An elite hedge fund bought 1 million GameStop shares before the meme stock’s 400% surge

• A top hedge fund built a GameStop stake from scratch last quarter ahead of the meme stock’s surge.
• Renaissance Technologies’ 1 million shares were briefly worth $65 million at Tuesday’s high.
• RenTech, founded by the late Jim Simons, also boosted its AMC bet and pared Tesla and Nvidia.

A world-beating hedge fund revealed it built a GameStop stake from scratch last quarter, making it a potential winner from the meme stock’s explosive leap this week.

Renaissance Technologies owned 1 million shares of the video-game retailer at the end of March, a position worth $13 million at the time, its first-quarter portfolio update shows.

GameStop stock was up more than 400% at its Tuesday high, briefly valuing RenTech’s stake at $65 million if still intact. The stock price has retreated from that peak of nearly $65 to about $33 on Wednesday, which still leaves the company worth more than $10 billion.

The rally in GameStop’s shares was fueled by Keith “Roaring Kitty” Gill’s return to social media this week. The retail investor was one of the biggest winners from the social-media frenzy that caused GameStop to skyrocket in early 2021.

RenTech uses algorithms to decide many of its trades, which can result in sweeping changes to its stock portfolio each quarter. It was founded by Jim Simons, the noted mathematics professor and Cold War-era codebreaker who died on Friday.

The quant fund made other striking changes to its holdings last quarter.

It slashed its Nvidia stake by nearly two-thirds, from about 1.5 million shares to 551,000, cutting the position’s value from about $767 million to below $500 million.

RenTech pared its Tesla stake as well, going from 2.6 million shares worth $635 million to 1.8 million shares worth $316 million. It also piled into AMC Entertainment Holdings — another notable meme stock — boosting its bet on the theater chain from 4.9 million shares worth about $30 million in December to 8.7 million shares in March, which were valued at $60 million at Tuesday’s close.

The total value of the firm’s stock portfolio was almost flat at about $64 billion. Its top three holdings were Novo Nordisk, Palantir, and Meta at the end of March. Uber and Nvidia were its second- and third-largest positions three months earlier.

It’s worth emphasizing that quarterly portfolio updates only provide a snapshot of a firm’s holdings on a particular date and exclude shares sold short, private investments, and overseas bets.

They don’t always paint a full picture of the investing strategy behind the picks, especially when algorithms are dictating trades.