Sometimes it doesn’t feel great to be correct, and it’s rare to be proven correct so quickly.
We published an important piece around noon on Thursday, August 18th, 2022, before we knew that Ryan Cohen had disposed of his BBBY shares a day earlier. We now know the outcome of something we wondered in the piece: “We don’t yet have a way to know how many shares might have been sold into the final paroxysm of [Wednesday’s] move.” As we learned after the close yesterday, the answer was “all”.
As we learn from yesterday’s SEC 13D filing, he actually began selling on the 16th. This is interesting because the 144 filing with his intention to sell was dated the 16th. This means that the selling likely began almost immediately after the filing was accepted by the SEC, since he managed to sell over 3.7 million shares on that day.
Over the two-day period, his stock sales ranged from $18.6848 to $29.2192. If you use the Scale Trader function on your TWS, hopefully all your sales go this well:
Source: SEC
Without the immediate knowledge of Mr. Cohen’s potential sale, BBBY shares closed about 11.7% higher on the 17th. This episode was a master class in how to manage SEC filings. When buying stock or options, notify the market as quickly as possible. When selling, utilize filing methods that offer the ability to obfuscate your intentions for a crucial session or two. The moves may be legal, but they are certainly unseemly. (This escapade certainly seems worthy of SEC attention if they are sincere about their role in protecting individual investors.)
Oh, one more important thing: we learned late yesterday that BBBY hired Kirkland & Ellis as a restructuring advisor[i]. Healthy companies don’t need to hire restructuring advisors. One has to question whether a 10% holder of a company’s shares had no knowledge of impending problems.
Now that the dust has settled, it’s painfully obvious that an investor with a massive social media following utilized his ability to generate excitement in meme stocks to turn a losing position into a winner at the expense of unsuspecting shareholders. It pains me to say it, but an untold number of investors, blinded by greed, fell victim to the machinations of a potentially unscrupulous operator. Yet still, not all the players have left the table. Given the role that Ryan Cohen played in what seems akin to a pump and dump scheme[ii], one might think that GameStop, another company in which he holds almost 12% of the stock, would be suffering mightily. But those shares are only down about 7%. Even after getting suckered, it appears that not everyone has left the table.
—
[i] Full disclosure, my nephew is a restructuring attorney at Kirkland & Ellis. We have not discussed this matter.
[ii] “Seems akin” – I can’t make an accusation of illicit activity without proof
Disclosure: Interactive Brokers
The analysis in this material is provided for information only and is not and should not be construed as an offer to sell or the solicitation of an offer to buy any security. To the extent that this material discusses general market activity, industry or sector trends or other broad-based economic or political conditions, it should not be construed as research or investment advice. To the extent that it includes references to specific securities, commodities, currencies, or other instruments, those references do not constitute a recommendation by IBKR to buy, sell or hold such investments. This material does not and is not intended to take into account the particular financial conditions, investment objectives or requirements of individual customers. Before acting on this material, you should consider whether it is suitable for your particular circumstances and, as necessary, seek professional advice.
The views and opinions expressed herein are those of the author and do not necessarily reflect the views of Interactive Brokers, its affiliates, or its employees.
