Sunil Singhania, a Dalal Street veteran and founder of Abakkus Asset Manager LLP, on Wednesday tweeted that his son, Ujjwal Singhania, had bought the now infamous stock pair — GameStop and AMC Entertainment Holdings — at very low prices and earned staggering returns on them.
Ujjwal bought shares of GameStop, a struggling brick-and-mortar video games store, at $10 and went on to make a mind-numbing return of 3,540 per cent, as the stock surged on incessant buying by a group of Reddit-using retail traders, who tried to challenge the bearish positions of influential funds in what has now become known as Wall Street vs Main Street battle.
“I thought I was a smart investor till my son Ujju Singhania (Ujjwal Singhania), a first-time novice Robinhood investor based in (the) US, told me he had bought GameStop for $10 and AMC Theatres (AMC Entertainment) for $2,” Singhania said in a late evening tweet on micro-blogging website Twitter.
Shares of AMC Theatres closed at $19.90 on Wednesday.
The GameStop stock lies at the centre of a bizarre battle between Wall Street hedge funds that had taken short positions in the scrip and a bunch of retail traders, who are part of a Reddit group called ‘WallStreetBets’.
A few weeks ago, some retail traders — part of the sub-Reddit — discovered that hedge funds such as Melvin Capital held large short positions and decided to challenge them by buying and holding the stock. Their strategy triggered a large short squeeze in the stock, and resulted in the stock giving over 800 per cent returns so far in the New Year.
At the close of trade on Wednesday, GameStop stock traded at $346.60 on the New York Stock Exchange, up 134.22 per cent for 2021.
Singhania’s son also made top dollars on his investment in AMC Entertainment Holdings’ stock, which has risen 862.5 per cent year to date. Much like GameStop, AMC Entertainment, which owns theatres across the US, is struggling because of the pandemic and the rise of over-the-top entertainment.
On Wednesday, shares of AMC Entertainment ended 282.5 per cent higher at $19.97 on NYSE.
More sophisticated investors on Wall Street have dubbed stocks such as GameStop and AMC Entertainment, which have questionable fundamentals, as ‘meme stocks’. It is a term used to describe scrips with weak fundamentals that are driven higher by frenzied buying by retail investors using the new-age, zero-commission trading apps.