The hedge fund badly bruised by betting against GameStop is still struggling after ending the first half with a 46% loss, report says

Gabe Plotkin

Gabe Plotkin’s Melvin Capital Management, targeted by the Reddit army of day traders for its bearish GameStop bets, ended the first half of the year with a 46% loss, Bloomberg reported.

The New York-based hedge fund, which suffered a stunning 53% loss in January from the Reddit-trader short squeeze, gained 1% in June. But it is still struggling to recover, Bloomberg said in the Thursday report, citing sources familiar with the matter.

Melvin Capital, founded by star portfolio manager Plotkin, did manage to stage something of a comeback with a 22% gain in February. But its overall first-quarter loss stood at 49%, Insider understands.

The hedge fund got torched by the Reddit army alongside other high-profile firms that had big bets against GameStop when day traders banded together to send shares of the gaming retailer skyrocketing. When the price of a stock rises, short sellers must typically cover their positions by buying shares at that higher price.

Melvin Capital lost a chunk of its assets in the trading frenzy, ending January with $8 billion in assets, down from $12.5 billion at the start of the year. Its assets had risen to $11 billion as of June 1, the Financial Times and Bloomberg reported.

After the January hit, the fund has somewhat recovered. It is up 18% for the five months between February and June, Insider understands. It gained 5.4% in the second quarter.

The hedge fund is understood to be taking smaller-sized positions to limit its exposure to single companies. It exited its public short positions against GameStop, AMC and other stocks in the first quarter, but may have still held non-public, more traditional short positions.

Founder Gabe Plotkin has also asked a team of data scientists to comb through social media and day-trader forums for stock names of interest to retail traders, Bloomberg reported.

A spokesperson for Melvin Capital declined to comment.

Read More: Prominent market bear Albert Edwards warns that investors who prematurely bet on higher inflation are set up for further losses – and lays out the pathway to record-low bond yields

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These are the top 10 meme stocks Reddit’s Wall Street Bets is talking about right now

WallStreetBets

It’s paid to follow what stocks Reddit’s Wall Street Bets crowd are talking about this year, as several have gone through epic rallies.

From GameStop in January to AMC Entertainment last month, the 10.6 million-member forum has driven the conversation in so-called meme stocks that have exploded higher amid overwhelming demand from retail investors. Strong demand for stocks with shaky fundamentals has led to several hedge fund blowups that were caught on the opposite side of the trade betting against the company in question.

GameStop’s short-squeeze, in-part led by the Wall Street Bets crowd, led to a more than 50% drawdown in multi-billion dollar hedge fund Melvin Capital. Meanwhile, the sharp rally in struggling movie theater chain AMC Entertainment caused billions of dollar in losses for short-sellers in May and June.

As traders look to replicate the success of Wall Street Bets stocks, one data aggregator is compiling the most mentioned stocks on Reddit’s forum.

These are the top 10 meme stocks Reddit’s WallStreetBets forum is focused on right now, according to data compiled by SwaggyStocks. The list excludes mega-cap tech stocks and is based on mentions over the past 24 hours.

10. Cleveland Cliffs

Ticker: CLF
Wall Street Bet Mentions Over Past 24 Hours: 89
Market Capitalization: $10.3 billion

GettyImages 1228399692
Hot molten steel in a blast furnace.

9. Virgin Galactic

Ticker: SPCE
Wall Street Bet Mentions Over Past 24 Hours: 124
Market Capitalization: $10.7 billion

Virgin galactic whiteknighttwo
A Virgin Galactic spacecraft attached to its carrier vehicle, WhiteKnightTwo.

8. BlackBerry

Ticker: BB
Wall Street Bet Mentions Over Past 24 Hours: 145
Market Capitalization: $7.0 billion

A shareholder uses his Blackberry while waiting for the Research In Motion annual meeting to begin in Waterloo, July 17, 2007.
BlackBerry shareholder

7. Palantir

Ticker: PLTR
Wall Street Bet Mentions Over Past 24 Hours: 192
Market Capitalization: $46.9 billion

Palantir

6. Clean Energy Fuels

Ticker: CLNE
Wall Street Bet Mentions Over Past 24 Hours: 196
Market Capitalization: $2.0 billion

Clean Energy Fuels

5. SoFi

Ticker: SOFI
Wall Street Bet Mentions Over Past 24 Hours: 227
Market Capitalization: $13.9 billion

sofi fintech

4. GameStop

Ticker: GME
Wall Street Bet Mentions Over Past 24 Hours: 275
Market Capitalization: $14.4 billion

GameStop
Queue in front of Gamestop store in Christmas atmosphere in Milan during coronavirus emergency, Milan, Italy, on November 03 2020.

