China Fund News reporter Ivan
The past 2021 was a big year for global hedge funds. According to LCH Investments, a hedge fund research firm, the 20 best-performing hedge funds in the world made a new record of $65.4 billion for their clients in 2021. But from the perspective of annualized yields, the average yield of the top 20 is only 10.5%, far outperforming the 27% increase of the S&P 500.
Last year, when the average annualized return of hedge funds was not high, equity hedge fund Senvest Management achieved a staggering annual return of more than 85%, becoming the best performing hedge fund in 2021 and much higher than the second place Access 58.37%.
(2021 Hedge Fund Annual Returns List Source: LCH Investments)
The reason why Senvest has achieved such an amazing return is due to the profit of about $700 million (about 4.5 billion yuan) obtained by the company last year by accurately stepping on the long position of GameStop. The deal is the best deal in the $3 billion hedge fund's 25-year history, the data shows.
And how is this "god operation" accomplished? A few days ago, Richard Mashaal, founder and CEO of Senvest, revealed in an interview that the "secret" of the signal they threw was a Tweet tweet from Tesla CEO Elon Musk!
Buy low and sell high "retail stocks"
Made $700 million
Mashaal said: "He (Musk) used that Tweet to cheer us up and we all looked at each other and thought how can you get past it? So, for us, it marked the culmination of momentum (at the game station) and we started to exit our remaining positions. ”
The Mashaal-mentioned tweet, sent by Musk after the U.S. stock market closed on January 26, 2021, contained only "Gamestonk!" Among them, "stonk" is a Wall Street phrase that refers to the fact that stock prices can rise without a reason.
(Source: Musk Twitter screenshot)
The tweet directly helped Game Station soar more than 42% after hours that day, and the next day, Game Station reached a closing high of $347.51 per share, when Senvest threw out its long position.
In fact, the legend of "retail hugging stocks" such as game stations began earlier.
Founded in 1984, headquartered in Texas, USA, game station is the world's largest video game retailer, the main profit model is to sell game discs, of course, will also sell game magazines, game peripherals, character handmade, at its peak there were more than 6,000 branches around the world, and in 2005 listed, code GME. Such a store carries the gaming feelings of a generation in the United States.
But due to deteriorating operating conditions, the profitability of the game station is very bad, and the performance of the driving stock is also very bad, only about $3 per share at the low of 2019. Later, in 2020 and 2021, driven by good news such as external capital injection and management changes, the stock price began to rise to about $30.
The stock's rally has also attracted the attention of users in the Wall Street Bets section of the US Reddit forum, which is mainly retail investors, and financial institutions that are good at shorting. Subsequently, the famous short-selling institution Citron Capital and the star hedge fund Point72 announced the short-selling game station. The rhetoric of these short-selling institutions completely angered retail investors, so they began to frantically buy shares of the game station, driving up the stock price. It is to use "short squeeze" to teach The Workey bears a lesson and let these short-selling institutions suffer huge losses.
(Game Station stock price changed in three years Source: CNBC)
Thus began the Air Force War. The share price of game station soared 641% in nine days and had soared 1700% in the year as of January 28 of that year.
The epic battle ended with a massive retail victory — citron surrendered and left the market; Point72's $750 million, Citadel's $2 billion lost; Melvin, a 100-billion-dollar hedge fund, directly blew up and was on the verge of bankruptcy.
Senvest Management began configuring game stations in September 2020, when there was a string of sell ratings and bearish conditions surrounding the stock. But Mashaal said: "For us, it's a classic reverse thinking game, Wall Street doesn't make a lot of selling recommendations, and the game station has a lot of such advice, and the buying advice is very little, even no." Of course, there is also a short interest, more than 100% of the outstanding shares. Both of these points are very obvious indicators that this is an unpopular stock. ”
When Senvest bought the game station, it was even less than $10 per share, and when Musk threw it after Twitter, it had reached nearly $350 per share, making more than 35 times the profit.
