Market News: Steve Cohen’s Point72 Buys 606,000 shares of $GME stock.
(Business Insider) Steve Cohen’s Point72 supersized its bet on Elon Musk’s Tesla last quarter and made an unexpected wager on GameStop (NYSE:GME) stock.
The billionaire investor’s hedge fund purchased nearly 878,000 Tesla shares, worth $108 million as of December 31.
It also held bullish call options on another 60,500 shares of the automaker at the year’s end, a Securities and Exchange Commission filing revealed earlier this week.
Cohen and his team scooped up 606,000 shares of the video-game retailer, a stake worth $11 million as of December 31.
In 2021, the New York Mets owner deactivated his Twitter account after receiving several threats from users during the ‘meme stock’ rally.
“I’ve really enjoyed the back and forth with Mets fans on Twitter which was unfortunately overtaken this week by misinformation unrelated to the Mets that led to our family getting personal threats,” Cohen said in a statement.
Cohen’s hedge fund, which managed nearly $19 billion in assets at the time, lost nearly 15% after retail investors caused shares of videogame retailer GameStop to surge in 2021.
The losses at Point72 are mainly due to the company’s investment in hedge fund Melvin Capital, which bet against GameStop and had to receive nearly $3 billion in emergency cash from two outside investors, one of which was Point72.
Today, GameStop shareholders are looking to recreate the events that occurred in 2021 when stocks soared to all-time highs.
One creative way ‘apes’ are fighting Wall Street in 2023 is by registering their shares via a Direct Registration System, or DRS.
The company says at least 30% of its shareholders have registered their shares with the Direct Registration System (DRS) which equates to approximately 71.3 million shares.
Market News Today: Goldman Sachs talks short squeezes in 2023.
Goldman Sachs (NYSE:GS) is reporting hedge funds betting against stocks globally abandoned those short positions last week at the fastest pace since 2015, surpassing the speed of exits during the ‘meme stock’ frenzy in 2021.
The latest short squeeze, implying that stock prices rose so much that bearish bets become too expensive to hold, saw hedge funds caught out by a sharp rally in equities on Feb. 2 after the U.S. Federal Reserve slowed the pace of interest rate hikes and markets anticipated that rates would peak soon, per Reuters.
According to the Goldman note, the speed at which hedge funds exited bearish positions surpassed that seen in January 2021 when retail traders managed to squeeze short sellers out of stocks such as videogame retailer Gamestop (NYSE:GME) and movie theatre operator AMC Entertainment Holdings (NYSE:AMC).
During the ‘meme stock’ frenzy in 2021, GameStop shares rose to nearly $500 per share, or +1,500% that year.
AMC shares rose from $2 early that year to an all-time high of $72 per share, more than +3,000%.
Today, both AMC and GameStop remain heavily shorted with AMC Entertainment having a higher-than-ever cost to borrow fee.
Experts say hedge funds remain bearish
Despite the massive short covering, hedge fund managers do not seem to be more upbeat about markets.
“Positioning isn’t ‘high’ and it doesn’t seem like many investors are bullish, per se,” JPMorgan’s Positioning Intelligence said in a note reviewed by Reuters, adding it has also seen hedge funds adding some shorts in highly shorted stocks.
It seems institutional investors are not entirely switching sides yet but are continuing to add to their short positions on already heavily shorted stocks.
Still, short interest in both AMC and GameStop has both risen and fluctuated, signaling few shorts closing.
AMC Entertainment stock is up more than +60% this year-to-date, GME stock more than +34%.
Hedge funds will need to determine whether it’s worth paying millions of dollars per month in fees just to short AMC stock.
A short squeeze may be triggered at any moment as this weight gets too heavy.
Industrials and Information Technology Companies
The largest short positions held by hedge funds were in industrials and information technology companies, the Goldman note said.
It added that hedge funds also exited many long positions in Asian developing markets and Chinese equities last week.
Resurgent risk appetite among some investors has also fueled rallies in the shares of so-called meme stocks since the start of this year, though many analysts are skeptical the recent moves will last, said Reuters.
But I disagree.
AMC Entertainment may havebottomed out as we see the stock price bounce and retest major levels of support.
The company’s high short interest and cost to borrow has grown substantially over the past two years.
Major price action may trigger short sellers to close their positions, initiating a chain reaction that will lead to a short squeeze.
The short thesis for AMC Entertainment is getting weaker as new developments surface in the entertainment industry.
Goldman Sachs is right, massive short squeezes are coming.
And the retail investor is about to put Wall Street upside down again, just like they did during the ‘meme stock’ frenzy of 2021.
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Market News Today – Goldman Sachs talks short squeezes in 2023.
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Stock Market 2023: Top stocks outperforming the SPY.
AMC Entertainment (NYSE:AMC) stock continues to be one of the biggest ‘meme stocks’ even after its massive debut in 2021 when shares rose from $2.50 to $72 later that year.
The stock, at the publication of this article, is trading at $6.08, the same share price it was two years ago before gaining serious traction.
