Whale Watch: Ryan Cohen Ding Dong Ditched Bed Bath & Beyond
Tracking the latest moves from the activist meme stock king.
Ahoy, mateys. Welcome aboard Whale Watch, where Troop echolocates and analyzes the movements of A-list activist investors with the most capital and influence: management firms, hedge funds, CEOs, and other big fish rocking shareholder boats across the seven seas. On our radar this round: memelord Ryan Cohen.
Whale: Ryan Cohen
Co-Founder, Chewy; Chairman, GameStop; Managing Member, RC Ventures
Cohen made his fortune on the online pet supply retailer Chewy, which he founded in 2011 and sold to PetSmart in 2017 for $3.35 billion, in what was at the time the largest e-commerce acquisition ever. In August 2020, Cohen started accumulating GameStop shares, and in January 2021, the videogame vendor appointed Cohen and two allies to its board, thanks to huge support from retail investors, who took to calling him daddy. The moves inspired a massive stock price surge, fueled by memes and r/WallStreetBets users committed to pumping the stock — popularizing the term “meme stock” and lending Cohen a cult reputation. GME is still up from its pre-meme doom, armed with overhauled management led by credible Amazon alumni, and Cohen is chairman. He’s also a major shareholder in Apple and Wells Fargo.
Whar She Blows: Bed Bath & Beyond
Cohen surfaced as a major Bed Bath & Beyond shareholder in March, accrued a 9.8% stake, and made an activist play. He suggested that the struggling housewares retailer should narrow its inventory focus, spin off its in-his-opinion-undervalued baby gear business buybuy BABY, and explore a full-fledged sale, ideally to a private equity firm that might pay a premium. Cohen’s announcement sparked a new Reddit-driven rally that faded in late spring but returned with a vengeance this month (a wave on which one USC student made a cool ~$110 million). But on the same day that the stock price hit $30, up nearly 500% for the month, Cohen disclosed that he was dumping his entire then-11.8% stake, for around $68 million in profit. Unsurprisingly, BBBY sank in response.
Decoding the Whale Signals
Back in March, Bloomberg’s Matt Levine, a whale watcher of the finest caliber, half-joked that Cohen should leverage his Reddit fanbase by staking a new meme-y stock, making some vague activist demands, and cashing out after it goes to the moon. That’s not exactly what happened here. Cohen handpicked three new board members, two of whom were specifically tasked with figuring out what to do with the baby business Cohen suggested selling. He also presumably contributed to ex-CEO Mark Tritton’s ouster in June. Those are meaningful-ish activist moves. Still, it’s noteworthy that Cohen announced he was cashing out (so soon) on the same day that BBBY hit a five-month peak. (A few observers have called the sequence of events suspicious, but enforcement action is unlikely.) Always good to remember that whales, even the ones who read Reddit, are in it for the money. Meanwhile, Bed Bath & Beyond reportedly secured a Sixth Street Partners loan to stem the bleeding, but remains in a rut.
Until next time, sailors, fare thee whale.
