Student Earns $110 Million in Shares of Bed Bath & Beyond

A 20-year-old college student made nearly $110 million in gains by selling a stake in struggling retailer Bed Bath & Beyond, after its stock price soared during a month of frenzied trading reminiscent of last year’s meme stock boom.

Jake Freeman, a specialist in applied mathematics and economics at the University of Southern California, acquired nearly 5 million shares in Bed Bath & Beyond in July, according to regulatory filings, after bad profits The dismissal of its CEO led to a drop in its share price.

Freeman bought his stake for less than $5.50 a share. Tuesday, bed bath behind It rose to more than $27 a share. With the stock soaring, Freeman sold more than $130 million worth of stock from his accounts at TD Ameritrade and Interactive Brokers.

“I certainly wasn’t expecting such a sinister rise,” Freeman said in an interview on Wednesday. “I thought that was going to be six months plus play… I was really shocked because it went up so fast.”

After selling the shares, Freeman went to dinner with his parents in the New York City suburb where they live, and on Wednesday flew to Los Angeles to get back on campus, he said.

Freeman got more than 6 percent of his position via Freeman Capital Management, a fund registered in the cowboy town of Sheridan, Wyoming, according to the filings. He said he collected money from friends and family and believed the troubled company could restructure its debts.

Upon revealing his position in July, Freeman sent a relentless letter to the retailer’s board of directors. He said the company “is facing an existential crisis for its very survival.” He added that they need to “reduce the liquidity burn rate, radically improve the capital structure, and increase liquidity.”

Shares of the New Jersey-based chain — known for operating cavernous stores filled with brooms, towels and kitchen gadgets — have surged fivefold over the past month even after the gloom profits Report on June 29.

It said sales fell 25 percent in the second quarter compared to the same period in 2021, while its net loss widened to $358 million from $51 million. Its cash position has shrunk to $107 million from $1 billion at the start of the year.

Bed Bath & Beyond is one of the few meme stocks that became popular at the beginning of 2021 but received less attention than GameStopa retailer of video games, and AMC movie theaters chain.

The increase in its share price was prompted by the interest of retail investors who were attracted by the small free-floating stock and a large number of short sellers betting on the drop in the share price.

These two traits tend to attract the interest of retail investors who frequent the Reddit forums. This means that they can try to engineer a “short squeeze” by driving the stock price higher and forcing professional investors to unwind their bearish positions, which pushes the stock higher.

Freeman’s sale was just in time. Bed Bath & Beyond shares fell 17 percent in after-hours trading Wednesday after Ryan Cohen, president of GameStop and a large shareholder at a homewares retailer, revealed that he plans to sell his entire stake of about 12 percent in the company. .

It was a separate disclosure Monday from Cohen, co-founder of pet food retailer Chewy and champion of meme stock, which caused the stock to rip on Tuesday. He revealed that he had bought a large number of call options in Bed Bath & Beyond – derivatives that could generate windfall if the stock rises in value.

Cohen did not respond to a request for comment.