Investors sit on huge gains from GameStop

Ryan Cohen's stake in GameStop has soared in value

Fund managers are sitting on huge gains even after the Reddit-fuelled bubble in GameStop shares appeared to pop.

As the stock took a rollercoaster ride on Thursday, dropping by nearly two thirds in one point, some managers had cashed out and others were still up by thousands of percentage points. 

Ryan Cohen, the founder of Chewy.com and an activist shareholder in GameStop, watched as the value of his holding slumped by roughly a third as trading stabilised.

His 13pc stake in GameStop bought for just $76m in December, had been worth about $3bn at the start of trading on Thursday but was down to about $2.25bn by mid-afternoon.

While retail investors have gleefully acquired shares in the struggling videogames retailer, sending its shares soaring, traditional fund managers have also ridden the wave to huge gains.

According to its latest US filings, one UK quant fund, Quadrature Capital, bought 130,000 GameStop shares last year when they were worth less than $10.

Its shares would have been worth about $32m in afternoon trading on Thursday. The fund did not respond to a request for comment on whether it still held the position.

Tyndall Asset Management, a fund founded by former Jupiter trader Alex Odd, snapped up 80,000 shares in total in December and early January. It sold its final shares on January 26. 

A GameStop store in Alhambra, California

Felix Wintle, manager of its North American fund, said: “We believed the bear case was complacent. The stock was sold 144pc short, but you had an activist shareholder with a strong track record in Ryan Cohen and a whole new management team — proof the business still had validity. We hoped it might hit $100 in three years, but it did it in about three weeks.”

Meanwhile, David Harding’s Winton Group owned about 20,000 shares in GameStop, according to a quarterly filing. Winton declined to comment on its market positions.

GameStop’s biggest shareholders including Fidelity, BlackRock and Vanguard, all stand to make huge gains even after the massive pullback in trading on Thursday that saw GameStop shares plunge 65pc. 

Other substantial holders include Norway’s central bank and Michael J Burry. 

Meanwhile, other fund managers have secured trades granting them huge returns on shares and options held in companies pumped by retail investors on the Reddit forum WallStreetBets.

They include Silverlake, a major creditor of Odeon owner AMC, which owned a $600m convertible bond that would flip when its share price reached more than $13, according to the Financial Times.

New York fund Mudrick Capital swapped $100m in debt for shares that are now worth $273m.

The incredible surge in GameStop’s share price was fuelled by an assault by amateur online traders determined to squeeze out shortellers in the stock. The buying frenzy was egged on by users of the internet forum WallStreetBets amid claims of market manipulation on both sides.