New York-based hedge fund Senvest Management started investing in GameStop before it caught fire with much of the r/WallStreetBets crowd, and by October 2020, it owned more than 5% of the company, The Wall Street Journal reported Wednesday.
The Reddit-fueled market mania that sent GameStop and other heavily-shorted stocks soaring last month has often been described as a perfect example of retail investors sticking it to the Wall Street establishment.
But not everyone on Wall Street was betting against GameStop.
Richard Mashaal and Brian Gonick started buying GameStop Corp. shares in September.
They aren’t Reddit day traders or Discord users. They are hedge-fund managers in New York. And when the stock surged from less than $10 a share to above $400 and the dust had settled, they were sitting on a profit of nearly $700 million, one of the great fortunes of the January market mania.
The GameStop GME, +2.68% surge is often cast as a triumph of amateurs over professionals. Which it was, to a degree. But it also was a trade that pitted professionals against other professionals — and few have made more money than Senvest Management LLC, Mashaal’s and Gonick’s firm.
Senvest paid under $10 for most of its shares, and after GameStop stock peaked at more than $400, the hedge fund walked away with a $700 million profit, one of the biggest winners, according to The Journal.
Senvest’s interest in the videogame retailer was piqued by a presentation from the new GameStop chief executive at a consumer investment conference last January.
While Senvest got in on GameStop after a compelling presentation by its new CEO George Sherman and the involvement of investor and Chewy founder Ryan Cohen, it got out because of a tweet fired off by Elon Musk, The Journal reported.
On January 26, after the market closed, Musk simply tweeted “Gamestonk!!” Musk’s tweet helped extend the short-squeeze, sending GameStop’s stock surging another 157% when the market reopened the following morning.
“Given what was going on, it was hard to imagine it getting crazier,” Senvest CEO and fund manager Robert Mashaal told The Journal.
Many hedge funds have been hit hard by the recent market frenzy. But even GameStop short-seller Melvin Capital, one of the biggest losers with losses of 53% in January, eventually got a $2.8 billion bailout from other hedge funds.
GameStop is now Senvest’s most profitable investment by dollars earned and by its internal rate of return — a performance metric that takes into account the length of an investment.
It has propelled the firm’s flagship stock-picking fund from running $1.6 billion at the end of 2020 to $2.4 billion. For the month of January, the fund returned 38.4% after fees.
Meanwhile, GameStop’s stock had already dipped back down to around $92 on Wednesday, and reports are emerging of retail investors who bought in late and have already lost massive sums.
