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- After a review of its investment strategy, hedge fund White Square has decided to close its doors
- Bets against GameStop cost the UK fund a double-digit percent loss in January
- Its decision to shut down is said to have nothing to do with the meme stock’s recent surge
GameStop has completed a nearly $1.13 billion stock offering to fund growth, while a hedge fund that lost money by shorting GME is shutting down. One of the hedge funds badly burned in the infamous GME social media driven short squeeze is closing down, while GameStop itself has just completed its $1.13 billion equity offering. White Square Capital, based in London and run by Florian Kronawitter, has closed its main fund and will return capital to investors, according to the Financial Times.
Kronawitter views on Gamestop
At its peak, White Square Capital had $440 million in assets under management (AUM). When the Wall Street Bets reddit helped pump GME’s price from $21 on Jan. 12 to around $345 on Jan. 27, the hedge fund was one of many that suffered double digit percentage losses from short positions.
According to the Financial Times, the fund’s closure was unrelated to its GameStop misadventure, according to a source. In a letter to investors, co-founder Kronawitter stated that in the current financial climate, the traditional equity long-short model is being challenged because there are far too many fish in the pond using the same long-short strategy.
The traditional edge is being eroded [by other investors], and there is an oversupply of capital, according to Kronawitter. The hedge fund’s arbitrage opportunities have shrunk as a result of the onslaught of capital caused by central bank monetary interventions, according to the co-founder.
These factors are accompanied by relative ease of access to information and cheaper investment alternatives, according to Kronawitter, which makes it difficult to justify hedge fund management fees in the current market. Members of the r/wallstreetbets subreddit expressed their delight in a Reddit thread discussing the news, with user turtleduck77 comparing hedge funds that shorted GME to dominoes falling and noting that it’s time to invest in dominoes! It’s about the game, not the pizza.
GameStop’s ATM service is now complete
GameStop announced yesterday that it had completed an at-the-market (ATM) equity offering, selling five million shares of common stock for $1.3 billion before commissions and offering expenses. According to the announcement, GameStop will use the net proceeds from the ATM Offering for general corporate purposes, as well as investing in growth initiatives and maintaining a strong balance sheet.
GameStop’s NFT marketplace, which will be launched on Ethereum, is one of the growth initiatives that is likely to be funded. While details are scarce at this time, the company’s blockchain division is said to be led by Matt Finestone, the former business operations leader of Ethereum and Loopring DEX.
The smart contract platform was created by foobar, a developer who previously worked on wrapper solutions for the classic version of Crypto Punks, HD Mooncats, and MooncatHelper NFT projects. It is based on the ERC-721 NFT standard.
Andrew is a blockchain developer who developed his interest in cryptocurrencies while pursuing his post-graduation major in blockchain development. He is a keen observer of details and shares his passion for writing, along with coding. His backend knowledge about blockchain helps him give a unique perspective to his writing skills, and a reliable craft at explaining the concepts such as blockchain programming, languages and token minting. He also frequently shares technical details and performance indicators of ICOs and IDOs.