3. ContextLogic

Ticker: WISH
Wall Street Bet Mentions Over Past 24 Hours: 289
Market Capitalization: $7.7 billion

Wish CFO
Wish CFO Rajat Bahri.

2. AMC Entertainment

Ticker: AMC
Wall Street Bet Mentions Over Past 24 Hours: 297
Market Capitalization: $26.1 billion

AMC Entertainment

1. Clover Health

Ticker: CLOV
Wall Street Bet Mentions Over Past 24 Hours: 468
Market Capitalization: $4.3 billion

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Chamath Palihapitiya, Founder and CEO of Social Capital LP, speaks at the Sohn Investment Conference in New York on May 4, 2016.

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AMC jumps 10% as the Reddit favorite reports the most customers in a weekend since reopening

Vin Diesel driving a car in "Fast and Furious 9."
Vin Diesel in “Fast and Furious 9.”

  • AMC Entertainment jumped as much as 10% on Monday after it reported strong traffic at its theaters over the weekend.
  • The company said more than 2 million customers visited its movie theaters over the weekend.
  • The new ‘Fast and Furious’ movie installment helped drive a post-pandemic box office record.
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Meme stock and Reddit favorite AMC Entertainment soared on Monday, surging as much as 10% following a strong weekend at the movies.

Driven by hot weather and the opening of “Fast and Furious 9,” AMC saw more than 2 million guests visit its theaters over the weekend, representing a post-pandemic record for the company.

“Fast and Furious 9” also broke records, with the movie generating $70 million in ticket sales over the weekend. That’s the biggest opening weekend for a movie since 2019’s Star Wars: The Rise of Skywalker.

According to AMC, six of its movie theater locations represented the top 10 busiest theaters in the US. And an additional 500,000 people visited AMC’s international locations over the weekend, according to the company.

“The combination of widespread vaccination and the release once again of blockbuster movies is proving to be the magic formula for the return of moviegoing,” AMC CEO Adam Aron said.

Shares of AMC are up more than 2,600% year-to-date and have cost short-sellers billions in losses.

Despite the near-record stock price and an improving outlook for movie ticket sales, some investors remain unconvinced that AMC is worth its current market valuation of nearly $30 billion. Short interest as a percentage of AMC’s entire share float still stands at just below 20%, according to data from ShortSqueeze.

AMC Entertainment stock chart
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Reddit is auctioning 3 ethereum NFTs featuring its alien mascot Snoo

KIEV, UKRAINE - 2018/08/14: In this photo illustration, the Reddit social networking website seen displayed on a smartphone.
Snoo, the alien mascot of Reddit.

  • Reddit is selling three “CryptoSnoo NFTs” that feature its famous alien mascot.
  • “Take advantage of this rare opportunity to own a piece of Reddit history-snag a CryptoSnoo NFT,” the website said.
  • Once purchased, buyers will get access to a URL that will take them to a webpage dedicated to their NFT.
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Reddit is auctioning three non-fungible tokens powered by the ethereum blockchain, with the social media site taking bid from now until July 1.

The tokens are called “CryptoSnoos NFTs” and feature the famous alien mascot of the social media site. The Block was first to report.

“Take advantage of this rare opportunity to own a piece of Reddit history-snag a CryptoSnoo NFT,” the website said.

The three CryptoSnoos NFTs are named Original Block, Helium, and Snooprematic.

All were minted on June 17 and are on sale on NFT platform OpenSea.

According to Reddit, Original Block is inspired by Reddit’s characteristic Snoo caricature. Helium, meanwhile, is associated with the “contemporary art movement” and “everyday objects that are blue and sparkle.” Snooprematic is influenced by a “geometric vocabulary.”

A screenshot of Reddit's NFT called CryptoSnoos taken from its official website.
Reddit’s NFT called CryptoSnoos.

The current highest bid for Original Block is $3,959.82, for Helium it’s $1,979.91, and for Snooprematic, it’s $1,394.07.

Once purchased, buyers will get access to a URL that will take them to a webpage dedicated to their NFTs.

NFTs are unique digital assets secured on a blockchain. Each NFT has its own signature, which can be verified in the public ledger and cannot be duplicated.

NFTs have soared in popularity in 2021. Artwork, tweets, and news columns turned into digital art have fetched millions of dollars at auction.

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The CEO of AMC gifted his twin sons 500,000 shares in March. Now the holdings are worth more than $30 million after the stock’s massive surge.

