Reddit day trader army fattens fortunes of the super rich

[LONDON] A horde of traders on Reddit that see themselves as sticking it to the establishment by hunting for heavily shorted stocks is adding billions to the wealth of some of the world's ultra rich.

Larry Chen, chairman and chief executive officer (CEO) of GSX Techedu, saw his fortune increase US$4.2 billion on Wednesday as US depository shares of the Beijing-based online tutoring company rose 36 per cent, pushing his net worth to US$15.6 billion on the Bloomberg Billionaires Index.

Fellow Chinese billionaire Wang Jianlin's wealth surged by US$773 million through his stake in AMC Entertainment Holdings. A flood of retail traders caused the stock to spike as much as 310 per cent even as the broader market slumped. Hedge funds such as Mudrick Capital, which owned 4.6 million shares in the cinema operator as at Jan 4, also got a boost.

Chewy Inc co-founder Ryan Cohen added about US$1.8 billion with his holding in GameStop Corp, the video-game retailer that has surged more than 1,700 per cent this year. Fellow investor Donald Foss, founder of sub-prime auto lender Credit Acceptance Corp, now owns a stake worth about US$1.2 billion, according to the Bloomberg index.

Even the head of Tootsie Roll Industries benefited, with CEO Ellen Gordon's fortune rising US$185 million as the confectioner's shares rose to a record, while National Beverage Corp founder Nick Caporella saw his net worth jump US$1.8 billion to US$6.8 billion as shares of the maker of LaCroix soda water climbed 40 per cent.

METEORIC RALLY

Day traders have been piling into previously unloved tickers favoured by short sellers in recent sessions, driving them to record highs. The meteoric rally of GameStop has already worn down some institutional investors, with Melvin Capital closing out its short position by Wednesday.

The hunt for heavily shorted stocks is being led by the Reddit forum WallStreetBets, which boasts roughly 2.8 million members. Some of the more outspoken have taken an activist stance, portraying their campaign as taking a stand against such societal problems as financial inequality and generational injustice.

Ms Gordon owns just over half of Tootsie Roll Industries' common shares and 81 per cent of its B shares, according to company filings. Her stake in the maker of Tootsie Pops, Junior Mints and Dubble Bubble gum, which she owns both directly and on behalf of other family members, is now worth US$1.8 billion.

Mr Cohen disclosed an investment in GameStop in August. By December, he'd purchased nine million shares in the retailer for a total cost of US$76 million and now holds a stake worth about US$3.1 billion. GameStop shares rose 135 per cent to a record US$347.51 in New York after triggering three volatility halts.

Mr Wang, the founder of closely held conglomerate Dalian Wanda Group, now owns a stake worth about US$1 billion in AMC, which climbed to US$19.90 in New York trading, the most since October 2018. Mr Wang has a net worth of US$14.4 billion, according to the Bloomberg Billionaires Index.

BLOOMBERG