GameStop Corp. GME short seller White Square Capital is shutting down after it suffered huge losses during the retail trading frenzy earlier this year, the Financial Times reported.
What Happened: White Square Capital reportedly said in a letter to investors that it plans to close down its main fund and return capital to investors this month following a review of its business model.
The London-based hedge fund, which managed about $440 million in assets at its peak, suffered double-digit per cent losses in January from its bet against GameStop, as per FT.
Why It Matters: White Square Capital’s move to shut down marks one of the first hedge fund closures following the surge in shares of stonks – stocks popular with retail investors.
It was reported in January that hedge fund Melvin Capital lost 53% on its investments that month as amateur traders belonging to the Reddit Investor forum r/WallStreetBets bid up heavily shorted stocks such as GameStop and movie theater chain AMC Entertainment Holdings Inc. AMC to create a short squeeze.
Melvin Capital later received $2.75 billion in investments from hedge funds Citadel LLC and Cohen’s Point72 Asset Management.
In early June, AMC and GameStop short-seller losses swelled up to $12 billion on a year-to-date basis.
Price Action: GameStop shares closed almost 6.3% lower in Monday’s trading at $200.37.
Read Next: Wish Sees Extremely-High WallStreetBets Interest As Stock Surges; Clean Energy Fuels, AMC, BlackBerry Other Top Trends
Photo by JJBers on Flickr
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