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AMC Theaters CEO Adam Aron accepts the Sid Grauman Award on behalf of AMC at the 33rd American Cinematheque Award at the Beverly Hilton Hotel on Nov. 8, 2019.

  • AMC CEO gave his twin sons 500,000 shares of the movie theater chain in March, Bloomberg reported.
  • At that time, the gift was worth about $6.8 million, but following a massive surge, the value of the shares has ballooned five-fold.
  • AMC’s monster rally catapulted the company to record highs Wednesday, with a year-to-date gain of as much as 3,325%.
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AMC Entertainment CEO Adam Aron gave his twin sons 500,000 shares of the movie theater chain in March, at the time worth about $6.8 million, according to a March 17 filing with the Securities and Exchange Commission, Bloomberg first reported.

But following a massive surge, those shares have seen a five-fold gain and are now valued at around $31.2 million.

As for Aron, the filing revealed that his shares and longer-term grants are now worth more than $260 million.

AMC’s monster rally catapulted the stock to record highs Wednesday, with its market valuation surpassing $30 billion. The stock’s year-to-date gain in the previous session surged to as much as 3,325%.

The meteoric rally has some analysts sounding the alarm yet again over unrealistic valuations. David Trainer, CEO of New Constructs, said AMC’s stock is trading at levels that are disconnected from fundamentals.

“There is no fundamental reason to be buying shares of AMC Entertainment,” Trainer said in a statement. “We think AMC Entertainment’s stock is worth $0 per share, given its weak earnings, dilution from recent stock offerings and mountain of debt.”

AMC shares are trading lower by 21.03% to $49.39 as of 12:13 p.m. ET Thursday.

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AMC surges 126% as Reddit cheerleaders overpower large hedge-fund share sale

amc theaters
  • Shares of AMC Entertainment surged as much as 126% on Wednesday before trading was halted for volatility.
  • The move comes after hedge fund Mudrick Capital dumped shares on the same day it was disclosed the firm bought 8.5 million units.
  • Retail traders on sites like Reddit remained bullish on the meme stock.
  • See more stories on Insider’s business page.

AMC Entertainment surged Wednesday despite a share dump from hedge fund Mudrick Capital.

Shares of the world’s largest movie theater operator jumped as much as 126% to trade around $72, triggering a halt for volatility. The surge built on Tuesday’s gains, which pushed the stock 23% higher during the session to close at $32.04. AMC shares have now spiked almost 500% in just seven trading days.

The Leawood, Kansas-based company announced Tuesday it raised $230.5 million in cash after agreeing to sell 8.5 million shares to Mudrick Capital for $27.12 each, a dollar higher than the stock’s Friday closing price. Shares surged following the news as the company said it would use the funds to make acquisitions, improve consumer appeal, and deleveraging.

Just hours after the announcement, Mudrick Capital sold its entire stake at a profit, Bloomberg reported. Despite the share dump, the meme stock continued its rally early Wednesday as retail traders remained bullish. The stock remained one of the top talked-about companies on Reddit threads like Wall Street Bets, HypeEquity data showed.

AMC has led a broader rally in meme stocks, like GameStop and BlackBerry, so far this week amid renewed interest in the retail-trader favorites. BlackBerry, for its part, closed 15% higher at $11.56 Tuesday and continued rallying in early morning trading, as GameStop closed 12% higher at $27.02 Tuesday and upticked just slightly Wednesday.

Last week, shares of the movie theater operator rallied for days after private Chinese conglomerate Dalian Wanda Group announced it sold nearly all of its remaining stake in the company. Retail traders cheered the newly available shares, more than doubling the stock price through the course of the week.

Retail traders have invested in heavily shorted stocks like AMC and GameStop, in an effort to squeeze short sellers, who have lost billions on their bets. But shorts haven’t given up as short interest in the stocks is 21%, according to MarketBeat data.

If you’re a Millennial or Gen Z investor willing to share your investing experience, reach out to the reporter of this article at ndailey@insider.com.

Read more: Morgan Stanley identifies 28 underappreciated, high-quality stocks to own as the market’s most expensive names are due to continue underperforming

Screen Shot 2021 06 02 at 11.34.42 AM
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Reddit traders strike again: AMC theaters is on an unbelievable 1,100% gain in share price this year

amc movie theater nyc covid19
A view outside AMC 34th Street 14 movie theater during the coronavirus pandemic on May 14, 2020 in New York City.

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Propelled by Reddit traders, AMC has landed on the moon and discovered it’s made of movie theater nacho cheese. Following a remarkable 1,100% gain in share price this year, the chain raised more than $230 million to acquire other theaters, such as the former Arclight Cinemas and Pacific Theatres.

