5 Stocks Reddit’s WallStreetBets is Buying in July 2021

1. GameStop Corp. (NYSE: GME)

Number of Hedge Fund Holders: 13     

GameStop Corp. (NYSE: GME) is a video game retailer that also sells other entertainment products. It is placed first on our list of 10 stocks Reddit’s WallStreetBets is buying in July 2021. The company’s shares have offered investors returns exceeding 4,545% over the course of the past twelve months. The stock is one of the most mentioned on Reddit forum WallStreetBets and has become a symbol of the market fight between retail investors and hedge funds. 

On July 6, GameStop Corp. (NYSE: GME) announced that it would be leasing a new facility in Nevada as part of expansion plans. According to the company, the new facility could be functional as soon as next year. 

Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in GameStop Corp. (NYSE: GME) with 3.2 million shares worth more than $620 million.  

In its Q1 2021 investor letter, Rhizome Partners, an asset management firm, highlighted a few stocks and GameStop Corp. (NYSE: GME) was one of them. Here is what the fund said:

“The first quarter saw some bizarre market reactions. Game Stop is a heavily shorted legacy video game retailer that saw its stock price rise from $17 to a peak of $483 within a month. It appears that retail investors on a Reddit.com forum called WallStreetBets used memes to create a viral feedback loop of forced buying. Game Stop reached $20 billion in market cap and had more daily trading volume than Apple at one point. The Game Stop short squeeze became a black swan event for the short sellers. Large hedge funds such as Melvin Capital suffered 50% losses during a short period and required emergency capital injections that resulted in costly dilution. Shorting is difficult and introduces a risk of ruin. This is especially true in situations where a large percentage of the float is shorted. We want to remind you that we hedge our portfolio via index puts, sector puts, and sometimes buying puts directly in our own portfolio companies. However, we rarely short because 1) we are not good at it 2) the potential for brain damage is too high and 3) we want to avoid the risk of ruin.”

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