

Why Bed Bath & Beyond shares are up more than 350 percent this month

Cohen has a devoted following among small retail investors due to his major role in the GameStop craze. In late 2020 and early 2021, traders on Reddit and other online communities bought shares of the video game retailer, with the goal of profiting from a company that several institutional investors had written off. The stock soared from nearly $5 to more than $480 — a staggering rally in the decline of the brick-and-mortar business. The frothy increase and fluctuation fueled, and the meme stock was born.

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Small investors joined forces and went looking for other companies that Wall Street was short selling or betting against. The strategy described on Reddit used what is known as short squeeze, in which those who bet on stocks – usually hedge funds – are forced to buy shares to close their positions.

Cohen founded the online pet food company Chewy and later became the CEO of GameStop. His plan to revive the video game retailer was buoyed by an unexpected explosion of online enthusiasm for the company last year, sending its stock price up and making it the first of many meme stocks. Other companies include the AMC Cinema Series, smartphone maker BlackBerry and telecoms company Nokia.

Freeman teaches at the University of Southern California where he studies applied mathematics and economics, to me Financial Times. the report He said he raised money for the initial investment by Freeman Capital from friends and family. His LinkedIn profile indicates that he trained at New Jersey-based hedge fund Volaris Capital.

In a July 21 letter to the company’s board of directors, he said Bed Bath & Beyond “is facing an existential crisis for its survival.” He encouraged her to stop burning money so quickly, restructure her capital, and raise more funding.

“Freeman Capital plan to reorganize [Bed Bath & Beyond] It consists of two crucial legs: cutting debt and raising capital.

Bed Bath & Beyond has been struggling for years. Its first-quarter sales were 25 percent lower than a year earlier as the retailer posted a net loss of $358 million. It also has debts of $1.37 billion.

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When the stock surged more than 300 percent as it garnered attention online, Freeman seized the opportunity to liquidate his holdings, SEC filings show, selling $130 million worth of stock on Tuesday.

Freeman told financial news site MarketWatch that he “didn’t expect the stock to go up like it did,” adding that he now believes it has too much downside risk.

“I expected it [Bed Bath & Beyond] Better structure the balance sheet for the value to be unlocked. I felt these highs [the stock] Not worth it from a risk/reward standpoint.”

According to the Financial Times, Freeman and his uncle Scott Freeman, a former pharmaceutical executive, separately acquired an active stake in Mind Medicine, a New York-based company focused on drug-inspired drugs.