A legendary hedge fund exited its position in GameStop before the meme stock rose as much as 550%.
Tudor Investment Corporation, founded and run by billionaire trader Paul Tudor Jones, held bullish call options on 44,300 GameStop shares at the end of December, according to SEC filings. The options had a notional value of approximately $777,000.
Tudor Jones’ company also held bearish put options on 27,800 shares of GameStop stock with a notional value of about $487,000. Neither position appeared in the hedge fund’s first-quarter portfolio update Wednesday, indicating it liquidated them in late March.
GameStop shares had fallen to around $10 in late April, but soared to an intraday high of $65 on Tuesday. The catalyst was the return of Keith “Roaring Kitty” Gill, a key figure in the GameStop saga, to social media. However, the stock fell nearly 20% on Wednesday and fell another 15% in premarket trading on Thursday.
This week’s surge is reminiscent of January 2021, when GameStop’s stock price rose from less than $5 to more than $80 on a split-adjusted basis. The buying frenzy was fueled by retail investors and whipped up on social media to squeeze short sellers, get rich quick and have fun at the same time.
Tudor Jones seemed skeptical about the episode during a CNBC interview in June 2021, but he wished those involved the best.
“I probably wouldn’t pursue the investment theses that they’re proposing,” he said. “I don’t think I’m smart enough at this point to judge whether they’re right or wrong. More power to them. I hope they succeed.”
Tudor may have closed its GameStop bet before the stock soared this week, but it’s worth noting that quarterly portfolio updates only provide a snapshot of a fund’s holdings as of a certain date and exclude stocks sold short, private investments and overseas bets. As a result, they don’t always paint a complete picture of a company’s overall positioning.
Tudor runs a sprawling portfolio with more than 2,000 stocks, so it’s not terribly surprising that it counted GameStop among them in the fourth quarter.
After all, Tudor has held GameStop shares in at least 40 different quarters since the company went public in 2002, according to SEC filings.
It also wasn’t a large position compared to its direct stakes in Splunk and Nvidia, worth $254 million and $65 million, respectively, as of December.
Tudor Jones’ company is also actively trading, meaning it could have easily bought or sold GameStop shares or options last quarter and even during this week’s frenzy.
Regardless, it’s notable that Tudor abandoned its bet on GameStop before the company’s meteoric rise and spectacular fall this week.
In contrast, Renaissance Technologies, a quantitative fund founded by the late Jim Simons, amassed 1 million GameStop shares from zero last quarter.
Tudor did not immediately respond to a request for comment from Business Insider.
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