- A student turned $25 million into over $130 million by investing in Bed Bath & Beyond.
- Jake Freeman discussed his background, massive bet and retail reaction on Twitter.
- The 20-year-old touted Bed Bath & Beyond’s products and their prospects if consumer demand wanes.
A 20-year-old college student invested $25 million in shares of Bed Bath & Beyond, then cashed in a profit of $110 million less than a month later.
Jake Freeman shed light on his background, investing style and fondness for the homewares retailer in a Chat Spaces Twitter with Wook Capital, registered after revealing its stake in July.
Freeman, a math and economics student at the University of Southern California, became interested in finance when he was 12 years old. He started working in the industry at 14 and his first project was analyzing the performance and cost of tail risk hedges on retail portfolios, he said.
The college senior described his Bed Bath & Beyond bet as the “maiden voyage” of a fund he set up this summer, Freeman Capital Management.
He presented the bet as “looking out for himself” after researching options and credit at work and in his spare time. He declined to share how he raised $25 million, citing confidentiality agreements with his backers.
Freeman, who proposed that Bed Bath & Beyond reduce its debt by offering stock warrants and convertible notes to its bondholders, trumpeted the struggling retailer’s products during the Q&A on Twitter.
He argued that even if high inflation and rising interest rates weakened consumer spending, people would still need basic items like towels and sheets, and would not eliminate them from their mode. of life even if their price increases.
Additionally, he championed the physical locations of Bed Bath & Beyond’s baby products company, Buy Buy Baby. He highlighted their value to customers whose babies won’t stop crying or who engage in “extra activities like babies that require going to the store.”
The young investor also revealed that he shopped at Bed Bath & Beyond, especially when he needed to buy something for college or moved between apartments. He highlighted CO2 cartridges as one of his common purchases. “I’m a fan of sparkling water,” he said.
Freeman offered some advice for newbie investors. He recommended that they focus on longer-term games initially, as they can focus on business fundamentals and more easily assess whether their thesis is correct.
They also need to make fewer assumptions about near-term catalysts and headwinds, and external forces affecting stock prices matter less, he said.
Elsewhere, Freeman said he decided to take questions from retail investors because he wanted to give them access similar to that received by analysts and institutional investors. He noted that if he pursues activist games in the future, it might be useful to persuade retail investors to vote for his proposals.
On a related note, Freeman hinted that he didn’t do activist gaming at Bed Bath & Beyond because Ryan Cohen, the activist investor and president of GameStop, was already pushing for changes at the company. “There is a phrase: too many cooks in the kitchen,” he said.
Finally, Freeman revealed that he was surprised by the fierce backlash from his investment in Bed Bath & Beyond.
“I certainly didn’t expect such visceral responses and strongly opinionated responses from the Reddit community,” he said.
The investor added that he was “somewhat shocked” by the scale of the reaction and that people were contacting his friends and acquaintances for information about him.
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