The company’s stock has lost more than 99 percent of its value.
(Photo: Bloomberg)
Dusseldorf The bankruptcy of the US household goods retailer Bed Bath & Beyond (BBBY) has brought hedge funds billions in profits. The unregulated investment funds have massively bet on falling prices at the long-stricken group and have made almost $ 1.3 billion in profit with these “short bets” since January 2021. This emerges from an analysis by the US financial data provider S3 Partners.
When the professional investors, also known as short sellers, started their bets against BBBY, the price was still at $52.89. On Monday, the stock fell to a record low of 18 cents after the company announced on Sunday it would file for bankruptcy. The price loss is 99.7 percent.
Short sellers make money from falling prices by borrowing shares from large investors such as insurance companies or pension funds for a fee, where they see price risks. Then they sell the stock immediately to buy it back cheaper before the redemption date. The difference between the sell and buy price is your profit.
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