Perfect timing
20-year-old makes $100 million from meme stock
8/18/2022, 6:36 p.m
With the help of friends and family, Jake Freeman buys a block of shares in struggling retailer Bed Bath & Beyond in July. Within a few weeks, the rate quadrupled. “I was shocked that it went so quickly,” says the young investor. Fortunately, the student cashes in immediately.
It’s what millions of small investors dream of: becoming a multi-millionaire practically overnight with a single bet. It is granted to only a few. Jake Freeman is lucky to be one of them.
The 20-year-old student invested in ailing US retailer Bed Bath & Beyond in July. Allegedly with the help of friends and family, Freeman is raising enough money to buy a whopping five million shares, six percent of the company, reports the Fiancial Times (FT), citing public documents.
The young investor, who is studying mathematics and economics at the University of California, buys the shares at less than $5.50 per share. That puts his stake at around $25 million. Shortly before his investment, the company presented miserable figures and the managing director lost his job. After that, it all happens in quick succession: This Tuesday, Bed Bath & Beyond climbed to over $27 a share. Freeman doesn’t hesitate. According to FT, he sells shares for more than $130 million and makes a fortune in one fell swoop.
“I was really shocked”
Apparently he can’t believe his luck: he didn’t expect such a “malicious rally”, the newspaper quoted the young man as saying. “I thought it was going to be a six month value. I was really shocked that it went up so quickly.”
Freeman is not a stock market beginner. It is said that he not only worked as an intern at a New York hedge fund, but also has other relevant practical experience. Among other things, he has probably been investing for years with his uncle, Scott Freeman, a former pharmaceutical manager. According to FT, the two recently built an activist stake in a publicly traded pharmaceutical company called Mind Medicine.
Freeman professionally built his more than 6 percent stake in Bed Bath & Beyond through a Wyoming registered fund called Freeman Capital Management. Not all brokers are allowed to sell their practical experience. However, Freeman showed the right touch with this investment. His timing was perfect: Shortly after he cashed in, the price fell again.
Comeback of meme stocks
Bed Bath & Beyond stock has been on a roller coaster for weeks. Like Gamestop, the titles belong to the so-called meme stocks. Bed Bath & Beyond is just a lot less well known. With meme gambler papers, small investors in relevant Internet forums – such as Reddit – call on each other to buy titles, which acts like an amplifier and regularly causes prices to explode. Even large hedge funds, which had speculated on a price drop through short selling, were already affected.
On Tuesday, shares in the US home chain Bed Bath & Beyond soared 60 percent on Wall Street, more than quadrupling since July. Freeman decided to cash in. Apparently, like many small investors, he grabbed it in July after activist investor Ryan Cohen’s investment vehicle RC Ventures acquired call options on almost two million shares. The investor therefore assumes that the shares in Bed Bath & Beyond will increase in value. The papers expire in January 2023. Apparently Freeman didn’t want to wait that long.
He coped well with his first really big coup, as the FT writes. After selling the shares, he went to dinner with his parents near New York City, and on Wednesday he was back in Los Angeles to return to university.