- A storied hedge fund exited its GameStop wager last quarter before the meme stock's epic surge.
- In December, Paul Tudor Jones' firm held call options on 44,300 shares and puts on 27,800 shares.
- GameStop stock soared as much as 550% between late April and Tuesday, but has now pared those gains.
A legendary hedge fund exited its GameStop position before the meme stock surged as much as 550%.
SEC filings show that Tudor Investment Corporation, a firm founded and led by the billionaire trader Paul Tudor Jones, held bullish call options on 44,300 GameStop shares at the end of December. The options had a notional value of about $777,000.
Tudor Jones' firm also held bearish put options on 27,800 GameStop shares with a notional value of around $487,000. Neither position appeared in the hedge fund's first-quarter portfolio update on Wednesday, indicating it exited them by the end of March.
GameStop shares had sunk to around $10 by late April but skyrocketed to an intraday high of $65 on Tuesday. The return of Keith "Roaring Kitty" Gill — a key figure in the 2021 GameStop saga — to social media is widely seen as the catalyst behind the run. But the stock fell nearly 20% on Wednesday and tumbled another 15% in premarket trading on Thursday.
This week's surge was reminiscent of January 2021 when GameStop's stock price went from under $5 to north of $80 on a split-adjusted basis. The buying frenzy was fueled by retail investors and whipped up on social media to squeeze short sellers, get rich fast, and have fun in the process.
Tudor Jones seemed skeptical of the episode during a CNBC interview in June 2021, but he wished those involved the best.
"I would probably not be pursuing the investment theses they are," he said. "I don't think I'm smart enough at this point in time to judge whether they're right or wrong. More power to them. I hope they succeed."
Though Tudor may have closed out its GameStop bet before the stock soared this week, it's worth noting that quarterly portfolio updates only provide a snapshot of a fund's holdings at a certain date and exclude shares sold short, private investments, and international bets. As a result, they don't always paint a full picture of a firm's overall positioning.
Tudor runs a sprawling portfolio with well over 2,000 holdings, so it's not surprising that GameStop was one of them in the fourth quarter of 2023. SEC filings show that Tudor has owned GameStop shares in at least 40 different quarters since the company went public in 2002.
It also wasn't a big position compared with Tudor's direct stakes in Splunk and Nvidia, worth $254 million and $65 million, respectively, in December.
The firm trades actively, too, meaning it could easily have bought or sold GameStop shares or options last quarter or even during this week's frenzy.
Regardless, it's notable that Tudor dropped its GameStop wager before the company's meteoric rise and fall this week.
In contrast, Renaissance Technologies, a quant fund founded by the late Jim Simons, amassed 1 million GameStop shares from scratch last quarter.
Tudor didn't immediately respond to a request for comment from Business Insider.
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