Bed Bath & Beyond.
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Jake Freeman raked in a roughly $110 million profit on Bed Bath & Beyond stock last week.
The college senior discussed his huge wager on Reddit, Twitter, and in a Financial Times interview.
The 20-year-old student spoke about his personal interests, including his love of taking baths.
Jake Freeman is a normal college student in many ways: He enjoys cooking, watching TV, playing video games, going to the movies, and hanging out with friends. Yet he stands out for one big reason — he recently cashed out an estimated $110 million profit on Bed, Bath & Beyond stock.
Freeman, an applied math and economics major at the University of Southern California, is also the 20-year-old chief of Freeman Capital Management. His fund spent about $25 million building a 6.2% stake in Bed Bath & Beyond, which it revealed on July 21. It sold the entire position in the retailer less than a month later, on Aug. 16, for north of $130 million.
News of his sale, coupled with GameStop chairman and meme-stock champion Ryan Cohen’s disposal of his roughly 12% stake in Bed Bath & Beyond, drove the stock down from a high of $30 on August 17 to $11 by Friday’s close.
Freeman has shown big ambitions and a prodigious intellect from an early age, the Financial Times reported this week. He made his first investment of $500 at the age of 13 with his uncle’s help, he copublished an academic paper about hedging bonds with default swaps at 16, and he ran for US president at 18, the newspaper said.
The college senior leveraged his knowledge of math and finance in a letter to Bed Bath & Beyond’s directors this summer. He suggested the company could address its financial woes by offering stock warrants and convertible notes to bondholders, in return for cutting the company’s debts.
Freeman reflected on his short-lived bet in a Reddit post titled “An Ode to BBBY” on Wednesday. He explained a sharp rise in the retailer’s stock price, and the fact he was leaving for school the next day, spurred his decision to cash out.
Moreover, he described his purchase as a “watershed moment” for Bed Bath & Beyond, and said he hoped it could capitalize on its elevated stock price to clean up its finances and stay in business for a long time.
Freeman also discussed his massive wager, and shed some light on his personal life, in a Twitter Spaces conversation with Wook Capital on Aug. 10.
He said Bed Bath & Beyond had serious liquidity issues, its vendors were upset, and bankruptcy was a real possibility if its bosses failed to act. He framed his proposal as a way for company executives to raise some vital cash, as well as secure time to fix their business — which could avoid a firesale of the Buy Buy Baby division.
Bed Bath & Beyond and Freeman didn’t immediately respond to requests for comment from Insider.
During the Twitter conversation, Freeman revealed that he bought the stock because it appeared to be priced for bankruptcy. He believed the correct change to the company’s capital structure would lessen that danger and unlock significant upside.
He emphasized that his financial backers understood the risk of parking $25 million in a single meme stock, and he had specifically raised the money for that purpose.
Freeman also celebrated Bed Bath & Beyond’s passionate retail following, and their willingness to openly criticize his plan. He looked forward to exploring some of their theories in his future academic research, he continued.
Moreover, he acknowledged they were skeptical of his intentions as an investor. They may feel vindicated now, given his hasty sale of the stock.
Finally, Freeman recalled a visit to his local Bed Bath & Beyond store. He saw lots of valuable inventory, but too many niche items, including a $300, “very gimmicky” foot warmer. Still, he expressed his love for one of the retailer’s namesake products.
“I do like the baths at Bed Bath & Beyond,” he said. “I’m a big fan of taking baths, I guess.”