Even before his headline-making windfall, Jake Freeman was no ordinary zoomer.
While it wasn’t without “substantial” family support, at the age of 13, the New Jersey native began his investing journey. According to Financial Times, his first wager amounted to US$500 (AU$720) and was placed with the help of his uncle and former pharmaceutical executive Dr Scott Freeman.
From 2017 up until July of this year, Freeman interned at Volaris Capital Management under the mentorship of its founder and former Credit Suisse executive Vivek Kapoor. The pair have even published academic papers examining “complex theories” about debt defaults and options contracts. Real page-turners.
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“He’s not of the typical mould that the schools are conspiring to transform our young children into,” Vivek Kapoor told FT.
“Jake is a smart, sharp guy with a dense set of neurons that can address any problem without dogma.”
But perhaps the second most fascinating detail about Jake Freeman has to be his US presidential campaign at the ripe old age of 18 — despite the fact that Article II of the Constitution dictates a minimum age of 35 years old.
The incredibly ambitious lad collected signatures, formed a campaign committee, and registered his bid with the Federal Election Commission.
“He wanted to be the youngest on the ballot,” explained friend and high school classmate Eray Sabuncu, who also signed the 2020 election filing in the capacity of treasurer.
“I didn’t know then that he was going to be famous.”
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How Jake Freeman got his hands on US$25 million (AU$36 million) for the initial stake is still something of a mystery. He claims it was mostly from friends and family along with whatever had been squirrelled away. In any case, the funds were raised through his vehicle Freeman Capital Management, which is registered in Wyoming; a state that’s apparently become a haven for those looking to set up limited liability companies thanks to its low taxes and strict privacy rules.
From there, the University of Southern California applied mathematics and economics major decided to hedge his bets on the long-struggling Bed Bath & Beyond (NASDAQ: BBBY) around July this year by purchasing five million shares at US$5.50 (AU$7.90), according to regulatory filings. For reference, his position represented over 6% of the company. What made it such a compelling buy? The combination of CEO Mark Tritton being shown the door and rather bleak earnings had tanked the stock price, rendering it quite the bargain. Plus the coming short squeeze, of course.
“I do like the baths at Bed Bath & Beyond,” said Jake Freeman.
“I’m a big fan of taking baths, I guess.”
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Thanks to a surge in r/WallStreetBets mania, the very same that sent GameStop and AMC to the moon last year, it didn’t take long before BBBY soared above the US$27 (AU$38.80) threshold. But sensing the winds were about to change once again, Freeman decided it was the right moment to solidify the gain. Offloading US$130 million (AU$187 million) worth of stock through his TD Ameritrade and Interactive Brokers accounts, the lad had effectively made his nut.
“I certainly did not expect such a vicious rally upwards,” Freeman said in a recent interview.
“I thought this was going to be a six-month-plus play… I was really shocked that it went up so fast.”
“I did expect that as [Bed Bath & Beyond] better structured its balance sheet for value to be unlocked. I felt at those elevated levels [the stock] was not worth it from a risk/reward standpoint.”
The timing proved to be perfect. Later that week, Bed Bath & Beyond stock would sink by 20% after prolific investor, GameStop Chairman, and patron saint of meme stocks – Ryan Cohen – publicly disclosed his intentions to offload his entire 12% stake in the company through his RC Ventures LLC, netting an even heftier profit than Freeman Capital Management.
While the diamond-handed bagholders out there panicked as BBBY was in freefall, Jake Freeman was enjoying dinner with his parents in New York City before flying back to Los Angeles where the University of Southern California campus is located. At the time of this writing, BBBY sits at just US$10.36 (AU$14.89).
It’s like old man Buffett always says: be greedy when others are fearful and fearful when others are greedy.
