Renaissance Technology bought 1 million GameStop shares before the meme stock's 400% surge

A leading hedge fund revealed that it built a GameStop stake from scratch last quarter, positioning itself as a potential beneficiary from the stock's recent explosive surge according to a new report. Renaissance Technologies reported owning 1 million shares of GameStop at the end of March, valued at $13 million according to its first-quarter portfolio update. GameStop's stock soared over 400% at its peak on Tuesday, briefly increasing the value of RenTech's stake to $65 million. Despite the stock price retreating to around $33 on Wednesday, the company remains valued at over $10 billion.

The rally in GameStop shares was driven by Keith "Roaring Kitty" Gill's return to social media. Gill was a prominent figure in the social media driven surge that caused GameStop to skyrocket in early 2021. RenTech, which utilizes algorithms for many of its trades, often sees significant changes in its stock portfolio each quarter. The firm, founded by the late Jim Simons, a noted mathematician and Cold War codebreaker, made several notable adjustments last quarter.

The fund significantly reduced its Nvidia holdings by nearly two thirds, cutting the position from about 1.5 million shares to 551,000, reducing its value from approximately $767 million to below $500 million.mSimilarly, RenTech pared down its Tesla stake, decreasing it from 2.6 million shares worth $635 million to 1.8 million shares worth $316 million. Additionally, the fund increased its position in AMC Entertainment Holdings, another meme stock, from 4.9 million shares valued at about $30 million in December to 8.7 million shares worth $60 million as of Tuesday's close.

Overall, the total value of RenTech's stock portfolio remained relatively stable at about $64 billion. By the end of March, its top three holdings were Novo Nordisk, Palantir, and Meta. Earlier in the year, Uber and Nvidia were among its largest positions. It's important to note that quarterly portfolio updates provide a snapshot of a firm's holdings on a specific date, excluding shares sold short, private investments, and overseas bets. They may not fully reflect the investment strategy, especially when algorithmic trading is involved.