Reddit day trader army fattens fortunes of the super-rich
A horde of traders on Reddit that see themselves as sticking it to the establishment by hunting for heavily shorted stocks is adding billions to the wealth of some of the world’s ultra-rich.
Larry Chen, chairman and chief executive officer of GSX Techedu, saw his fortune increase $US4.5 billion ($5.9 billion) on Wednesday as US depository shares of the Beijing-based online tutoring company rose 38 per cent, pushing his net worth to almost $US16 billion.
Fellow Chinese billionaire Wang Jianlin’s wealth surged more than $US450 million through his stake in AMC Entertainment Holdings as retail traders surged into the stock, causing it to spike as much as 310 per cent even as the broader market slumped. It also boosted hedge funds such as Mudrick Capital, which owned 4.6 million shares in the cinema operator as of January 4.
Chewy Inc. co-founder Ryan Cohen added about $US1.6 billion with his holding in GameStop, the video-game retailer that has surged more than 1500 per cent this year through Wednesday. Fellow investor Donald Foss, founder of subprime auto lender Credit Acceptance, now owns a stake worth more than $US1 billion, according to the Bloomberg Billionaires Index.
Even the head of Tootsie Roll Industries benefited, with CEO Ellen Gordon’s fortune rising $US200 million as the confectionery maker’s shares rose to a record.
Meteoric rally
Day traders have been piling into previously unloved tickers favoured by short sellers in recent sessions, driving them to record highs. The meteoric rally of GameStop has already worn down some institutional investors, with Melvin Capital closing out its short position by Wednesday.
The hunt for heavily shorted stocks is being led by the Reddit forum WallStreetBets, which boasts roughly 2.8 million members. Some of the more outspoken have taken an activist stance, portraying their campaign as taking a stand against such societal problems as financial inequality and generational injustice.
Gordon owns just over half of Tootsie Roll Industries’ common shares and 81 per cent of its B shares, according to company filings. Her stake in the maker of Tootsie Pops, Junior Mints and Dubble Bubble gum, which she owns both directly and on behalf of other family members, is now worth more than $US1.8 billion.Cohen disclosed an investment in GameStop in August. By December, he’d purchased 9 million shares in the retailer for a total cost of $US76 million and now holds a stake worth almost $US3 billion. GameStop shares were up 134 per cent to $US345.55 in late Wall Street trade on Wednesday in New York after rising as much as 140 per cent at the open, leading to at least two volatility halts.
Jianlin, the founder of closely held conglomerate Dalian Wanda Group, now owns a stake worth about $US700 million in AMC, which climbed as high as $US20.36 in New York trading, the most since September 2018. Jianlin has a net worth of $US13.6 billion, according to the Bloomberg Billionaires Index.
Bloomberg
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Source: Thanks smh.com