GameStop brings triumphant success to Montreal as two locals
The Wall Street Journal wrote about a hedge fund run by Senvest Management that made a $700 million profit on GameStop. This profit has now been fully realised. Senvest has its roots in Montreal, and it is a part of Senvest Capital, a holding company that is listed on the TSX.
It was started as an operating company by Victor Mashaal, who is from Montreal and is still the Chairman. In the 1990s, his son Richard Mashaal started investing in public stocks, mostly through a US hedge fund.
The hedge fund is very risky, opportunistic, and high-powered. But since the 1990s, the average return has been around 20% per year. Including the GameStop gain, the fund was up 38% in January. Since April 1997, it has grown at an annual rate of 18.3%, which makes it likely one of the best-performing funds during that time.
This comes with steep losses, like when the market dropped 54% in 2008. Since 2009, Senvest on the TSX has gone up 14 times. Richard Mashaal was born and raised in Montreal. He went to school at Wharton and has lived in New York for a long time. But the phone number for his office in Montreal still works, and Senvest, the parent company, is still based here.
The Mashaals own about $400 million worth of shares in the public company Senvest. The $5 million that was used to start the hedge fund is now worth about $2.4 billion.
Senvest is a flexible investor with a wide range of interests, including tech in Israel and Cyprus, real estate, private equity, and private debt. Senvest was part of the group that bought MacDonald Dettwiler (MDA) in 2019, which is the company that owns the Canadarm. Due to investments in energy, they spent some time in the desert in the last few years.
Richard says, “We look for companies that are out of favor, disliked, misunderstood, or undervalued, where expectations, sentiment, and valuations are all low.” In other words, stopping fridges from falling. Even though frog-kissing has worked for more than 20 years, I won’t trust it. If you want to learn more about the Senvest strategy, you can read this article. Thanks to Terminal Value on Twitter for letting me know about this and the WSJ story.
Ryan Cohen, the billionaire founder of Chewy.com, which sells pet food, is the other Montrealer who has gotten rich because of GameStop. Ryan Cohen is a dropout from Montreal who is 35 years old. His 9 million shares, which he bought for an average of $8.43 each, are now worth more than $600 million, even though GameStop has dropped a lot since its peak and is now trading at around $80.
Since he is now a director of the company, he probably doesn’t have as much freedom to make money on the side. He says that his father taught him how to make long-term investments with confidence. Almost all of his $1 billion worth is in three stocks: GameStop, Apple, and Wells Fargo.
In short, Saint-Jacques Street is where “opportunistic investing” got its start.
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