Tudor Investment Corporation, a legendary hedge fund founded and led by billionaire trader Paul Tudor Jones, strategically exited its GameStop position just before the meme stock surged by as much as 550%.
SEC filings reveal that at the end of December, Tudor Investment Corporation held bullish call options on 44,300 GameStop shares, with a notional value of approximately $777,000. The firm also held bearish put options on 27,800 GameStop shares, valued at around $487,000. By the end of March, neither position appeared in the hedge fund’s first-quarter portfolio update, indicating that the firm had exited both its call and put options on GameStop.
GameStop shares, which had fallen to around $10 by late April, soared to an intraday high of $65 on Tuesday, driven by the reappearance of Keith "Roaring Kitty" Gill, a pivotal figure in the GameStop phenomenon, on social media. However, the stock’s volatility continued as it declined nearly 20% on Wednesday and dropped another 15% in premarket trading on Thursday.
This week's surge echoed the events of January 2021, when GameStop's stock price skyrocketed from under $5 to over $80 on a split-adjusted basis. The buying frenzy, fueled by retail investors and amplified on social media, aimed to squeeze short sellers, generate quick profits, and enjoy the excitement.
Paul Tudor Jones expressed skepticism about the GameStop episode during a CNBC interview in June 2021 but 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."
While Tudor Investment Corporation closed out its GameStop position before this week's surge, it's important to note that quarterly portfolio updates only provide a snapshot of a fund's holdings at a specific point in time. These updates exclude shares sold short, private investments, and overseas bets, so they don’t always provide a complete picture of a firm's overall positioning.
Tudor Investment Corporation manages a vast portfolio with over 2,000 holdings, making it unsurprising that GameStop was among them in the fourth quarter. SEC filings show that Tudor has owned GameStop shares in at least 40 different quarters since the company went public in 2002. However, this position was relatively small compared to its direct stakes in companies like Splunk and Nvidia, which were valued at $254 million and $65 million, respectively, in December.
The firm’s active trading style means it could have bought or sold GameStop shares or options at any point during the last quarter or even during this week's frenzy. Nonetheless, it is notable that Tudor exited its GameStop position before the stock’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 Investment Corporation did not immediately respond to a request for comment from Business Insider.
