GameStop affair, two art megacollectors involved: one bought the Giacometti of records

There are also billionaires and art collectors Steven Cohen and Kenneth Griffin among the key players (unfortunate for them in a negative way) in the GameStop affair, the incredible Wall Street deal that the financial world has been talking about for days. Cohen, with a personal wealth of $14.1 billion as of February 2020, is one of the richest people in the world: he is the founder of thehedge fund Point 72 and is known in the art world for his collection that includes masterpieces such as Jeff Koons’ Rabbit, Picasso’s Le Rêve, Damien Hirst’s The Physical Impossibility of Death in the Mind of Someone Living, Jasper Johns’ celebrated shark under formaldehyde, Flag. Larry Gagosian, one of the world’s greatest gallery owners, said that “it’s amazing what Cohen has collected,” referring to the U.S. financier’s prestigious collection.

Griffin is also the founder of a large hedge fund, Citadel, and has a personal wealth of $21 billion (also among the world’s richest men). His extensive art collection includes paintings by Paul Cézanne, Jasper Johns, Jackson Pollock, Jean-Michel Basquiat, Njideka Akunyili Crosby and others. Griffin is also very active as a museum supporter: in 2015 he donated $40 million to the Museum of Modern Art in New York and $10 million to the Museum of Contemporary Art in Chicago, his hometown. In 2018 he replicated by donating $16 million to the Norton Museum of Art in West Palm Beach, and in 2019 $25 million to New York’s Shed performance center and $125 million to Chicago’s Museum of Science and Industry. Both Cohen and Griffin have also been involved in some spectacular art buying and selling transactions. Notably, in 2015 Cohen bought Alberto Giacometti’s L’homme au doigt from Christie’s, the most expensive sculpture ever sold at auction, and Griffin in 2016 bought two paintings from tycoon David Geffen, Willem de Kooning’s Interchange and Jackson Pollock’s Number 17A, for the monstrous sum of $500 million, the highest amount ever spent on a transaction involving works of art.

What happened these days on Wall Street? A major New York investment firm, Melvin Capital Management, has attempted a short sell on the shares of GameStop, the well-known, publicly traded video game chain that has been a frequent protagonist in recent years of financial speculation by various hedge funds. Melvin was joined by other hedge funds who, to sum up, by short selling bet on the deterioration of GameStop’s stock. However, something happened that probably no one in the world of finance could have predicted: the intense activism of small investors came into the picture, who decided to unite and network against the speculative investment giants. Intuited by Melvin’s operation, a kind of movement of small traders (many of whom, unemployed as a result of the pandemic, precisely to counter the losses they suffered as a result of Covid, began trading online) came together on the Reddit platform.

What happened next is explained today by an article in Repubblica, which reports the testimony of one of the small investors who enlivened the discussion on Reddit, young Eduardo D’Aquino: on January 14, Melvin decided to take a short position against GameStop, amounting to 143 percent of the outstanding shares. Melvin was immediately imitated by other hedge funds. GameStop stock had fallen to $35 but then began to rise again due to the intervention of 34-year-old trader Keith Gill, a “hero” of small investors. “Gill, the opposite of pinstripes on Wall Street,” explains Repubblica, "is one of the stars of the Reddit chat Wall Street Bets. His post, which he calls ’deepfuckingvalue,’ posts serious and detailed analysis and gives news about potential market deviations. The Reddit community catches on and understands his message again in mid-January, summarizing it says this: ’A downward speculation on 143% of a company’s stock should be thwarted. If the stock goes up we will do a squeeze, that is, we will put the fund in trouble and it will have to cover the positions by buying into the stock market at astronomical prices.’ The people of Reddit [...] smell unfairness but also understand the technical possibility of making money. Everyone is self-taught on the Internet. So 2.7 million people buy GameStop stock, which jumps in a few days to nearly $500 per share. ’I was tempted to sell,’ says Eduardo, ’my investment had gone from $450 to $15,000, which was a small fortune for me, but I resisted. Because like the others I wanted to teach a lesson to these funds that with their financial power destroy even healthy companies in order to speculate. And they do it with impunity. In this case we will not give in and Melvin will have to cover himself even at $1,000 or $1,200 per share’."

Thanks to the action of reddit users, GameStop’s stock rose 20 percent on Jan. 25, and by Wednesday, Jan. 27, it had multiplied to a value of $347.51 guaranteeing the company, explains an article in theInternational, the equivalent value of a company like Renault. One can therefore understand very well how much the big hedge funds have lost at the moment with their bearish operation if the value of GameStop’s stock has increased tenfold. The game, of course, is not yet over, but it is nevertheless a fact that on Friday, at the close of trading, it ended with a clear victory for the "rebels,“ who are now being hailed in many quarters as those who have succeeded in ”jamming the system," as theInternational writes.

What was the role of the two mega-art collectors in all this? They came to the rescue of Melvin, who due to the action of the “rebels” lost 2.75 billion to avoid bankruptcy. And that is precisely the amount that Point72 and Citadel, Cohen and Griffin’s hedge funds, will pull out to help Melvin, in what has been seen by many as a market manipulation operation to stop small investors: “Citadel,” noted entrepreneur Tyler Winklevoss tweeted last Jan. 28, “invests in Melvin Capital, which was about to go under because of Wall Street Bets [the Reddit channel that triggered the rebel operation, ed.] Citadel is also Robinhood’s largest customer.” Robinhood is an investment platform, which was largely by the “rebels” to invest in GameStop stock: and Robinhood has since halted trading in the stock. Citadel and Point72 are Melvin investors, however, and a bankruptcy of the company would affect the other hedge funds as well.

It is not yet clear what impact the affair will have on Cohen and Griffin’s collections, partly because these events are still unfolding. At the moment, there is strict confidentiality on the part of the two billionaire super collectors.

Pictured: Alberto Giacomett, L’homme au doigt (1947; bronze, height 180 cm)

GameStop affair, two art megacollectors involved: one bought the Giacometti of records

Warning: the translation into English of the original Italian article was created using automatic tools. We undertake to review all articles, but we do not guarantee the total absence of inaccuracies in the translation due to the program. You can find the original by clicking on the ITA button. If you find any mistake,please contact us.