Did AMC find a $230 million bill in the laundry or…?

AMC issued 8.5 million shares to investment firm Mudrick Capital to raise the sum. According to Bloomberg, Mudrick immediately sold off all of its freshly purchased shares after deeming the stock overvalued (wait until they hear about movie theater popcorn).

  • Mudrick bought its shares at $27.12 and, if it had sold them when the stock hit a high of $33.53 yesterday, it could have raked in around $40 million.

Quote du jour: AMC CEO Adam Aron said, “With our increased liquidity, an increasingly vaccinated population, and the imminent release of blockbuster new movie titles, it is time for AMC to go on the offense again.”

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GameStop’s latest rally has pushed shares up roughly 50% in the past month amid a new meme-stock boom

ryan cohen millennial activist investor 2x1

  • Meme stocks are experiencing a resurgence, with shares of GameStop rising roughly 50% in the past month.
  • The rise can be partially attributed to a short-squeeze as the company’s short interest remains elevated at 20%.
  • Shares of Gamestop have risen more than 1,200% since December 31, 2020.
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GameStop stock continued its rally on Friday amid a meme-stock resurgence with shares rising as much as 5.39%.

In the past month alone, shares of GameStop are up nearly 50%, while fellow Reddit darling AMC has seen an incredible rise of nearly 200% over the same period.

The jump in share price can be at least partially attributed to a short-squeeze as 20.27% of outstanding shares are currently sold short, according to data from S3 Partners managing director of predictive analytics, Ihor Dusaniwsky.

GameStop shares were also buoyed by the company’s recent announcement that it is building a non-fungible token (NFT) platform based on the ethereum blockchain.

The meme-stock resurgence has put short sellers in some serious trouble. On Tuesday alone, short sellers in AMC and GameStop lost $618 million, according to data from ORTEX.

GameStop stock is up more than 1200% since December 31, 2020, and the company has capitalized on the move.

The video game retailer raised more than $550 million via an at-the-market share offering, paid down debts, and implemented a turnaround strategy led by Chewy.com co-founder Ryan Cohen.

However, GameStop’s resurgence comes in spite of recently released data that shows videogame sales declined on a year-over-year basis for the first time in 14 months in April, according to NPD Group.

Game Stop also let its former CEO, George Sherman, walk away last month with a $170 million pay-out.

Shares of Gamestop still trade around 45% off of the company’s record-high of $483 per share, reached during the wild late-January short-squeeze.

GME chart 4
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Don’t short meme stocks as retail and institutional investors rotate back into Reddit trades, market strategist says

WallStreetBets

Traders shouldn’t be shorting so-called meme stocks amid a rotation back into Reddit trades from both institutional and retail investors, according to Joe Terranova, senior managing director and chief market strategist at Virtus Investment Partners.

Terranova sat down with CNBC on Thursday to discuss the recent resurgence of meme stocks and said when it comes to the social media favorites, “the first thing you don’t do is you don’t short these stocks.”

To his point, on Tuesday alone, AMC and Gamestop’s rise caused short sellers to lose $618 million in a single day, according to data from ORTEX.

The market strategist went on to describe the rotation back into Reddit favorites like GameStop and AMC from both retail traders and institutions after cryptocurrencies’ recent leverage unwinding.

Despite a common belief that these trades are run by the retail community, Terranova says institutions are just as involved.

“Let’s not think that this is just all retail traders. This is institutional money, this is hedge funds, they’re participating on the long-side, and I don’t think you fight it,” he said.

When asked whether this was a short-term trade or a “fundamental investment” Terranova laughed and said it was clearly just a trade as far as institutions are concerned.

The strategist noted that there are algorithms used by institutions that are recognizing price momentum in meme stocks and “positioning accordingly on the long-side.”

Shares of Gamestop are up more than 35% this past week as increased chatter on Reddit, and other social media platforms has brought a second wind to the video game retailer.

Fellow Reddit darling AMC‘s stock is also on fire, surging more than 45% since last Thursday.

Blackberry has seen a resurgence of late as well, with Reddit traders using rocket emojis to celebrate its return to around $10 per share.

Terranova says as these Reddit stocks rise, the key question isn’t how to trade them, but rather: what’s next?

“The question now becomes where else do they target? Do they go to Beyond Meat which has a 24% short interest? Do they look at Roblox, which is trading incredibly strong? I think ultimately that they do, but absolutely you don’t short these stocks,” Terranova said.

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