- A college student turned $25 million into more than $130 million by investing in Bed Bath & Beyond.
- Jake Freeman spoke about his background, his massive bet, and the backlash from retailers on Twitter.
- The 20-year-old touted Bed Bath & Beyond’s products and their prospects if consumer demand wanes.
Jake Freeman shed light on his backgroundyour investment style and your penchant for home goods retailing in a Twitter Spaces Conversation with Wook Capital, recorded after he revealed his participation in July.
Freeman, a mathematics and economics student at the University of Southern California, became interested in finance at the ripe age of 12. He started working in the industry at 14, and his first project was to analyze the performance and cost of tail risk hedges in retail portfolios, he said.
The college senior described his Bed Bath & Beyond venture as the “maiden voyage” of a fund he created this summer, Freeman Capital Management.
He framed the gamble as “strike out on my own” after studying options and credit at work and in his spare time. He declined to share how he raised $25 million, citing confidentiality agreements with his backers.
Freeman, who proposed to Bed Bath & Beyond to reduce its debt by offering equity warrants and convertible notes to its bondholders, touted the ailing retailer’s products during the Twitter Q&A.
He argued that even if high inflation and rising interest rates weaken consumer spending, people would still need basic items like towels and sheets, and would not eliminate them from their lifestyle, even if they rose in price.
In addition, he defended the physical locations of Bed Bath & Beyond’s baby products business, Buy Buy Baby. He underscored its value to customers whose babies won’t stop crying, or are engaging in “additional childhood activities that require going to the store.”
The young investor also revealed that he shops at Bed Bath & Beyond, especially when he needs to buy something for college or when he moves out of an apartment. He highlighted CO2 canisters as one of his common purchases. “I’m a fan of sparkling water,” he said.
Freeman offered some advice to novice investors. He recommended that they focus on longer-term plays initially, as they can focus on the company’s fundamentals and more easily assess whether his thesis is correct.
They also have to make fewer assumptions about short-term catalysts and headwinds, and external forces affecting share prices matter less, he said.
Elsewhere, Freeman said he decided to field questions from retail investors because he wanted to give them access similar to what analysts and institutional investors received. He noted that if he pursues activist moves in the future, it might be useful to persuade retail investors to vote for his proposals.
On a related note, Freeman hinted that he didn’t make an activist move on Bed Bath & Beyond because Ryan Cohen, the activist investor and chairman of GameStop, was already pushing for changes at the company. “There is a phrase: Too many cooks in the kitchen,” he said.
Ultimately, Freeman revealed that he was taken aback by the fierce backlash to his investment in Bed Bath & Beyond.
“I definitely wasn’t expecting such visceral responses and strong opinions from the Reddit community,” he said.
The investor added that he was “somewhat surprised” by the magnitude of the reaction and the fact that people contacted their friends and acquaintances to get information about him.