This past week, Cohen’s Point72 Asset Management invested 750 million to the Melvin Capital Management hedge fund. Due to the phenomenon that is Gamestop Stock, Cohen’s Point72 have had losses of around 15% early this year. What does all this mean, and does it affect the Mets at all? I’ll break it down.
The $GME trend has many factors, and there are many reasons why it’s happening. The main reason for the trend, was the stock being short sold, and Reddit users seeing this. When a stock is short sold, it’s when someone sells their share and quickly tries to buy the share back, at a lower price. This whole situation regarding the short sale really took off on January 22. A share went from 45.03 at the close the day before, to 65.01 on the 22nd. In that week, a share was as high as 438.67. Because of the quick turnaround, due to Reddit, hedge funds had to act quickly.
Popular trading app Robinhood, shut down all sales of “Meme Stocks” on Thursday January 28. This included Gamestop, AMC, Nokia, Naked Brand, and many more. When the public was told no, they didn’t take that well. Because of the restrictions, it looked poorly on Robinhood obviously, and many of the hedge funds. The people believed that people at Melvin and other hedge funds led to this decision. That’s where Steve Cohen and his friends come into play.
Effect on Wall Street
When the internet and new investors realized this possibility, they pounced. Unfortunately for the suits on Wall Street, this wasn’t an anticipated move. Melvin Capital was one of them and could be considered the biggest loser in this case. There hasn’t been a confirmed number, it’s widely reported though that Melvin Capital has lost about 30% on the year. Like I said before, Cohen and fellow hedge funds had to bail out Melvin. Between Cohen and Citadel LLC, they gave Melvin Capital 2.75 billion. This money was used to get Melvin out of Gamestop. Melvin Capital has now sold their shares, probably made a little money, but the public perception may always be negative towards them.
Does this affect the Mets?
No. The comparison has been floated around, The Wilpon’s and Bernie Madoff. This is not that, and I’m not just saying that to calm people down. Steve Cohen is the thirty-sixth richest person in the world, according to Forbes. He wouldn’t let Gamestop get in his way of harming the New York Mets. Point72 and the Mets payroll are not related, and one doesn’t eat into another. When it’s all said and done, both entities are businesses run by Steve Cohen. It’s not like Sandy Alderson picks all the people to work for Point72. At Point72 nobody picks who is batting fifth in the Mets lineup. This is just a little snafu, that is harmless when it comes to the day to day of the New York Mets.