Billionaire technology investor Chamath Palihapitiya told CNBC on Wednesday that it closed its position on GameStop, a day after joining the frenzy of trading around the video game retailer.
He also defended the power of individual investors to compete with Wall Street hedge funds.
The CEO of Social Capital and former Facebook executive wrote on Twitter that he bought GameStop call options worth $ 125,000 in February, after asking his followers on Twitter what to buy. Calls are derivative instruments that give the buyer the right to buy a stock at a set price. The trader makes money when the stock rises above the strike price. GameStop shares opened Wednesday at $ 354 per share, up more than 1,550% this year alone.
Palihapitiya said on CNBC’s “Fast Money: Break Report” on Wednesday: “I ended up closing my position this morning and wanted to announce that I was taking all the profits I made, plus my initial position – to take $ 500,000 and I will donate it ”.
Palihapitiya dismissed criticism on Wall Street about how individual investors unite on social media – especially the Reddit message board on wallstreetbets, and the short GameStop and a handful of other actions like professionals – as hypocrites. He said hedge funds are trying to push stocks all the time.
He said allowing speculative funds to pass 140% of GameStop shares could be seen as irresponsible.
Shares of GameStop initially rose earlier this month after the company said Chewy co-founder Ryan Cohen was joining its board. As buyers entered the stock, shorts were sent running toward the hills.
A short press occurs when a stock with a large block of missing sellers begins to rise in price, and shorts struggle to buy shares at current higher prices to limit their losses. They return the number of shares borrowed and lose the price difference.
Palihapitiya said that the phenomenon surrounding GameStop shares, a few other shares such as AMC Entertainment, is much more than a simple trading story, claiming that it is a push of the institution again.