Keith Gill, known on Reddit as DeepF——-Value and as Roaring Kitty, is seen in a portion of the YouTube video displayed on a smartphone screen in front of the GameStop logo.
Pavel Gonchar | Light rocket | Getty Images
Almost five years ago GameStop Champion Keith Gill placed a $53,000 bet at his favorite video game store. Gill’s net worth topped $289 million this week.
The meme stock leader, who can move stocks simply by posting cryptic messages online, shared a screenshot of his portfolio Monday night, showing he held on to his 5 million GameStop shares and 120,000 call options even after a 21% surge. On Monday, he made a whopping $79 million – in one trading day.
Gill, whose name is “DeepF ——Value” on Reddit and “Roaring Kitty” on YouTube and X, began sharing his position in GameStop in September 2019 with a $53,000 stake, encouraging a group of retail traders to go short positions. -sale of hedge funds. By the end of the stunning episode in April 2021, Gill exercised his call options position, receiving 200,000 shares of common stock.
The size of his positions increased dramatically when he re-emerged three years later. Meanwhile, GameStop, a stock he initially bought because he thought it was a great bet, is still trying to transition from brick-and-mortar video game shopping to e-commerce.
“The most successful players are the ones who are simply out of their minds. To trade this way, you have to be made of something else,” said Michael Howe, co-founder and chief strategist of OpenInterest.PRO.
“You will never see a professional trader make numbers like this,” Howe added. “Most of our risk managers would have gone down this path before you even got to something like this. It’s simply unimaginable.”
However, Gill may be in trouble. The Wall Street Journal reported that electronic trading broker Morgan Stanley was considering firing him over concerns that what he was doing might amount to market manipulation.
CNBC could not verify what Gill said about his GameStop stake and portfolio.
Next steps?
The latest screenshot of Gill’s portfolio shows 120,000 call options against GameStop with a $20 strike price expiring on June 21.
In other words: If the stock price rises above $20 that day, Gill will be able to exercise the options at $20 per share, leaving him with 12 million more shares. His total of 17 million shares would make him GameStop’s fourth-largest shareholder, behind Vanguard, BlackRock and Ryan Cohen’s RC Ventures, according to FactSet.
The par value if sold will be $240 million of shares purchased at $20.
“If you don’t have the money to take custody of the shares after the calls are exercised, you simply lease them with the condition of selling them or selling shares against them before they expire,” said CC Lagator, co-founder of brokerage Options. AI. “The problem with a position of this size is that it will be very obvious to other market participants that these calls or the stock relative to these calls is short, which puts a lot of pressure on the stock.”
1 billion dollars?
If Gill exercises the call, he will be left with 17 million shares. At Monday’s closing price of $28, the bet would be worth $476 million.
At GameStop’s recent peak of $64.83 on May 14, it would be worth $1.1 billion. (His cost of acquiring such a stake would thus be $421.4 million.)
Gill could also roll these call options to an additional expiration date to buy some time, which means exiting the current position and immediately entering a similar position. However, this can be an expensive option.
“The problem is that every time he does this, he will spend money on the premium for the new option,” Lagator said.
GameStop shares fell about 2% on Tuesday.