BOSTON / LONDON, Jan 31 (Reuters) – Wall Street is gearing up for another week of market turmoil, with signs that the sales frenzy is pumping up stock prices such as GameStop Corp. and AMC Entertainment Holdings Inc are spreading to other property.
Some of Wall Street’s largest hedge funds are still fattening their wounds after retail traders tried to push up stock prices sharply, resulting in a huge loss for investors. large.
Melvin Capital, a hedge fund at the heart of the GameStop drama, lost 53% in January but received promises of new money from investors in the final days of the month, Reuters reported on Sunday.
Melvin ended up in January with more than $ 8 billion in assets after starting the year with about $ 12.5 billion in funds, according to someone familiar with the case.
On Friday, Andrew Left of Citron Research, who spent two decades building his brand as one of the world’s leading short sellers, turned his back on detailing the shortcomings of companies publicly, after intense backlash against him and others who said GameStop’s video vendor was not worth its price stock.
“We saw the potential of a new investment base, in terms of the ability to shape not only the fortunes of individual stocks but the fortunes of a large market segment like the Russell 2000,” said Sunil Krishnan, head of multi-asset management. at Aviva Investors.
Among the volatile price fluctuations was the level of a situation that last week covered U.S. hedge funds, buying and selling, the highest since a financial crisis of more than a decade a year ago, according to a study by Goldman Sachs Group Inc. to stocks still near the highest levels, the investment bank warned.
“According to Goldman Sachs Prime Services, this week represented the largest active hedge investment fund since February 2009. Cash covered long positions and summaries in all sectors, ”The investment bank wrote in a note late on Friday.
“Despite this active disinfection, total net and wholesale asset exposures on a mark-to-market basis are both close to record highs, reflecting an ongoing risk of a sale is made on condition. ”
There are rising signs that retail traders who moved the market last week are setting their sights further than just U.S. stocks.
On Thursday and Friday, the price of money rallied, bringing gains to around 10% since messages began circulating on Reddit’s social media platform urging retail investors to enter the market and prices increase. The price of gold has also risen.
Market trends like this have focused on the rising volume of traders selling on financial markets, which had previously been dominated by larger institutions.
“What has been surprising in recent months is that the scale of sales engagement has begun to shift the dials,” said Paul O’Connor, head of Janus Henderson’s multi-asset team in London.
“If you look at that data a month or two ago, you can see that it has happened. It’s not like those people woke up last week, ”said O’Connor.
Reporting by Svea Herbst-Bayliss in Boston and Sujata Rao-Coverley in London; Written by Joshua Franklin in Miami; Edited by Alden Bentley and Peter Cooney