I’ve heard of hedge funds betting against GameStop. I’m confused on why they do this because the word hedge means “protect yourself from risk”, right
What hedge funds are against GameStop?
Steven Cohen’s hedge fund Point72 Asset Management invested new money as Melvin was taking losses last year. Melvin had been betting against GameStop since 2014. It profited as the shift toward downloaded and streaming videogames caused the bricks-and-mortar retailer’s stock to drop.
Why do hedge funds bet against a stock?
Hedge funds and shorts
The hedge funds see the stocks aren’t doing well, in large part because of the pandemic. Their investors basically make a bet that the stocks will continue to go down. It’s legal to do this on Wall Street. The process is called a short.
Do hedge funds bet against the market?
Types of Hedge Funds
An equity hedge fund may be global or country-specific, investing in attractive stocks while hedging against downturns in equity markets by shorting overvalued stocks or stock indices. A relative-value hedge fund takes advantage of price or spreads’ inefficiencies.
Why hedge funds lost money on GameStop?
The hedge fund made the losses in this year’s first so-called meme-stock rally, in January, but later recovered much of that lost ground, the newspaper said. It said the decision to shut the fund resulted from a review of White Square’s business model, rather than from the GameStop rally.
What happens if a hedge fund loses your money?
Quote from video on Youtube:That they will receive a return but without providing any management or oversight.
Who shorted GameStop?
Mohammad Hormozzadeh, a 31-year-old day trader in Brooklyn, N.Y., was one of those investors who directly registered shares. He expects the big short squeeze to hit GameStop later this year.
Which hedge funds are in trouble?
ExodusPoint Capital Management and Balyasny Asset Management are two hedge funds that have reportedly nursed losses, according to the Wall Street Journal. Two more are said to be Rokos Capital Management and Alphadyne Asset Management, Bloomberg News reported.