John Minchillo/AP
- A storied hedge fund exited its GameStop wager last quarter, before the meme stock's epic surge.
- Paul Tudor Jones' firm held call options on 44,300 shares and puts on 27,800 shares in December.
- GameStop stock soared as much as 550% between late April and Tuesday, but has now pared those gains.
A legendary hedge fund exited its GameStop position before the meme stock surged as much as 550%.
Tudor Investment Corporation, founded and led by billionaire trader Paul Tudor Jones, held bullish call options on 44,300 GameStop shares at the end of December, SEC filings show. The options had a notional value of about $777,000.
Tudor Jones' firm also held bearish put options on 27,800 GameStop shares with a notional value of around $487,000. Neither position appeared in the hedge fund's first-quarter portfolio update on Wednesday, indicating it exited them by the end of March.
GameStop shares had sunk to around $10 by late April, but skyrocketed to an intraday high of $65 on Tuesday. The catalyst was the return of Keith "Roaring Kitty" Gill, a key figure in the GameStop saga, to social media. However, the stock fell nearly 20% on Wednesday and tumbled another 15% in premarket trading on Thursday.
This week's surge was reminiscent of January 2021, when GameStop's stock price went from under $5 to north of $80 on a split-adjusted basis. The buying frenzy was fueled by retail investors and whipped up on social media to squeeze short sellers, get rich fast, and have fun in the process.
Tudor Jones seemed skeptical of the episode during a CNBC interview in June 2021, but he wished those involved the best.
"I would probably not be pursuing the investment theses they are," he said. "I don't think I'm smart enough at this point in time to judge whether they're right or wrong. More power to them. I hope they succeed."
Tudor may have closed out its GameStop bet before the stock soared this week, but it's worth noting that quarterly portfolio updates only provide a snapshot of a fund's holdings on a certain date and exclude shares sold short, private investments, and overseas bets. As a result, they don't always paint a full picture of a firm's overall positioning.
Tudor runs a sprawling portfolio with well over 2,000 holdings, so it's not hugely surprising that it counted GameStop among them in the fourth quarter.
After all, Tudor has owned GameStop shares in at least 40 different quarters since the company went public in 2002, SEC filings show.
It was also not a big position compared with its direct stakes in Splunk and Nvidia, worth $254 million and $65 million, respectively, in December.
Tudor Jones' firm trades actively too, meaning it could easily have bought or sold GameStop shares or options last quarter and even during this week's frenzy.
Regardless, it's notable that Tudor dropped its GameStop wager before the company's meteoric rise and dramatic fall this week.
In contrast, Renaissance Technologies, a quant fund founded by the late Jim Simons, amassed 1 million GameStop shares from scratch last quarter.
Tudor didn't immediately respond to a request for comment from Business Insider.