🍋 Hedge Funds Load Up on Meme Stocks

Dow hit 40k milestone, and why hedge funds were buying meme stocks before the rally started.

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"Those kinds of times… when everyone is running around like a chicken with its head cut off, that's pretty good for us… " — Jim Simons

Good Morning and Happy Friday! The stock market hit record highs as inflation cools - and the Dow Jones briefly hit 40,000 for the first time. Weed stocks popped as regulators move to reclassify marijuana. Figma will let employees sell shares at a $12.5 billion valuation after the Adobe deal fell through. Reddit shares soared after hours after striking a deal to bring Reddit content to ChatGPT. Disney-Fox-Warner Bros sports streaming service just dropped its official name - Venu Sports. Plus the salary you need to be middle class in every U.S. state, and are happier people more productive? 

SQUEEZ OF THE DAY

Hedge Funds Loading Up on Meme Stocks

Renaissance Technologies, the quant fund founded by the legendary (and late) Jim Simons, is apparently all-in on meme stocks. They loaded up on shares of AMC Entertainment and GameStop right before the latest rally took off.

According to regulatory filings, the hedge fund bought 3.82 million shares of AMC in the first quarter of 2024. And they also scooped up 1 million shares of GameStop, marking a new position for the fund during the three months of 2024.

It’s a little ironic for sure. This week’s rally brought back memories of the wild 2021 meme-stock craze, with $GME and AMC stocks more than doubling. 

But while in 2021 short-selling hedge funds got burned and lost billions of dollars in 2024 (RIP Melvin Capital), it seems like hedge funds are getting in on the action before anyone else.

Which begs the question…did Renaissance know something that the rest of us didn’t?

Renaissance wasn’t the only hedge fund to dive into the meme-stock frenzy early this year. Balyasny Asset Management added both AMC and GameStop in the first quarter. DE Shaw sold off both stocks, while Schonfeld Strategic Advisors and ExodusPoint Capital Management exited their positions in GameStop.

Takeaway: With $GME shares up almost 1,200% over the past five years - you have to scratch your head a little and ask why Renaissance would be loading up on meme stocks. It probably wasn’t based on fundamentals - and maybe they knew something we didn’t. And it just goes to show—while r/WallStreetBets and retail investors gave hedge funds a run for their money during the 2021 short squeez, they couldn’t outplay Wall Street for long. After all, the house always wins—even when it's betting on memes.

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HEADLINES

Top Reads

  • U.S. stock market hits another record high as inflation cools (Axios)

  • Reddit will let OpenAI use its data to train AI models (Reuters)

  • Weed stocks pop as Biden backs marijuana reclassification (YF)

  • After Adobe deal collapse, Figma allows employees to sell shares at $12.5B valuation (CNBC)

  • Disney-Fox-Warner Bros. sports streaming service has a new name: Venu Sports (YF)

  • Vanguard names BlackRock veteran as CEO (Fox)

  • The salary you need to be considered middle class in every U.S. state (CNBC)

  • Boeing supplier will start laying off employees (YF)

  • Wayfair to open first retail store (CNBC)

  • How much money the U.S. spends on war (CNBC)

  • Walmart market cap tops $500B (CNBC)

  • Apple launches eye-tracking tech (Verge)

CAPITAL PULSE

Markets Rundown

US stocks lose steam after Dow hits milestone 40,000 mark.

Movers & Shakers

  • (+) Canada Goose ($GOOS) +16% after the company reports growth surge in China.

  • (+) Walmart ($WMT) +7% after the retailer announced earnings beat thanks to e-commerce, high-income shoppers.

  • (–) Deere ($DE) -5% after it lowered full-year profit forecast.

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DAILY VISUAL

Japan: Shrinking Population Resulting in More Vacant Homes

Source: Apollo

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ENLIGHTENMENT

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MEME-A-PALOOZA

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