- A student turned $25 million into over $130 million by investing in Bed Bath & Beyond.
- Jake Freeman discussed his background, his massive commitment and the retail response to it on Twitter.
- The 20-year-old praised Bed Bath & Beyond’s products and the outlook as consumer demand fades.
A 20-year-old college student plowed $25 million into Bed Bath & Beyond stock and made a $110 million profit less than a month later.
Jake Freeman shed light on his background, his investing style and his penchant for the homeware retailer in a Twitter Spaces Conversation with Wook Capital, incorporated after he disclosed his stake in July.
Freeman, a math and economics major at the University of Southern California, became interested in finance when he was 12 years old. He started working in the industry at age 14, and his first project was analyzing the performance and cost of tail risk hedges on retail portfolios, he said.
The university senior described his Bed Bath & Beyond bet as the “maiden trip” for a fund he founded this summer, Freeman Capital Management.
He took the bet as “just getting it out” after studying options and credit at work and in his spare time. He declined to share how he raised $25 million, citing confidentiality agreements with his backers.
Freeman, who suggested Bed Bath & Beyond reduce its debt mountain by offering warrants and convertible notes to its bondholders, trumpeted the ailing retailer’s products during the Twitter Q&A.
He argued that even if high inflation and rising interest rates weakened consumer spending, people would still need basic items such as towels and sheets, and would not cut them out of their lifestyles, even if they went up in price.
In addition, he defended the physical locations of the baby products division of Bed Bath & Beyond, Buy Buy Baby. He underlined their value to customers whose babies won’t stop crying, or who “engage in extra baby-like activities that require shopping.”
The young investor also revealed that he shops at Bed Bath & Beyond, especially when he has to pick up something for college or moves from one apartment to another. He highlighted buses with CO2 as one of his usual purchases. “I’m a fan of sparkling water,” he said.
Freeman gave some advice to budding investors. He recommended that they initially focus on longer-term play because they can focus on the fundamentals of the company and more easily verify that their statement is correct.
They also need to make fewer assumptions about short-term catalysts and headwinds, and the external forces that affect stock prices are less important, he said.
Elsewhere, Freeman said he decided to answer questions from private investors because he wanted to give them the same access to him as analysts and institutional investors. He noted that if he pursues activist plays in the future, it may be helpful to convince retail investors to vote for his proposals.
On a related note, Freeman hinted that he hadn’t made an activist play at Bed Bath & Beyond because Ryan Cohen, the activist investor and GameStop chairman, was already pushing for changes at the company. “There’s an expression: too many cooks in the kitchen,” he said.
Finally, Freeman revealed that he was surprised by the fierce response to his Bed Bath & Beyond investment.
“I was definitely not expecting such deep-rooted responses and highly idiosyncratic responses from the Reddit community,” he said.
The investor added that he was “somewhat shocked” by the magnitude of the response and the fact that people are reaching out to his friends and acquaintances for information about him.
Read more: Morgan Stanley explains why stocks will fall at least 13% more before the end of the year – and shares the 3 sectors they believe will offer the best returns in the market