An American Student Trader Pockets $110M in One Month and Becomes the New Prince of Wall Street.
Lucky guy or genius?
From the title of this article, you might have thought that I was going to sell you advertising for a financial influencer, a dubious trading site, or a training organization to attract clients. I understand your suspicion. Better safe than sorry, as they say.
But that's not what we're talking about here.
Twenty-year-old Jake Freeman, still a student, did make $110 million in one month, the Financial Times reported. At the age of eighteen, he ran for president of the United States. In the end, it was not in politics, but in the markets that he made his name. Two years later, he has become the new prince of Wall Street. The prodigy is overwhelmed by requests for interviews.
Jake Freeman bought nearly 5 million shares of Bed Bath & Beyond Group in July 2022 at a price of around $5.5 and sold them a month later when it was over $27. He originally thought the stock could double, at most. He did well to sell since the “speculative wind” has died down. On Friday 19 August 2022, the stock closed on a 40.5% plunge, at 11 dollars. On Monday, August 22, 2022, it fell by another 16% to 9 dollars:
On the other hand, smallholders have been flocking to the stock for several weeks and will suffer heavy losses if the stock continues to plunge. According to Breakout Point's rankings, Bed Bath & Beyond is the second most popular stock among individuals behind Foot Locker and ahead of must-have GameStop and Apple.
A real rush on the stock that allowed Jake Freeman to pocket $110M
Customers of online brokers are probably not the only ones who are getting cold feet. At the end of June 2022, almost a third of the company's capital was held by hedge funds such as Ken Griffin's Citadel and Stephen Mandel's Lone Pine Capital. Did these large managers sell in time before the stock plunged?
The recent movements (derivatives) and rumors surrounding the stock could lead the US Securities and Exchange Commission to open an investigation (insider trading, price manipulation ...).
After his investment, Jake Freeman had written to the board of directors to call for a turnaround, given its persistent difficulties which had attracted short sellers (who were betting on the fall of the stock). The share of the bathroom and kitchen products distribution group had soared in July 2022 due to renewed buying by private speculators, who made it one of their flagship stocks, the famous meme stocks with AMC and GameStop.
However, the group's results and financial health deteriorated further in the second quarter of 2022. After this miraculous operation, he did not go out to celebrate his victory in a nightclub. “I was shocked,” he told the British daily. He had dinner with his parents in New York. Did he pay the bill? He then flew back to Los Angeles, where he is studying math and economics.
When he came of age, Jake Freeman set up his fund, Freeman Capital Management, by contributing his savings and raising $25 million from family, friends, and acquaintances. They are the ones who are entitled to the $110 million he raised in one month. Will his investors pocket and withdraw all or part of their profits or will they trust the young prodigy for new stunts on Wall Street?
His operation provides him with publicity that should bring him new clients. Well-established hedge funds may also offer to hire him.
Jake Freeman did not take advice from any guru or self-proclaimed former trader. He first learned about finance at the age of seventeen when he interned at a hedge fund, Volaris, which specialized in quantitative finance and derivatives. At thirteen, he started investing with his uncle, a former pharmaceutical executive. On Google, searches for the young trader have soared in the last week and all countries (United States, Iceland, Singapore, Hong Kong, Canada, France, ...).
Unsurprisingly, his success has stirred up jealousy
Unsurprisingly, his success stirs up jealousy, and he is a victim of denigration and attacks on social networks. This is particularly the case on Reddit, where individuals who lost a lot of money on the title Bed Bath & Beyond, the origin of Jake Freeman's fortune, are mourning.
“A lot of conspiracy theories are circulating about me: that I don't exist or that I'm acting underhandedly on behalf of an amusement park in Taiwan,” he told the British daily.
If all 20 million American students had the same trading capabilities, they would have generated the equivalent of 1,600 times the total student debt outstanding ($1.4 trillion). But Jake Freeman is an isolated case. For many, the career of an apprentice trader is short, full of disillusionment, and sometimes takes a tragic turn.
Two years ago, twenty-year-old Alexander Kearns, a Robinhood client, committed suicide when he thought he had lost $750,000 trading options. Great traders often start their careers early. At twelve years old and under the supervision of his grandmother, Michael Platt of BlueCrest was investing in British stocks, and he was successful, as he ended up with a £30,000 fortune. Even before he came of age, Paul Tudor Jones got a job from his uncle as a trader on the New York floor. The prize for precociousness goes to Warren Buffett, who, at the age of ten, was already discussing investments with the head of Goldman Sachs. You know the rest from the Oracle of Omaha.
Some reading
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The Paradox of the Unbearable Lightness of Markets — The World Is Bad, but Finance Is Better. The investor prefers to enjoy the summer by putting aside the bad news about the world that is piling up.
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Top 10 Hacks in Cryptocurrency World in 2022 — Some Lessons to Learn for the Future. A good way to understand why Bitcoin is in a class by itself.