Conversation with Keith Gill, the man behind the GameStop short squeeze: I support retail investors and their right to speak out

By Julia-Ambra Verlaine / Gunjan Banerji Wall Street Journal

Compiled by: DuanchuanMediaInitium Media

The driving force behind the GameStop short squeezeKeith GillInterviewed by The Wall Street Journal

“I support these retail investors and their right to speak out,” he said in his first interview.

Image source: Screenshot from The Wall Street Journal

This article was first published on 2021-02-04

He led a group of fans on the Internet to push GameStop's stock price to an incredible surge, which attracted the world's attention to the game retailer and made many retail investors experience the gains and losses of wealth overnight. And he said he was just an ordinary person.

"I didn't see this coming," said Keith Gill, 34, who is known to fans as "DeepF—ingValue" on Reddit's WallStreetBets forum and as "Big Dad" to his 2-year-old daughter. As for the situation that has attracted the attention of Congress, the Federal Reserve, hedge funds, the media, trading platforms and hundreds of thousands of investors, he said it was not his plan.

“I have a very small role in this whole thing,” Gill said in an interview with The Wall Street Journal last week after a tumultuous new investment game unfolded. “I support these retail investors and their right to speak out,” he said in his first interview.

Until recently, Gill was just an ordinary marketer at Massachusetts Mutual Life Insurance Co., but many people believe that he is the driving force behind the surge in GameStop's stock price. As of last Friday, GameStop's stock price has soared by more than 16,00% since the beginning of the year. Last Wednesday, GameStop's stock price soared 1,35% in one day, setting an all-time high of $347.51. On Thursday, the stock plummeted to $194 per share, and then rebounded sharply in the rest of last week. It should be noted that GameStop's stock price was only around $18 at the beginning of this year.

Many online investors said that it was under Kil's call that they formed a powerful force, which not only caused heavy losses to well-known hedge funds, but also turned Wall Street upside down.

Last Wednesday, Gill posted a screenshot of his personal securities account online, which showed that his investment income on GameStop stocks and options the day before was about $20 million. A Reddit user named "reality_czech" left a message: "Your tight grip not only inspired many of us to buy this stock, but also held it. The example you set has truly changed the lives of thousands of ordinary people. We thank you from the bottom of our hearts. You deserve every penny you earn."

The next day, Gill posted another screenshot showing that he had lost $15 million on his GameStop investment. According to a Wall Street Journal reporter, after the close of trading on Thursday, his securities account balance on E*Trade totaled about $3.Xiaobai Navigation$3 million, including GameStop stock, options and millions in cash.

"He always loved money," said Gill's mother, Elaine Gill. "He would collect those scratched-off lottery tickets that a lot of people didn't know they had won and would just throw on the ground ... but a lot of times those tickets would actually pay out."

Gill has more than one online name. He is called "Roaring Kitty" on YouTube. His online image has attracted thousands of fans and imitators, who have shared screenshots of their stock accounts. As the investment frenzy around GameStop peaked last week, hundreds of thousands of new investors downloaded brokerage apps such as Robinhood to join the movement, according to Internet data information company Apptopia Inc.

Gill said he was not an instigator of ordinary retail investors against powerful institutional investors, but he firmly believed that ordinary investors could dig out investment value in those buried stocks. He never thought that so many fans would argue about his name, let alone that his stock account would have millions of dollars more. He said that he was just an ordinary dad living in the suburbs of Boston, with his own hobbies on the Internet and a plastic slide on his lawn.

GameStop store in Manhattan, New York, USA, January 30, 2021

Gill recalls that he started investing in GameStop in June 2019, when the stock was still hovering around $5. Earlier that year, GameStop began searching for its fifth CEO, just 12 months after the last one took over. Gill kept buying the stock. Although Gill had hardly played any other video games besides Super Mario and Donkey Kong, he believed that the struggling game retailer had every chance of reviving by attracting a new generation of video game players.

“People were quick to assume that GameStop was going to be the next Blockbuster,” Gill said, referring to the movie rental chain that has fallen as traditional retail has waned. “It seems like a lot of people were just misclassifying the investment opportunity rather than digging into the stock.”

Kil, who has shoulder-length hair, launched his own YouTube channel last summer. He moved his work to the basement of his rented house in Wilmington, Massachusetts, because he was afraid of disturbing his daughter after she fell asleep. He praised GameStop and Belgian beer in the live broadcast, and Delirium Tremens beer produced in Belgium is his favorite.

Wearing a red headband and aviator sunglasses, he fielded stock questions from viewers, first pouring himself some prosecco and then beer, celebrating his big win and yelling at his large audience and investors during a more than seven-hour YouTube livestream that has more than 200,000 views.

Gill's username on Reddit's WallStreetBets forum is vulgar, but it reflects his belief in value investing - that is, investing in stocks of companies that are undervalued relative to their fundamentals.

Among his many fans, Jon Hagedorn, a 34-year-old training director from Ronkonkoma, N.Y., said Kiel “is going to be the greatest legend in the history of the WallStreetBets forum.” He added, “He’s the original OG.”

The soaring share price of GameStop seems to be completely out of touch with the measurement standards of corporate value, which has been complained about in the market, saying that the practice of retail investors banding together to drive up the share price is tantamount to manipulating the stock price.

