Dialogue with GameStop short squeeze promoter Keith Gill: I support retail investors and their right to voice their opinions

Original Title: Keith Gill Drove the GameStop Reddit Mania. He Talked to the Journal.

Authors: Julia - Ambra Verlaine / Gunjan Banerji, Wall Street Journal reporters

Translation: Initium Media

GameStop short squeeze driver Keith Gill accepted an exclusive interview with The Wall Street Journal. In his first interview ever, he said, "I support these retail investors and their right to speak out."

Image source: Screenshot from The Wall Street Journal, originally published on 2021-02-04

He led a group of fans online to push GameStop's stock price to astonishing heights, drawing global attention to the video game retailer and causing many retail investors to experience dramatic wealth fluctuations overnight. Yet he claims to be just an ordinary person.

"I didn't expect it to be like this," said 34-year-old Keith Gill. On the stock forum WallStreetBets on Reddit, he is known to fans by the username "DeepF---ingValue," but to his two-year-old daughter, he is simply "Daddy." As for the situation that caught the attention of Congress, the Federal Reserve, hedge funds, the media, and hundreds of thousands of investors, he said it was not his intention.

Last week, after a rollercoaster new investment game unfolded, Gill spoke to The Wall Street Journal. In his first-ever interview, he said, "I am insignificant in this whole thing," adding, "I support these retail investors and their right to speak out."

Not long ago, Gill was just an ordinary marketer at Massachusetts Mutual Life Insurance Co., but many see him as the driving force behind GameStop's soaring stock price. As of last Friday, GameStop's stock price had skyrocketed over 1600% since the beginning of the year. On Wednesday alone, GameStop's stock price surged 135%, reaching an all-time high of $347.51, only to plummet to $194 per share the following day, before sharply rebounding for the rest of the week. It's worth noting that GameStop's stock price was only around $18 at the beginning of the year.

Many online investors have stated that it was Gill's call that united them into a powerful force, one that not only caused well-known hedge funds to suffer heavy losses but also turned Wall Street upside down.

On Wednesday, Gill posted a screenshot of his personal securities account online, showing that the previous day he had made about $20 million in profits from his investments in GameStop stocks and options. A Reddit user named "reality_czech" commented, "Your steadfastness has inspired many of us to buy this stock and hold on to it. The example you set has truly changed the lives of thousands of ordinary people. We sincerely thank you. Every penny you earn is well-deserved."

The next day, Gill posted another screenshot showing that his investment in GameStop had lost $15 million. According to a Wall Street Journal reporter who witnessed it, after the market closed on Thursday, his E*Trade securities account balance totaled about $33 million, including GameStop stocks, options, and millions in cash.

"He has always loved money," said Gill's mother, Elaine Gill. "He would collect those scratched-off lottery tickets that many people didn’t realize were winners and just tossed them on the ground… but many times those tickets could indeed be redeemed for prizes."

Gill has more than one online persona; he is known as "Roaring Kitty" on YouTube. His online persona attracted thousands of fans and imitators, who shared screenshots of their own securities accounts. According to internet data company Apptopia Inc., as the investment frenzy surrounding GameStop peaked last week, hundreds of thousands of new investors downloaded brokerage apps like Robinhood to join the movement.

Gill claims he is not an instigator of ordinary retail investors against powerful institutional investors, but rather believes that ordinary investors can uncover investment value in overlooked stocks. He never imagined that so many fans would debate who he really is, nor did he expect to see hundreds of millions of dollars added to his stock account. He describes himself as just an ordinary dad living in the suburbs of Boston, with hobbies online and a plastic slide on his lawn.

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

Gill recalls that he began investing in GameStop in June 2019, when the stock price hovered around $5. At the beginning of that year, GameStop started looking for its fifth CEO, just 12 months after the last one took office. Gill kept buying the stock. Although he had hardly played any video games other than Super Mario and Donkey Kong, he believed that by attracting a new generation of gamers, the struggling video game retailer could make a comeback.

Gill said, "People hastily assume that GameStop will become the next Blockbuster." Blockbuster was a chain of video rental stores that declined alongside the traditional retail industry. "It seems many people did not deeply explore the value of this stock but rather misclassified its investment opportunities."

With long hair cascading over his shoulders, Gill started his personal YouTube channel last summer. To avoid waking his daughter while she slept, he moved his work to the basement of his rented house in Wilmington, Massachusetts. During his live streams, he praised GameStop and Belgian beer, with Delirium Tremens being his favorite.

In a recent YouTube live stream, wearing a red headband and pilot sunglasses, he answered various stock-related questions from viewers. In a more than seven-hour live stream, he first poured himself some Prosecco and then switched to beer, celebrating his big profits while shouting at a large audience of viewers and investors. The live stream garnered over 200,000 views.

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

Among Gill's many fans, Jon Hagedorn, a 34-year-old training manager from Ronkonkoma, New York, stated that Gill "is bound to become the greatest legend in WallStreetBets history." He added, "He is the original OG."

