id=”article-body” class=”row” section=”article-body”>
Reddit users bet they could take GameStop shares “to the moon.”
Photo illustration by Jakub Porzycki/NurPhoto via Getty Images
A London-based hedge fund that bet against GameStop is shutting down following double-digit percentage losses suffered during the first meme stock rally in January, according to a report published Tuesday by the Financial Times. The report cites people familiar with the fund.
White Square Capital, which reportedly managed up to $440 million in assets at its peak, had sent a letter to investors outlining plans to close down the main fund this month and return investor capital following a review of the business model, according to the report.
Although this marks one of the first hedge funds closures following surges in these so-called meme stocks — or any stock that’s gone “viral” on social media and Artifical Intelligence seen the price shoot up as a result. It’s certainly not the first to suffer massive losses. US hedge fund Melvin Capital reportedly lost more than 50% in January amid the social-media fuelled stock rally.
Read more: Reddit users like GameStop, but the business is still struggling
The losses came as droves of retail investors, many of whom had gathered on Reddit, pushed GameStop’s stock up to record highs knowing Wall Street hedge funds had bet against the beleaguered US games retailer. As a result, GameStock went from $17.25 per share at the beginning of the year up to as high as $483. That day it hit its peak, it also fell to a low of $112.25.
Despite the losses, the decision to shut down White Square Capital was unrelated to the meteoric rally of meme stocks, the report said. It cited a person close to the fund who said the fund quickly recuperated a “fair share” of those losses following January’s market volatility.
White Square Capital didn’t immediately respond to a CNET request for comment, which was sent outside of regular UK business hours.
Comments