The Curious Case Of The Hedge Fund That Made $700 Million On GameStop
The Curious Case Of The Hedge Fund That Made $700 Million On GameStop
While retail was “sticking it to the suits” – the actual suits at hedge fund Senvest Management were about to net a cool $700 million on GameStop’s run higher. Why? Because GME was the largest Senvest holding as of Oct 7, an oddity considering many within the hedge fund world at the time viewed it as a potential bankruptcy candidate – hardly a prudent move from a fiduciary standpoint, unless Senvest had a plan… and boy did it have a plan.
But let’s back up.
Senvest principles, Richard Mashaal and Brian Gonick, started buying GSE stock equity in September, the Wall Street Journal report reveals, just weeks before they had accumulated a massive 3.6 million shares making Gamestop Senvest the fund’s largest holding. Mashaal told the Journal: “When it started its march, we thought, something’s percolating here. But we had no idea how crazy this thing was going to get.”
In retrospect, he just might have had an idea.
GameStop turned into the firm’s most profitable ever investment by dollars earned and IRR. Senvest’s fund has ballooned from $1.6 billion to $2.4 billion as a result of GameStop’s move and, for the month of January, the fund was up 38.4%. Gamestop is also the reason why Senvest is currently the top performing fund tracked by HSBC’s popular Hedge Weekly report.
Thomas Peterffy, chairman of Interactive Brokers, noted what many had suspected: “It is not just little people on the long side here. There are huge players playing both sides of GameStop.”
So just a series of very lucky coincidences leading up to a record, $700 million payday, or a masterfully executed plan that was laid out and executed far better than most Hollywood scripts?
We hope to have the answer once Congress holds its Gamestop hearings, although considering that Maxine Waters is in charge we won’t be holding our breath.