The meteoric rise of GameStop's stock price seems completely disconnected from measures of corporate value, leading to complaints in the market that this retail investor-led surge in stock prices amounts to manipulation.

The U.S. Securities and Exchange Commission (SEC) announced last Friday, "If it is found that trading activities have been abused or manipulated, the Commission will take action to protect the interests of retail investors." Gill said the SEC has not contacted him yet.

Long-Distance Runner and Value Investor

Gill's mother recalled, "When this frenzy just started, my first question to him was whether this would be dishonest or illegal. He told me, 'No, Mom, it won't be.'” Gill's parents, Elaine and Steve Gill, live in Brockton, Massachusetts, where Gill grew up.

In high school, Gill was a long-distance runner and later attended Stonehill College, not far from home, majoring in accounting. During his time there, he achieved national rankings in long-distance running. He once set an impressive record of running a mile in 4 minutes, but an Achilles injury forced him to retire.

Gill 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 Chartered Financial Analyst designation and was deeply attracted by the complexities and challenges of stock selection, which became another outlet for his energy besides long-distance running. He began working at Massachusetts Mutual Life Insurance Company in 2019.

In the summer of 2019, he began accumulating shares of GameStop and occasionally posted screenshots of his options positions from his E*Trade account on the WallStreetBets forum. A trader replied to Gill's post in September 2019, exclaiming, "Oh my God, dude, what made you invest $53,000 in GameStop?"

In the following months, he regularly published updates under the title "GME YOLO update," with GME being the stock ticker for GameStop. He reported five-figure and six-figure investment gains, even during periods when the stock price plummeted.

Gill was determined to stick with his investment in GameStop, and his dedication to the stock became a topic of conversation among day traders.

For his fans, his success tapped into the desire of millions of retail investors in the U.S. to try their hand at stock trading. Nowadays, stock trading incurs no fees, and the launch of various apps has made it easier for investors to trade via their phones. Online investment discussion communities composed of enthusiasts have further lowered the barriers for retail investing.

At the beginning of the COVID-19 pandemic, many novice investors stuck at home reported that online exchanges with other investors about stock or options trading techniques provided them comfort. In these exchanges, novices often heard experiences from those who had made money.

The exchanges were not always positive. A chat room set up outside of Reddit but associated with WallStreetBets was filled with vulgar, racist, and anti-gay rants. Many on the platform criticized Wall Street's powerful players, and some hoped to see financial moguls suffer losses.

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

January 28, 2021, outside the New York Stock Exchange, protesters demonstrated against the online trading platform Robinhood for restricting retail investors from buying GME and other rapidly rising stocks, citing financial requirements, leading to a 44% drop in GME's stock price that night.

Hedge Fund Liquidation

Many on Wall Street disagree with Gill's optimistic view of GameStop and have suffered significant losses. Hedge funds and other professional investors have bet against the stock.

To short a stock, hedge funds often borrow shares and sell them, planning to buy them back at a lower price later to return them, profiting from the difference. However, when a shorted stock rises sharply instead of falling, the hedge funds suffer losses and must buy back the stock at a loss to cover their positions, which in turn drives the stock price even higher—a phenomenon known as a "short squeeze."

The bearish positions of hedge funds attracted many retail investors who anticipated a short squeeze to invest in the stock. Gill said his investment strategy does not solely rely on short squeezes, but he knows others may bet on that.

So far, those professionals have misjudged the situation, while Gill and other individual investors who heavily invested in GameStop have emerged victorious. Hedge funds like Melvin Capital Management and Maplelane Capital were forced to liquidate their positions, suffering heavy losses and becoming the subject of ridicule among retail investors on Reddit.

More retail investors bought into GameStop, hoping its stock price would "skyrocket," as many investors on Reddit claimed. Retail investors also heavily bought stocks of companies like AMC Entertainment Holdings Inc., hoping to cash in on similar trends.

According to global media intelligence company Meltwater, last week, there were hundreds of thousands of posts about GameStop on Reddit, Twitter, and Facebook over the past month. Data from Dow Jones Market Data indicated that as the stock price climbed, GameStop became one of the hottest bets in the U.S. market in recent days, attracting fervent interest from investors.

Now, seasoned traders have begun to incorporate the influential behavior of retail investors like Gill into their investment considerations.

Mark Sebastian, founder of the Chicago Options firm Option Pit and with about 20 years of options trading experience, developed a stock-picking software that analyzes a large number of stocks to identify those with high retail investor activity. He trades options based on the momentum of these stocks, using upward or downward trends. AMC has recently come into his view, although he said he is not particularly interested in AMC.

"We are trying to find these stocks before they become popular," Sebastian said. He described a recent trade as "a free ride."

Gill said his life changed overnight, but he has not made future plans yet. He hopes his "Roaring Kitty" channel on YouTube will continue, and maybe he will buy a house. "I thought my investment in GameStop would succeed," he said, "but I never expected so much would happen in the past week."

Gill has a dream: "I have always wanted to build an indoor track or an indoor athletic field in Brockton," he said when talking about his hometown, "and now it seems I might really be able to achieve my dream."