In just a week, the ‘Reddit crowd’ trade which squeezed out seasoned hedge funds from GameStop has gone global.
Herding on the other side of bearish bets proved so profitable in GameStop and other shorted American stocks that it didn’t take long for copycats to emerge across the globe.
On Jan. 26, a seemingly random buying frenzy lifted a handful of stocks across Europe. Soon enough, traders spotted what UK publisher Pearson, German drugmaker Evotec and property firm Unibail-Rodamco had in common: they were among Europe’s most shorted stocks.
The moves then spread to Asia; on Jan. 28 heavily shorted Australian stocks Webjet, Tassal and InvoCare climbed while Malaysian retail investors debated buying into medical glove makers to squeeze out short-sellers.
The ‘Reddit crowd’ has impacted mainstream markets by forcing hedge funds to sell favoured stocks to cover losses. With short bets outstanding against some 5,000 U.S. companies, the action may continue.