20-year-old Jake Freeman just walked away with around $110 million from selling his 6.21% stake in meme-stock favorite Bed Bath & Beyond (NASDAQ: BBBY), when its stock price took a sharp upturn in the past few weeks, almost breaching the peak in April of this year — and very, very shortly before the stock started to go down after Ryan Cohen filed for a potential stock sale.
How did he do it?
Twitter user JC Oviedo (@JCOviedo6) outlines the timeline of Freeman’s investment. It begins with the registration of Freeman Capital Management LLC on May 20, which is then followed by the registration of FCM BBBY Holdings LLC on July 13. And then just a week later on July 20, the freshly registered holdings company files a 13G, disclosing that it owns 4,698,000 shares of Bed Bath & Beyond, or 6.21% of the common stock.
Freeman purchased his stake at below $5.50 per share, and at almost 5 million shares, adds up to over $25 million, which the 20-year-old claims was mostly raised from friends and family. It should also be noted that Freeman is the nephew and an investing buddy of Dr. Scott Freeman. The elder Freeman is a co-founder and former President/Chief Medical Officer of Mind Medicine (MindMed) Inc. (NASDAQ: MNMD). More on this later.
Prior to registering his own holdings and buying 5 million Bed Bath & Beyond shares over the span of a week, Freeman had allegedly been investing with his uncle for years. And he’d been an intern at Volaris Capital, a New Jersey Hedge Fund for over four years.
In the 13G filing, he attached a note where he said that Bed Bad & Beyond was facing an “existential crisis for its survival” and advocated for a two-legged realignment: cutting debt and raising debt capital. This becomes the catalyst for the stock to soar. And soar it did.
And then on August 16, FCM BBBY Holdings LLC updated its 13G filing to disclose that it has liquidated all of its almost 5 million Bed Bath & Beyond Shares. Freeman sold his stake for over $27 per share.
The 20-year-old then reportedly goes to dinner with his parents in the New York City suburb where they live, and then flies back to Los Angeles to return to campus, just $110 million richer.
On August 4, while Bed Bath & Beyond was still rallying, Freeman registered FCM MM Holdings, LLC. A week later on August 11, the new company, led by his uncle Dr. Freeman, launched an activist campaign against MindMed, calling it out for its underperformance after disclosing that it represents investors who together hold 5.6% of the company’s outstanding shares. In the letter, they declare that they wish to “work hand-in-hand” with the board to “unlock the Company’s full potential,” and give the company until the end of the month to respond.
It might be too soon to tell, but MindMed appears to be the next name to follow the BBBY path.
Interestingly, we highlighted last week on Twitter that on a combined basis Dr Scott Freeman may have control over 10% of MindMed, requiring the filing of insider status. An account claiming to be Freeman Capital responded promptly, stated that “Due to the way our stake is set up, we do not have any filing obligations at this time. We have both US and Canadian counsel advising us on these matters.”
The alternative, of course, is that Freeman Capital isn’t the driving force behind the company. Rather, it may be recent guidance provided by IIROC on short sales that are instead forcing certain traders to cover their current short positions.
But that’s pure speculation.
Information for this briefing was found via Twitter, and the sources and companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.