The U.S. Securities and Exchange Commission (SEC) announced last Friday that it would “take action to protect the interests of retail investors if it is demonstrated that trading activity was abusive or manipulative.” Kil said the SEC had not approached him yet.

Long-distance runner and value investor

"When this craze first started, one of the first questions I asked him was, is this dishonest or illegal? He told me, 'No, Mom, it's not,'" recalled Gill's mother, who lives with his father, Steve Gill, in Brockton, Massachusetts, where Gill grew up.

In high school, Keel was a long-distance runner. He later went to Stonehill College, not far from his home, to study accounting. During his time at school, his long-distance running results once won national rankings. He once set an excellent record of running a mile (about 1,600 meters) in 4 minutes, but an Achilles tendon injury forced him to retire.

Kiel moved to New Hampshire for a few years, where he met a mentor, a programmer and investor introduced to him by his aunt. He holds the qualification of a Chartered Financial Analyst and said that the complexity and challenge involved in stock picking deeply attracted him, which became another way for him to vent his energy besides long-distance running. He started working at MassMutual Life Insurance Company in 2019.

In the summer of 2019, he began to build a position in GameStop and occasionally posted screenshots of his options positions in his E*Trade stock account on the WallStreetBets forum. In response to Kil's post in September 2019, a trader exclaimed: "Oh my god, man, what made you invest $53,000 in GameStop?"

Over the next few months, he posted regular updates on his performance under the name “GME YOLO update,” referring to GameStop’s ticker symbol. He has racked up five- and six-figure gains, and he has posted his earnings even when the stock price has plummeted.

Gill was determined to stick with his GameStop investment, and his dedication to the stock has become a legend among day traders.

For his fans, his success is based on the desire of millions of retail investors in the United States to try their hand at stocks. Today, stock trading is free of charge, and the launch of various applications makes it easier for investors to trade through their mobile phones.CommunityIt also lowers the threshold for retail investment.

In the early days of the coronavirus pandemic, many new investors stuck at home said they found comfort in online conversations with other investors about stock or options investing tips, often hearing from those who had made money.

The content of the exchanges is not always positive. One chatroom, hosted outside Reddit but linked to WallStreetBets, was filled with obscene, racist and anti-gay screeds. Many on the platform blasted Wall Street power players, while others wanted to see financial bigwigs suffer losses.

"I'm not targeting anyone," Gill said. "'Roaring Kitty' is an investor education channel and I'm there to show my investment philosophy."

On January 28, 2021, the New York Stock ExchangeexchangeIn addition, some demonstrators protested the GameStop incident. The online stock trading platform Robinhood restricted retail investors from buying several rapidly rising stocks such as GME on the grounds of financial requirements, causing GME's stock price to plummet by 44% that night.

Hedge Fund Liquidation

Many on Wall Street disagreed with Gill’s bullish view on GameStop and suffered big losses as hedge funds and other investment professionals bet that the stock would fall.

To short a stock, hedge funds often borrow the stock and sell it, then buy it back at a lower price later and earn the difference. But when a shorted stock rises instead of falling, and the stock price rebounds sharply, the hedge funds will suffer. To close their positions, the hedge funds will have to buy the stock at a loss, which in turn will stimulate the stock to rise further. This is the so-called "short squeeze."

Hedge funds’ bearish positioning is what attracted many retail investors who expected a short squeeze to invest in the stock. Kiel said his investment strategy doesn’t rely entirely on a short squeeze, but he knows others might bet on it.

So far, the professionals have been wrong, and Gill and other individual investors who bought heavily into GameStop have won big. Hedge funds Melvin Capital Management and Maplelane Capital that shorted the stock have been forced to liquidate their positions, suffering heavy losses and becoming the laughing stock of retail investors on the Reddit forum.

Many more retail investors bought into GameStop in hopes that its share price would “take off,” as many investors on Reddit said. They also piled into shares of companies such as AMC Entertainment Holdings Inc., hoping to ride a similar trend and make a quick buck.

According to data released last week by global media intelligence company Meltwater, there have been hundreds of thousands of posts about GameStop on Reddit, Twitter and Facebook in the past month. According to Dow Jones Market Data, as its share price continues to rise, GameStop has been enthusiastically sought after by investors and has become one of the hottest bets in the U.S. market in recent days.

Now, seasoned traders are beginning to factor the behavior of influential retail investors like Kiel into their investment considerations.

Mark Sebastian, founder of Option Pit, a Chicago-based options firm with about 20 years of options trading experience, has developed a stock selection software that analyzes a large number of stocks to identify those with high retail investor activity. He will buy and sell options based on the momentum of these stocks, taking advantage of the upward or downward trend. AMC has also come into his sight recently, although he said he has little interest in AMC.

“We’re trying to find these stocks before they become popular,” said Sebastian, who called his latest trade “a steal for nothing.”

Kiel said his life changed overnight, but he hasn't made any future plans yet. He hopes to keep his "Roaring Kitty" YouTube channel going, and maybe buy a house. "I thought my investment in GameStop was going to work out," he said, "but I never expected so much to happen in the past week."

Keel has a dream in mind: "I've always wanted to build an indoor track or an indoor track and field stadium in Brockton," he said of his hometown, "and now it seems like I can actually realize my dream."

The article comes from the Internet:Conversation with Keith Gill, the man behind the GameStop short squeeze: I support retail investors and their right to speak out

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