Business & Investment

Wall Street prepares for Reuters’ second match against Reddit traders

© Reuters.File Photo: New York Stock Exchange Opens During COVID-19


By Svea Herbst-Bayliss and Sujata Rao

Boston / London (Reuters)-Wall Street is preparing for another week of market turmoil, with retail frenzy GameStop Corp (NYSE :) and AMC Entertainment (NYSE :) Holdings Inc extend to other assets.

Some of Wall Street’s largest hedge funds continue to lick their wounds after retailers have tried to raise the price of strongly bet stocks, causing significant losses to major investors.

Hedge fund Melvin Capital, at the heart of the GameStop drama, lost 53% in January but received a new cash commitment from investors at the end of the month, Reuters reported on Sunday.

According to someone familiar with the matter, Melvin started the year with assets of about $ 12.5 billion in January and ended with assets of more than $ 8 billion.

On Friday, Andrew Left of Citron Research, who spent 20 years building the brand as one of the world’s most famous short-selling, said the stock of video retailer GameStop wasn’t worth the price.

“We saw the power of a new investor base in terms of the ability to shape the fortunes of large market segments such as, as well as the fortunes of individual equities,” said Sunil Krishnan, head of multi-asset funds. Stated. Aviva (LON :) Investor.

In the midst of volatile price volatility, buying and selling positions by US hedge funds last week was the highest since the financial crisis more than a decade ago. Goldman Sachs Group Inc (NYSE :). Nonetheless, investment banks warned that their market exposure to equities is still close to record levels.

“According to Goldman Sachs Prime Services, this week represented the largest gross decline in active hedge funds since February 2009. Its coverage funds sold long positions in all sectors and covered shorts,” he said. The bank wrote in a note late Friday.

“Despite this aggressive de-leveraging, both hedge fund net exposures and market-based gross exposures remain close to record highs, indicating that the risk of positioning-led sales continues. I am. “

There are growing signs that retailers who moved the market last week are looking farther than just US stocks.

On Thursday and Friday, silver prices rose, rising about 10% since the message began to spread on social media platform Reddit, urging retail investors to enter the market and raise prices. The price of gold has also risen.

These market movements focus on the growing burden on retailers in financial markets that were previously dominated by large institutions.

Paul O’Connor, Head of Multi-Asset Team at Janus Henderson in London, said:

“If you look at the data a few months ago, you can see that’s happening. These guys didn’t wake up last week,” O’Connor added.

Wall Street prepares for Reuters’ second match against Reddit traders Wall Street prepares for Reuters’ second match against Reddit traders

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