In this article, we discuss the 5 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. If you want to read our detailed analysis of these hedge funds, go directly to the 10 Biggest Hedge Fund Casualties of Reddit WallStreetBets’ Short Squeezes.
5. D1 Capital Partners
D1 Capital Partners is a hedge fund managed from New York. It is placed fifth on our list of 10 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. The fund manages more than $13 billion in assets at the end of the first quarter of 2021. It is run by Dan Sundheim. News publication Bloomberg claims that the fund took a 20% hit in the short-selling saga involving GameStop Corp. (NYSE: GME) in January. D1 was one of the best-performing funds in 2020, finishing the year with a 60% gain and $20 billion in assets under management.
Daniel Sundheim of D1 Capital Partners
D1 Capital Partners has invested a lot of money in Microsoft Corporation (NASDAQ: MSFT), the Washington based technology company that sells computer software and services. Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Microsoft Corporation (NASDAQ: MSFT) with 23.9 million shares worth more than $5.6 billion.
In its Q1 2021 investor letter, Polen Capital, an investment management firm, highlighted a few stocks and Microsoft Corporation (NASDAQ: MSFT) was one of them. Here is what the fund said:
“We have written extensively about Microsoft in recent commentaries. It was our leading contributor last year and one of our largest weightings within the Portfolio. It continues to experience business momentum through several dominant, essential, and competitively advantaged businesses, like Office 365 and Azure. The markets it competes for are enormous, which gives the company the ability to compound at scale. In the past quarter alone, the company generated over $40 billion in revenue, representing a 17% growth rate. The inherent operating leverage in Microsoft’s business model continues and led to 34% earnings growth this past quarter. Despite the broad rotation we saw in the first quarter and Microsoft’s robust performance in 2020, we think its business fundamentals continue to exhibit strength, and the stock continues to reflect the fundamentals.”
4. Maplelane Capital
Maplelane Capital is an investment firm run from New York. It is ranked fourth on our list of 10 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. The hedge fund, run by Leon Shaulov, managed over $4 billion in assets. In late January, news publication Bloomberg reported that the fund had lost 33% in a single month after a failed attempt to short-sell GameStop Corp. (NYSE: GME) stock. However, the firm adjusted the short position before it took further losses as the share price of the video game retailer climbed because of Redditors.
One of the top investments of Maplelane Capital is Alphabet Inc. (NASDAQ: GOOG), the parent company of internet search engine Google. Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ: GOOG) with 2.9 million shares worth more than $6.1 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ: GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
3. Light Street Capital
Light Street Capital is an investment company headquartered in California. It is placed third on our list of 10 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. The hedge fund is a high-profile casualty to the GameStop Corp. (NYSE: GME) short-selling scheme that failed as Redditors squeezed short-sellers. Light Street Capital, according to Financial Times, managed over $3 billion in assets at the start of the year. This figure has since fallen to $1.8 billion, with losses primarily driven by short-selling attempts in January and May.
Glen Kacher of Light Street Capital
One of the biggest holdings of Light Street Capital is Facebook, Inc. (NASDAQ: FB), the California-based technology company that just crossed $1 trillion in market cap. At the end of the first quarter of 2021, 257 hedge funds in the database of Insider Monkey held stakes worth $40 billion in Facebook, Inc. (NASDAQ: FB), up from 242 in the preceding quarter worth $38 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ: FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
2. Melvin Capital Management
Melvin Capital Management is a hedge fund that operates from New York. It is ranked second on our list of 10 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. The fund took heavy losses as it tried to short-sell GameStop Corp. (NYSE: GME) in January. According to a report by news publication CNBC, the fund, managed by Gabriel Plotkin, and with more than $17 billion in assets under management at the end of the first quarter of 2021, was given a bailout worth $3 billion by billionaires Ken Griffin and Steve Cohen in January.
A top holding of Melvin Capital Management is Expedia Group, Inc. (NASDAQ: EXPE), the Wasington-based online travel firm. At the end of the first quarter of 2021, 86 hedge funds in the database of Insider Monkey held stakes worth $6.1 billion in Expedia Group, Inc. (NASDAQ: EXPE), up from 76 in the previous quarter worth $6.5 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Expedia Group, Inc. (NASDAQ: EXPE) was one of them. Here is what the fund said:
“Several of our better performers in the first quarter were purchased while their business models were under stress from COVID restrictions or the macro environment the pandemic created. What gave us confidence in purchasing Expedia were the actions the company took to extend out their balance sheets until travel resumed. It should benefit as a broader vaccination rollout prompts cruise lines to resume operations and consumers to start traveling again and are positioned to deliver better margins and gain pricing power as the economy normalizes due to the cost controls implemented during the downturn.”
1. White Square Capital
White Square Capital is a London-based investment management firm. It is placed first on our list of 10 biggest hedge fund casualties of Reddit WallStreetBets’ short squeezes. The firm recently announced that it was closing the main fund and would return capital to investors, according to a report published by news publication Financial Times. This follows the firm taking in double-digit percentage losses in a short-selling attempt involving GameStop Corp. (NYSE: GME) at the beginning of this year. The fund managed more than $400 million in assets at peak.
One of the top holdings of White Square Capital is The Walt Disney Company (NYSE: DIS), the mass media and entertainment firm based in California. At the end of the first quarter of 2021, 134 hedge funds in the database of Insider Monkey held stakes worth $12.5 billion in The Walt Disney Company (NYSE: DIS), down from 144 in the preceding quarter worth $16.4 billion.
In its Q4 2020 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and The Walt Disney Company (NYSE: DIS) was one of them. Here is what the fund said:
“One of the original constituents of the Nifty Fifty holds a place in our portfolio today. When we bought Disney three years ago, we wrote that “we view Disney theme parks in the US, Europe, and China as resistant to online substitution.” We did not reckon on a pandemic, which closed all of them, and sent all of usto our couches. Disney, however, wasready for us, brilliantly illustrating the importance of management foresight and change management. Or, as Louis Pasteur said, “chance favors the prepared mind.
A century after its founding in 1923, Disney is in the middle of a bold shift from its legacy media networks & entertainment model—with cable TV, theme parks, and theater films dominating its earnings—to a direct-to-consumer streaming media model. The keys to Disney’s transition: matchless storytelling, coupled with financial strength. The company reliably creates content that people all over the world are eager to consume. It also hastened spending on original content to attract subscribers to its new streaming platform. These factors have allowed Disney to weather the pandemic having expanded its direct engagement with customers. Such connections yield a rich harvest of insights used to customize offerings on a mass scale, reinforcing that engagement in a virtuous circle and thereby raising the lifetime value of each customer. Subscribers to Disney+ reached 86.8 million one year after launch, compared to the 60 – 90 million management projected to reach in 2024. To be sure, Netflix, Apple, and Amazon remain formidable competitors in new-era streaming entertainment (mind what we said about everyone standing up at once), but there’s fight left in this old dog.”
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