An elite hedge fund bought 1 million GameStop shares before the meme stock's 400% surge
RenTech, founded by the late Jim Simons, built a GameStop stake from scratch, boosted its AMC bet, and pared its Tesla and Nvidia wagers last quarter.
Reuters
- A top hedge fund built a GameStop stake from scratch last quarter ahead of the meme stock's surge.
- Renaissance Technologies' 1 million shares were briefly worth $65 million at Tuesday's high.
- RenTech, founded by the late Jim Simons, also boosted its AMC bet and pared Tesla and Nvidia.
A world-beating hedge fund revealed it built a GameStop stake from scratch last quarter, making it a potential winner from the meme stock's explosive leap this week.
Renaissance Technologies owned 1 million shares of the video-game retailer at the end of March, a position worth $13 million at the time, its first-quarter portfolio update shows.
GameStop stock was up more than 400% at its Tuesday high, briefly valuing RenTech's stake at $65 million if still intact. The stock has retreated from that peak of nearly $65 to about $33 on Wednesday, which still leaves the company worth more than $10 billion.
The breathless rally in GameStop shares had been fueled by Keith "Roaring Kitty" Gill's return to social media this week. The retail investor was one of the biggest winners from the social-media frenzy that caused GameStop to skyrocket in early 2021.
RenTech trusts algorithms to decide many of its trades, resulting in sweeping changes to its stock portfolio each quarter. It was founded by Jim Simons, the noted MIT math professor and Cold War codebreaker who died on Friday.
The quant fund made other striking changes to its holdings last quarter.
It slashed its Nvidia stake by nearly two-thirds from about 1.5 million shares to 551,000 shares, cutting the position's value from about $767 million to below $500 million.
Rentech also pared its Tesla stake from 2.6 million shares worth $635 million to 1.8 million shares worth $316 million. Moreover, it piled into another meme stock: AMC Entertainment. It boosted its bet on the theater chain from 4.9 million shares worth about $30 million in December to 8.7 million shares in March, valued at $60 million at Tuesday's close.
The total value of the firm's stock portfolio was almost flat at about $64 billion. Its top three holdings were Novo-Nordisk, Palantir, and Meta at the end of March. Uber and Nvidia were its second- and third-largest positions three months earlier.
It's worth emphasizing that quarterly portfolio updates only provide a snapshot of a firm's holdings on a particular date, and exclude shares sold short, private investments, and overseas bets.
They don't always paint a full picture of the investing strategy behind the picks, especially when algorithms are dictating trades.