A Wall Street hedge fund has managed to make hundreds of millions of dollars from a private investor riot on Reddit. According to The Wall Street Journal, this is Senvest Management LLC. The fund raised nearly $ 700 million from stock deals in the video game store chain GameStop, which jumped in price from $ 10 to $ 400 in a few days.
The publication notes that the founders of Senvest Management – Richard Mashaal and Brian Gonik – began buying up GameStop shares last fall, contrary to the advice of most analysts, by the end of October their share in the company reached 5 percent. “When it all started, we thought something was beginning to seep. But we had no idea how crazy it would turn out,” Mashaal commented on what happened in the market
At the end of November, one of the members of the community of private traders WallStreetBets on Reddit wrote a post in which he announced that Wall Street is confident that GameStop is dying. Other users were outraged and began to massively buy up shares of the network in order to “save it” and “take money from hedge funds.” Millions of small individual investors began to actively buy securities. As a result, in a couple of weeks the company’s shares rose more than tenfold, and a number of funds were forced to close their short positions (“shorts”) with billions of dollars in losses.
For several weeks, the quotes of companies that analysts previously considered unpromising, were growing rapidly. However, in early February, they began to decline again. Thus, GameStop shares fell in price during the trading session on February 2 by more than 40 percent.