AMC Entertainment continues to improve its fundamentals and remains the #1 leader in the movie theatre industry.
While online streaming has grown to become quite popular, especially during the pandemic, experts are beginning to weigh in on AMC’s side in 2023.
CNBC stated, “Netflix has backtracked on its previous policies, including by introducing an ad-supported subscription option, leading many to wonder whether the company should rethink its resistance to the traditional Hollywood movie release model as it looks for new ways to grow revenue.“
Even Amazon associates who asked not to be identified, per Bloomberg News, are stating the company plans to invest $1 billion per year in the movie theatre industry.
The world’s largest online retailer aims to make between 12 and 15 movies annually that will get a theatrical release.
“While a $1 billion annual investment for film development is on the lower end of what major Hollywood studios spend each year, it’s a positive sign for the movie theater business, which has struggled in the wake of the pandemic”, said CNBC.
Peloton Interactive, Inc. (NASDAQ:PTON) is an American exercise equipment and media company based in New York City.
The company’s products are stationary bicycles, treadmills, indoor rowers equipped with Internet-connected touch screens that stream live and on-demand fitness classes through a subscription service.
Company shares are up +109.11% year-to-date.
Peloton recently brought Leslie Berland, Twitter’s former marketing head, as its next chief marketing officer, per Bloomberg news reports.
She previously helped lead American Express for 10 years.
Peloton is trying to shift the tides after a rough 2022, when its stock dropped more than 75%.
The company in November posted wider losses than analysts expected for its first fiscal quarter.
Berland said in an announcement that she is “thrilled” to join the company at this “unique moment in its transformation journey.”
Stock Market 2023: Top stocks outperforming the SPY.
Tesla Inc. (NASDAQ:TSLA) had one of its worst years yet in 2022.
However, the company stock is outperforming the market today already gaining +74.16% in gains this year-to-date.
Tesla CEO Elon Musk sold 22 million shares of the company last year cashing in approximately $3.6 billion earlier in December according to this SEC filing.
After the massive selloff, Elon said during a Twitter space call that he will not sell any Tesla shares for about two years.
Musk said he sees a ‘serious’ recession in 2023 and is preparing for a worst-case scenario.
And although experts are saying a recession is likely to strike the U.S. economy during the first quarter of 2023, the company stock seems to be performing quite well today.
Shares of Hycroft Mining (NASDAQ:HYMC) rose 25% earlier this year when the company announced it had discovered more gold and silver than it had anticipated.
Majority of the company is owned by AMC Entertainment.
Market News: At least 30% of GameStop shareholders have registered their shares.
GameStop says at least 30% of its shareholders have registered their shares with the Direct Registration System (DRS).
According to the filing, approximately 30% of GME’s float is registered equating, to 71.3 million shares.
The efforts from retail investors come as a means to prevent manipulative short seller attacks.
GME stock is trading at $21.66 on Monday with trading volume surpassing the company’s average volume of 5.1 million.
Shares of GameStop (NYSE:GME) are up +26% this year-to-date, a great start to the new year.
On Monday, GameStop shares have risen more than 11% intraday where shares rose to nearly $22.50.
GME’s short interest is currently sitting at 23.55% with approximately 95 million shares out on loan.
This means that despite DRS, the game retailer continues to be heavily shorted.
GameStop Ownership Structure
How much of GameStop’s float is owned by retail investors?
Nearly 70% of the float is owned by individual shareholders according to Vickers Stock Research.
GameStop Ownership Structure – Franknez.com.
This means nearly 40% of retail investors have not registered their GameStop shares through DRS.
Yet it’s very possible the percentage of GameStop shareholders who have registered their shares has grown in the past months.
GameStop’s Chair Ryan Cohen himself owns more than 12% of GME shares.
These are held through Ryan’s holding company RC Ventures, which Vickers considers to be Institutional ownership (12% on graph).
Is DRS working out for GameStop shareholders?
It very well could be, considering GME shares are up nearly +26% this year despite having a high short interest rate.
AMC Entertainment (NYSE:AMC) stock on the other hand is up +44% this year despite DRS being significantly less popular within shareholders.
The movie theatre stock is also heavily shorted at 21.96%.
And according to AMC’s CEO, roughly 90% of shareholders own the float.
Where is GameStop headed in 2023?
30% of GameStop Shareholders have registered their shares according to GameStop.
GME stock has the potential to have a big year in 2023.
GameStop continues to be a popular company amongst retail investors, primarily due to the massive community of shareholders who are looking to squeeze short sellers again.
During the spark of the ‘meme stock’ frenzy, GameStop shares rose to $483 per share, a superior all-time high.
But shareholders are not convinced the stock is done running.
2023 opens up new possibilities for GameStop as e-commerce, NFTs, and Web 3.0 gaming continues to grow.
While the company may benefit from arming itself with more short-term capital, GameStop enters the new year with positive cash flow, an incredible start for the company as many continue to struggle.
