GameStop sobs billionaire Steve Cohen who reopens hedge fund, stops Robinhood IPO

The recent GameStop trade chase prompted legendary trader Steve Cohen to reopen its hedge fund, Point 72 Asset Management, to new investors, FOX Business has learned.

The reason? It depends on who you ask.

In recent weeks, Cohen’s hedge fund has received a significant hit from the GameStop imbroglio, which fell to 15% in January, mainly based on a Point 72 investment in Melvin Capital.

Ticker	Safety	Last	Alter	Alter%
GME	GAMESTOP CORP	225.00	-100.00	-30.77%

Shares fell another 31% on Monday.

Melvin, led by Cohen protégé Gabe Plotkin, was the target of a ‘bear attack’ focused on heavily shortened stocks snatched by legions of day traders with their Robinhood trading program. Melvin had a short stake in GameStop, and it was betting that it would fall, but it rose 1,700% within a few weeks before dropping in recent days.

But the damage to many shorts, including Melvin – and at point 72 – has already been done. The losses of more than 50% for Melvin required a cash inflow from Cohen of $ 750 million so that the fund could stay afloat. Billionaire Ken Griffin’s Citadel dropped another $ 2.75 billion.

GAMESTOP TRADING FRENZY MANAGED BY STIMULUS CONTROLS: GUNDLACH

The investments were announced last Monday, and then Tuesday silently, Point 72 began approaching brokers at Morgan Stanley, saying it had reopened the fund for new investors, and could offer them to their clients, FOX Business confirmed.

It is unclear which other brokerage firms can now sell point 72; Morgan Stanley is considered Wall Street’s largest brokerage firm with about 16,000 financial advisers serving small investor clients.

After raising $ 10 billion earlier in the year, it no longer accepted new customers because it had to consume the new cash supply.

The face of Point 72 surprised Wall Street executives because it was not well telegraphed. Cohen became a regular Twitter user after his purchase of the New York Mets during the summer, only to close his account after the news surrounding Melvin and the brief temporary sale of GameStop and a feud on social media with the founder of Barstool Sports, Dave Portnoy.

According to Wall Street executives, Cohen could potentially replace his lost capital with new cash due to the huge losses he suffered by investing in Melvin. A person close to Point 72 tells FOX Business that the fund is not facing a crisis, and Cohen believes it’s a good time to raise new cash amid a market upheaval over the GameStop. issues.

A spokesman for point 72 declined to comment. A Morgan Stanley spokesman made no immediate comment.

The madness with which GameStop is involved and a handful of heavy short stocks underscore the changing dynamics of the stock market. Armed with no commission trading programs like Robinhood and the ability to borrow small, first time, retail investors are flexing their muscles in the markets like never before.

They regularly share information about stocks on message boards and then direct investments in harmony, increasing stocks to unprecedented levels and at least for now causing huge losses for even sophisticated investors on the other side of their operations.

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The madness they caused in the markets led to twofold calls for tighter regulations. The concern is that these investors are both inexperienced and that they offer stocks better than where they need to trade, given the target companies’ lukewarm business prospects. When the madness is over, the stocks will trade sharply, leading to huge losses among many small investors who have speculated in a market they do not fully understand.

Ticker	Safety	Last	Alter	Alter%
AMC	AMC ENTERTAINMENT HOLDINGS INC	13.30	+0.04	+ 0.30%
BB	BLACKBERRY LIMITED	14.63	+0.53	+ 3.76%
BBBY	BED BATH & BEYOND INC.	30.26	-5.07	-14.35%

Many of these newcomers say they’ll just sit down at some of Wall Street’s biggest retailers. Recently, these investors have begun to focus not only on GameStop, but also on others, including AMC, Blackberry and Bed Bath & Beyond – former penny stocks – which have been curtailed by hedge funds.

In December, they launched a bear attack on the stocks catching shares and pushed them to astronomical levels. Funds that we do not have enough stocks, such as Melvin and to a lesser extent point 72, have suffered heavy losses.

In a short sale, a trader borrows a stock, sells it and hopes to make a profit by buying it back at a lower price to repay the borrower. But when stocks rise, as is the case with GameStop and others, the hedge fund loses money; in the case of Melvin, he lost so much money that it needed a lifeline from Point 72 and Citadel.

Robinhood also needs a rescue. Last week, the app had to exclude the trading of GameStop and the other shares because it did not have enough capital to complete the transactions. On Friday last week, it raised $ 1 billion to meet its required capital requirements, and on Monday it raised another $ 2.4 billion.

ROBINHOOD, IN THE MIDDLE OF CHAOS, MAKE ANOTHER CAPITAL INCREASE

Since FOX Business first reported, people with direct knowledge of the matter say Robinhood has suspended plans to go public indefinitely through an initial public offering he watched somewhere this year.

Robinhood now has about 13 million users, up from 500,000 in just six years. The biggest growth took place recently, especially during the COVID-19 exclusions when people – mostly unsophisticated first-time investors – used the app as a form of entertainment. The recovery of the stock market since its lows in March earlier has also brought new users.

But with growth came growth pains; people close to the company concede that Robinhood needs to expand its balance sheet more and secure compliance systems before they go public and get even more regulatory scrutiny.

A Robinhood spokesman did not respond to a request for comment.