, Columnist
GameStop Furor Inflicts Lasting Pain on Hedge Funds
The trading frenzy may be a lark for some investors, but it forces long-short funds into some unappealing options.
Hedge fund nightmare.
Photographer: Tiffany Hagler-Geard/Bloomberg
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Whatever happens next in the GameStop Corp. saga, the blow to hedge funds is real and won’t be absorbed easily.
Last week was a bad one for long-short equity hedge funds, so called because they simultaneously bet on some stocks (long) and against others (short). In what has become the shot heard around the investing world, a posse of retail investors who found one another on Reddit piled into shares of GameStop and a handful of other stocks, driving up prices and handing losses to hedge funds that bet against them.