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An Elite Hedge Fund Bought 1 Million GameStop Shares Before the Meme Stock’s 400% Peak

Renaissance Technologies bought 1 million GameStop shares last quarter.Reuters

  • A leading hedge fund built up a stake in GameStop last quarter, ahead of the surge in meme stocks.

  • Renaissance Technologies’ 1 million shares were briefly worth $65 million at Tuesday’s high.

  • RenTech, founded by the late Jim Simons, also increased its AMC bet, parrying Tesla and Nvidia.

A world-renowned hedge fund revealed it built a GameStop stock from scratch last quarter, making it a potential winner of the meme stock’s explosive jump this week.

Renaissance Technologies owned 1 million shares of the video game retailer at the end of March, a position worth $13 million at the time, according to its first-quarter portfolio update.

GameStop shares rose more than 400% at Tuesday’s high, briefly valuing RenTech’s stake at $65 million if it were still intact. The stock price retreated from that peak of nearly $65 to around $33 on Wednesday, still leaving the company worth more than $10 billion.

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The rally in GameStop’s stock was fueled by the return of Keith “Roaring Kitty” Gill to social media this week. The retail investor was one of the biggest winners from the social media frenzy that sent GameStop skyrocketing in early 2021.

RenTech uses algorithms to decide many of its trades, which can result in dramatic changes to the stock portfolio each quarter. It was founded by Jim Simons, the noted Cold War math professor and codebreaker, who died Friday.

The quantitative fund made other notable changes to its investments last quarter.

It cut its stake in Nvidia by almost two-thirds, from about 1.5 million shares to 551,000, reducing the value of the position from about $767 million to less than $500 million.

RenTech also reduced its stake in Tesla, from 2.6 million shares worth $635 million to 1.8 million shares worth $316 million. It also piled up AMC Entertainment Holdings – another notable meme stock – is upping its bet in the theater chain from 4.9 million shares worth about $30 million in December to 8.7 million shares in March, which were valued at $60 million as of late Tuesday.

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The total value of the company’s stock portfolio remained broadly stable at approximately $64 billion. The top three holdings at the end of March were Novo Nordisk, Palantir and Meta. Uber and Nvidia were the second and third largest positions three months earlier.

It’s worth emphasizing that quarterly portfolio updates only provide a snapshot of a company’s assets at a given date and exclude shares sold short, private investment and foreign bets.

They don’t always paint a full picture of the investment strategy behind the choices, especially when algorithms dictate trades.

Read the original article on Business Insider

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