USC math student, 20, makes $110 MILLION selling Bed Bath & Beyond’s meme-stock before shares plummeted 23% when its second biggest investor said he planned to offload all his stock

• Jake Freeman, 20, bought a $25million stake through his own fund in July
• He invested in five million Bed Bath & Beyond shares at $5.50 a share at the time 
• As a result, he owned around six percent of one of America’s largest retailers
• He then roughly sold more than $130million worth of stock on Tuesday, after the retailer’s stock price surged to $27 a share
• Shares tumbled 35 percent on Thursday as meme-stock billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his 10 percent stake

An applied mathematics and economics major at the University of Southern California, Jake Freeman, 20, made a $110million profit by selling all of his Bed Bath and Beyond stock on Tuesday, nearly a month after investing in five million company shares at $5.50 a share

A 20-year-old college student made $110million by selling all of his Bed Bath and Beyond stock – but he did so just before the retailer’s stock price slumped 23 per cent after its second-biggest shareholder indicated plans to sell his entire holding.

Jake Freeman, an applied mathematics and economics major at the University of Southern California, invested in nearly five million Bed Bath & Beyond shares at $5.50 a share in July, spending a total of $25 million with the help of a wealthy pharmaceutical investor uncle. 

As a result, he became a minority shareholder by owning around six percent of America’s largest houseware goods specialty stores as it became the latest ailing retailer to see a surge in its value thanks to the ongoing ‘meme stock’ boom. 

That sees amateur investors snap up stock in companies seen as past-their-best, helping to drive the share price up and making some lucky stockholders who sell at the right time millions of dollars. 

Freeman, whose family resides in the New York City area, then roughly sold more than $130million worth of stock on Tuesday, after the retailer’s stock price surged to $27 a share. It has since crashed back down 23 per cent to $18.55-a-share at news of investor Ryan Cohen’s plans to sell. 

He completed the transaction by using his TD Ameritrade and Interactive Brokers accounts, according to regulatory filings.

‘I certainly did not expect such a vicious rally upwards,’ Freeman told The Financial Times in an interview on Wednesday. ‘I thought this was going to be a six-months-plus play…I was really shocked that it went up so fast.’ 

‘I certainly did not expect such a vicious rally upwards,’ Freeman, who was a company minority shareholder, told The Financial Times. ‘I thought this was going to be a six-months-plus play…I was really shocked that it went up so fast.’

The 20-year-old said that funds raised from friends and family made it possible for him to invest in the company, initially buying a $25million stake through his own fund based in Wyoming, called Freeman Capital Management. 

He added that he had been investing ‘for years’ with his uncle, Dr. Scott Freeman – a former pharmaceutical executive. The pair also own a stake in Mind Medicine, a New-York based psychedelic medicine biotech company that promotes psychedelic-inspired medicines known as psychoplastogens and therapies to address addiction and mental illness.

Freeman also interned at Volaris Capital Management, a hedge fund headquartered in Millburn, New Jersey. Furthermore, he co-authored a research paper with Vivek Kapoor, an ex-Credit Suisse executive who is now the founder of Volaris Capital, at the tender age of 16. The research paper is titled ‘Irreducible Risks of Heding a Bond with a Default Swap.’

In a letter sent to Bed Bath and Beyond’s board of directors in July after his initial $25 million stock purchase, Freeman wrote that the retailer was ‘facing an existential crisis for its survival.’

He added that the company needed to ‘cut its cash-burn rate, drastically improve its capital structure, and raise cash.’ 

In a letter sent to the company’s board of directors in July after his initial $25 million stock purchase, Freeman said that Bed Bath and Beyond was ‘facing an existential crisis for its survival.’ He said the retailer needed to ‘cut its cash-burn rate, drastically improve its capital structure, and raise cash

On Thursday, however, shares tumbled 35 percent as billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his stake following a stunning rally in the meme stock this month. 

Cohen’s RC Ventures was the second largest investor in the company. The venture capital firm said in a regulatory filing that it has no stake as of August 16. 

The company’s shares were down at $12.27 in after-hours trading. After gaining nearly 360 percent this month and July, soon after Freeman’s $25million investment, the share price had risen to $30 in the previous session when the rout began after RC Ventures said it aims to sell 9.45 million shares, worth $148.6 million. 

It also included the sale of its January call options with strike prices between $60 and $80.

When Cohen’s firm first disclosed the bullish bet on Tuesday, it boosted retail investor interest and resulted in record trading in the stock.

Bed Bath and Beyond shares soared by 35 percent on Thursday, after billionaire investor Ryan Cohen exited the struggling home goods retailer by selling his stake following a stunning rally in the meme stock this month

Bed Bath and Beyond’s price share was listed at $18.55 after closing on Thursday. The steep drop follows a monstrous run from $5.77 at the start of the month to $23.08 on Tuesday, which Wall Street analysts saw as irrational

Brokerage Wedbush downgraded the stock to ‘underperform’ and reaffirmed its price target of $5, saying the stock looks ‘disconnected from fundamentals’ at the current valuation. 

‘News that Ryan Cohen may be selling his stake in BBBY appears to have spooked the meme stock faithful,’ said David Jones, strategist at Capital.com.

‘Unlike the frenzy of the past, (retail) traders seem more inclined to follow institutional wisdom than to blindly battle for companies with poor fundamentals.’

The retailer had in June ousted its chief executive and reported a slump in sales. It had in March added three directors in an agreement with Cohen, who is also the chairman of GameStop.

However, a stock market rebound has rekindled speculative options trading in single stocks among retail investors after volatile markets turned them away from risky bets earlier this year. 

So far in August, the sharp run-up in Bed Bath & Beyond shares had burnt a more than $600-million hole in the pockets of those who had bet against the stock, S3 Partners said on Wednesday. 

But short interest has increased to 55 percent of the company’s free float as bearish investors managed to find attractive entry points, the analytics firm said. Its ticker was trending high on investor-focused social media platform, stocktwits.com. 

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