Musk opened his mouth
Drive stock prices to stimulate the coin circle
It is not surprising that Senvest made $700 million on Musk tweets, Musk has always been known for "dare to say", sometimes making remarks as soon as the golden mouth is opened or the finger is sent to tweet, which can stir up stock prices and coin circles.
The latest voice came two days ago, and Musk started bringing "Dogecoin" again. Musk tweeted Tuesday morning: "If @McDonald's accepts Dogecoin, I'll have a happy meal on TV." ”
According to CoinMarketCap, Dogecoin rose 8% on the day, and it came at a time when cryptocurrencies were in such a downturn recently. Musk has touted Dogecoin on several occasions, including saying earlier this month that Tesla would accept the cryptocurrency as a payment method for some goods.
One of Musk's most notorious stock-rigging tweets was posted in August 2018. He said at the time: "Tesla is being considered to take Tesla private at $420 per share, and the funds are in place." The tweet sparked weeks-long speculation about Tesla's privatization deal. Tesla shares rose 11 percent at first, but then the gains were erased in the days and fell 30 percent in a month. In the end, Musk was fined $20 million by the SEC for this tweet and resigned as chairman of Tesla.
After hours on January 26, Eastern Time, Tesla disclosed its fourth quarter 2021 earnings report. According to the financial report, in the fourth quarter of 2021, the company's revenue was $17.72 billion, an increase of 65% year-on-year, and the net profit reached $2.3 billion, an increase of 760% year-on-year, and the single-quarter revenue and net profit once again hit a record high, and achieved profitability for the 10th consecutive quarter; Tesla's auto sales gross margin was as high as 30.6%, also a record high.
Musk also tweeted, "I think it may take 5 years or more for other companies besides Tesla to solve the problem of self-driving." But tesla also warned that supply chain problems will continue at least until the end of the year, causing today's closing stock price to fall by more than 11%, and the market value has evaporated by nearly 100 billion US dollars.
"Discerning" Senvest
This year is eyeing a luxury stock
According to the official website, Sunvest was founded in 1997 by Richard Marshaal, and its main strategy is to go long and short in stocks. Its assets under management range around $3 billion, with flagship fund Senvest Master Fund's net worth soaring from $1.6 billion to $2.4 billion in February 2021 last year due to its successful bets on Gaming Station as well as shares in Gaotu Education and a range of Canadian energy companies.
The "discerning" hedge fund this year said it was bullish on U.S. luxury goods group Capri Holdings Ltd. Richard Mashaal, founder and CEO of Senvest, said in a recent interview that he was bullish on Capri Holdings because he believed the company was undervalued and believed that the company's brands had good growth prospects.
Capri Holdings is the parent company behind international light luxury brands Michial Kors, Jimmy Choo and Versace, but according to its financial report data, after two consecutive losses, thanks to the recovery of the luxury industry after the epidemic, it finally made a profit in the third quarter of last year (until September 25, 2021). Based on its financial results for the second quarter of fiscal 2022, its revenue increased by 17% year-on-year to $1.3 billion and its net profit recorded $200 million.
By brand, Versace revenue recorded $282 million, up 45% year-over-year; Jimmy Choo revenue recorded $137 million, up 12% year-over-year, and Michael Kors revenue recorded $881 million, up 11% year-over-year.
(Capri's three major brand posters Source: Sina)
And Senvest isn't the only hedge fund favoring Capri.
Earlier, David Einhorn's Greenlight Capital also revealed in a report to investors that the company has bought Capri stock since last year and believes that the stock will usher in a "significant rise" as the market repositions Capri as a diversified luxury brand owner. Greenlight Capital began buying Capri shares in February last year and increased its holdings in May and December respectively, with an average purchase price of $55.86.
As of yesterday's close, Capri Holdings closed up 2.05 percent at $55.8 a share, for a total market capitalization of $8.4 billion. The stock price has risen nearly 40% in the past 12 months.
Will Senvest's bet be "a big profit" again? We'll see.
EDIT: Captain