A college student made a $110 million profit on Bed Bath & Beyond stock in under a month. Jake Freeman shed light on his background, his massive bet, and the retail backlash to it in a Twitter Q&A.
Photo by Lawrence K. Ho/Los Angeles Times via Getty Images
- A college student turned $25 million into more than $130 million by investing in Bed Bath & Beyond.
- Jake Freeman discussed his background, his massive bet, and the retail backlash to it on Twitter.
- The 20-year-old touted Bed Bath & Beyond's products, and its prospects if consumer demand fades.
A 20-year-old college student plowed $25 million into Bed Bath & Beyond stock, then cashed out a $110 million profit less than a month later.
Jake Freeman shed light on his background, his investing style, and his fondness for the homewares retailer in a Twitter Spaces conversation with Wook Capital, recorded after he revealed his stake in July.
Freeman, a math and economics major at the University of Southern California, became interested in finance at the ripe age of 12. He began working in the industry at 14, and his first project was analyzing the performance and cost of tail-risk hedges on retail portfolios, he said.
The college senior described his Bed Bath & Beyond bet as the "maiden voyage" for a fund he set up this summer, Freeman Capital Management.
He framed the wager as "striking out on my own" after studying options and credit at work and in his free time. He declined to share how he raised $25 million, citing confidentiality agreements with his backers.
Freeman, who proposed Bed Bath & Beyond slash its debt pile by offering stock warrants and convertible notes to its bondholders, trumpeted the ailing retailer's products during the Twitter Q&A.
He argued that even if high inflation and rising interest rates weaken consumer spending, people would still need basic items like towels and bedsheets, and wouldn't cut them out of their lifestyles even if they rose in price.
Moreover, he defended the physical locations of Bed Bath & Beyond's baby-products business, Buy Buy Baby. He underlined their value to customers whose babies won't stop crying, or are engaging in "additional babylike activities that require going to the store."
The young investor also disclosed that he shops at Bed Bath & Beyond, especially when he needs to pick something up for college, or he's moving between apartments. He highlighted canisters of CO2 as one of his common purchases. "I am a fan of sparkling water," he said.
Freeman offered some advice to newbie investors. He recommended they initially focus on longer-term plays, as they can focus on company fundamentals, and more easily gauge if their thesis is correct.
They also have to make fewer assumptions about short-term catalysts and headwinds, and the external forces affecting stock prices matter less, he said.
Elsewhere, Freeman said he decided to answer questions from retail investors because he wanted to give them similar access to him as analysts and institutional investors received. He noted that if he pursues activist plays in the future, it could be useful to persuade retail investors to vote for his proposals.
On a related note, Freeman hinted that he didn't make an activist play at Bed Bath & Beyond because Ryan Cohen, the activist investor and GameStop chairman, was already pushing for changes at the company. "There is a phrase: Too many cooks in the kitchen," he said.
Finally, Freeman revealed that he was taken aback by the fierce backlash to his Bed Bath & Beyond investment.
"I definitely was not expecting such visceral responses and strongly opinionated responses from the Reddit community," he said.
The investor added he was "somewhat shocked" by the scale of the reaction, and the fact that people were contacting his friends and acquaintances for information about him.
Contributer : Business Insider https://ift.tt/lEshOB2
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Thursday, September 08, 2022
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