Jake Freeman, the 20-year-old college student who reportedly banked $100 million trading Bed Bath and Beyond stock, purchased 4.69 million shares of the retailer Bed Bath & Beyond Inc (NASDAQ: BBBY) in July at roughly $5.20 per share along with his uncle, Dr. Scott Freeman.
That netted their Freeman Capital Management family fund a 6.21% passive stake in the meme stock.
“I wasn’t that aware it was a meme stock,” the University of Southern California student told Benzinga on Thursday.
“I approached it more from a mathematical side — looking at the balance sheet and the intersection of the debt side, the equity. I did not expect in any way the stock going up so fast.”
The Bed Bath & Beyond Investor’s Plan: In a July 21 letter to Bed Bath & Beyond, the younger Freeman outlined Freeman Capital’s plan for the realignment of the retailer, which consisted of two crucial legs: cutting debt and raising capital.
Fast forward just four weeks later, coupled with a carefully orchestrated short squeeze by Reddit’s WallStreetBets community known as the “Apes,” shares of Bed Bath rocketed to $28.60 at the highs on Tuesday — the same day Freeman Capital exited its entire stake in the company.
Curiously, on the same day, GameStop Corp. (NYSE: GME) Chairman Ryan Cohen, who sparked the Bed Bath & Beyond fanfare with the Apes, filed with the SEC saying he intended to sell as many as 9.45 million shares of the company beginning that day.
Related Link: MindMed A Newly Minted Meme? College Student Who Made $100M On Bed Bath & Beyond Is Involved In Psychedelics Stock
The Freeman Family Fund’s sale was well-timed. It closed at more than $130 million after spending $25 million in the initial investment, netting around $105-$110 million, or between 420%-460%.
MindMed Shares Skyrocket: Jake, who previously interned at Volaris Capital Management invests with his uncle Scott, who is the co-founder and former chief medical officer of Mind Medicine (MindMed) Inc (NASDAQ: MNMD). MindMed shares rocketed 77.4% from the previous day’s highs on Thursday after the Bed Bath & Beyond sale was disclosed.
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The investor focus is now on MindMed, which was originally a privately owned company, Savant, co-founded Scott.
The Freemans have built a 5.6% stake in the company and sent a strategic value enhancement plan to MindMed, outlining the fund’s interest in working “hand-in-hand” to cut the development time of MindMed’s two original drugs and slash its annual cash-burn rate.
Analyzing the letter, which the younger Freeman confirmed to Benzinga, FCM is focusing on MindMed’s core drugs, cutting cash burn and terminating MindMed’s at-the-money equity offering.
“I’ve been in drug development since I was in high school,” Scott said in an Aug. 16 interview on the YouTube channel Psychedelic Invest.
“About 13 years ago I partnered with Stephen Hurst and we founded a company called Savant. It was a private company working on drugs to treat addiction.”
After MindMed bought Savant, where he was previously CMO, Scott became the company’s first CMO. He left the organization around a year after he arrived, making him the first senior member of the team to do so.
Benzinga asked the younger Freeman why Scott left the company; he said he could not divulge the reason for Freeman’s departure due to a non-disclosure agreement.
“As a co-founder,” Scott said in the aforementioned interview. “I’ve been sitting on the sidelines watching, and one of the reasons why I want to go back is that I think there are things that I think need to be done differently.”
In the letter to MindMed, the pair call for an overhaul of the company, including cutting 11 of its 22 employees; the elimination of more than $21.8 million in non-core expenditures; and half of its cash burn rate over time.
It also calls for the immediate development of a proposal to approach the FDA to upgrade its MM-120 drug from a Phase 2 trial to a Phase 3 trial, which the Freemans said could bring the drug to market in four years rather than the expected seven to eight years.
The enhancement plan calls for a 50% reduction in executive compensation as well.
BBBY, MNMD Price Action: Bed Bath & Beyond shares were down 22.31% at $17.93 Thursday afternoon. MindMed shares were trading 41.5% higher at $1.06.
Photo via Shutterstock.
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