Among all the disconcerting things that occurred in the last six months, few people can compete with the short pressure of the Gamestop stock at the end of January. Over the course of two weeks, the action of the video game retailer has increased by more than 1,500%, thus putting the short sellers in a massive link. The price finally abandoned, but the Fallout continued, the Financial Times reporting that a hedge fund based in London ends after the suffering of losses during the gathering of stock earlier this year that it was apparently incapable of recover.
The sources of knowledge of the situation indicate that the White Carrian capital told investors that it will close its main fund in June and return capital after reviewing its economic model. According to sources, the Fund has managed $ 440 million in assets at its peak, but having bets against Gamestop, has finished suffering from two-digit losses when the inventory explosion of the same at the beginning of the year.
As FT Notes, this is the first of the first coverage fund closures to what would have been directly found on the rise of the same stocks which also saw the stock prices of AMC entertainment, Blackberry and others. other exponentially overnight. In addition to the white square, funds such as Melvin Capital and Light Street Capital in the United States reported major losses, but managed to stay afloat.
“The decision to close is related to the reflection on the short-term equity model,” said Kronawitter Florian Kronawitter Florian Capital Capital-Capital-Capital-Capital. “There are far too many fish in the pond with the same long short strategy. The traditional edge is eroded [eroded by other investors], there is a surplus capital offer. “
Although the sources claim that Gamestop was the main guilty of the disappearance of the White Square, a person close to the Fund tells FT that the decision was not linked. This person added that the Fund rendered “a fair action” of its losses of January, but the fund is definitely stopped, so it is clear that something happened to that.
In an investor letter announcing the closure, White Square Capital said that, despite a strong performance in 2020, two major investors had decided to withdraw their money from the Fund and put it in passive funds or private equity.
Meanwhile, Gamestop, which was valued at $ 18 at the beginning of 2020, is still sitting at $ 211.50 at the time of writing writing, with the Dow Jones today is at a record price $35,455.80.