A 20-year-old university student made $110 million by selling a stake in Bed Bath & Beyond after its stock price soared during a month of frenzied trading.
After Bed Bath & Beyond's stock price plummeted due to dismal earnings and the ousting of its chief executive, Jake Freeman, an applied mathematics and economics major at the University of Southern California, bought nearly 5 million shares in the company.
He bought his stake at a low price. Bed Bath & Beyond rose to more than $27 a share. As the stock went up, he sold more than a hundred million dollars of stock from his accounts.
In an interview on Wednesday, he said that he didn't expect the rally to go upwards. I was surprised that the price went up so quickly.
After selling the shares, he went to dinner with his parents in New York City and then flew to Los Angeles to return to school.
According to the filings, the fund registered in the cowboy town of Sheridan, Wyoming, was used to accumulate his more than 6 percent position. He said he helped the company restructure its debt by raising money.
The retailer's board received an uncompromising message from the man after he disclosed his position. He said that the company was in dire need of survival. He said it needed to raise cash, cut its cash burn rate, and improve its capital structure.
The New Jersey-based chain, known for operating cavernous stores full of vacuums, towels and kitchen gadgets, has seen its shares rise fivefold over the past month.
The company's sales fell by 25% in the second quarter compared to the same time in the previous year. At the start of the year it had $1 billion in cash, but now it has $107 million.
Bed Bath & Beyond is one of a few meme stocks that became popular at the beginning of the year, but has not received the same amount of attention as other meme stocks.
The increase in its share price has been driven by retail investors who are attracted by the stock's small free float and a significant number of short sellers who bet the share price will fall.
Retail investors tend to be interested in those two things. They can try to engineer a short squeeze by driving the share price higher and forcing professional investors to get out of the stock.
It was a good time to sell. The shares of Bed Bath & Beyond fell by 17 per cent in after-hours trading on Wednesday after the chair of the company said he was planning to sell his entire stake.
It was a disclosure from Cohen on Monday that sent the stock on a tear. He said he bought a lot of call options in Bed Bath & Beyond that could deliver a windfall if the stock price goes up.
Cohen did not reply.
All Rights Reserved © 2024
