Friday, October 07, 2022

How Did a 20 Year Old Man Make $110 Million Selling “Meme” Stock?

(Jake Freeman,)
(Jake Freeman,)

Jake Freeman is a typical American college student in many ways: he enjoys cooking, watching TV, playing video games, going to the movies, and hanging out with his friends.

However, he stands out from his peers for one big reason: He recently posted an estimated $110 million profit on Bed, Bath & Beyond stock, Business Insider reported.

Freeman, who studies applied mathematics and economics at the University of Southern California, is also the 20-year head of Freeman Capital Management.

“His fund spent some $25 million to build a 6.2% stake in Bed Bath & Beyond, which he disclosed on July 21. He made less than a month, on August 16, for more than $130 million. , sold full position in retailer.

News of its sale, coupled with GameStop president and meme champion Ryan Cohen dumping his nearly 12% stake in Bed Bath & Beyond, sent the stock from an August 17 high of $30 to $11 as of Friday’s close. It is stated in the article.

Freeman has demonstrated grandiose ambitions and a prodigious wit from a young age, the Financial Times highlighted this week: He made his first $500 investment at age 13, at age 16, with the help of his uncle. Co-published a scholarly paper on bonds with default swaps. Sal and ran for President of the United States at the age of 18, according to the FT.

(Getty Images)
(Getty Images)

The college senior put his math and finance background to good use in a letter to the directors of Bed Bath & Beyond this summer, suggesting that bondholders be given stock purchase guarantees and convertible notes in exchange for shorting the company. You can deal with your financial woes by offering loans, as per BI.

Freeman reflected on his short-term bet on Wednesday in a Reddit post titled “An Ode to BBBY.” There he explained that the sharp rise in the retailer’s stock price, and the fact that he was on his way to school the next day, prompted his decision to “cash up”.

He further described his purchase as a “defining moment” for Bed Bath & Beyond, adding that he expects “it will take advantage of its higher share price to clean up its finances and stay in business longer.” will be able to take advantage.”

Along these lines, Freeman also discussed his huge bet, and shed some light on his personal life, in a Twitter Space conversation with Wook Capital on Aug. 10. In this context, he said Bed Bath & Beyond had “serious liquidity problems, that its suppliers were in trouble and that bankruptcy was a real possibility if their owners did not act.”

In addition, he elaborated that his proposal is “a way for company executives to get some significant cash as well as ensure time to recover their business, which could prevent the sale of the Buy Baby division.” Is.”

In a conversation on Twitter, Freeman revealed that he “bought the shares because they seemed to be causing the price to drop. He believed that properly changing the company’s capital structure would reduce that risk and There will be a significant benefit.”

In addition, he insisted that his financial backers understood the risk of putting $25 million in a meme share, and that he had raised money specifically for that purpose.

On the other hand, he appreciated Bed Bath & Beyond’s ardent supporters and their willingness to openly criticize their plan, as he wanted to explore some of their theories in his future academic research.

He also admitted that he had doubts about his intentions as an investor. Given the hasty sell-off of shares, they may feel right now.

Finally, she recalled a trip to her local Bed Bath & Beyond store, where she saw a lot of valuable inventory, but several niche items, including “very artificial” $300 foot warmers. However, he expressed his love for one of the products bearing the retailer’s name.

“I love the bathrooms at Bed Bath & Beyond,” he said. “I’m a big fan of bathrooms, I guess.”

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