Michael Jordan paid $275 million for a majority stake in the Charlotte Hornets in 2010. Now the NBA legend according to ESPNis in talks to sell that interest to a consortium led by Gabe Plotkin and Rick Schnall, minority owners of the Hornets and Atlanta Hawks, respectively.
More from Fortuna:
Plotkin might be familiar wealth readers in a different context. The hedge fund billionaire was downtown of GameStop Saga at the height of the meme stick craze during the pandemic.
In 2021, retailers communicating on online forums like Reddit, particularly the r/WallStreetBets site, banded together to boost GameStop’s shares, often trading on commission-free brokerage platform Robinhood. Plotkin’s Melvin Capital Management had either shorted or bet against the video game retailer. The dealer army also bought up other stocks that the hedge fund had sold short.
In January 2021 alone Melvin Capital lost around $6.8 billion, which has suffered one of the fastest declines for a hedge fund since the 2008 financial crisis. Other hedge funds Point72 and Citadel made cash investments in Melvin Capital during the so-called short squeeze, but they withdrew their investments just over a year later. Finally, Melvin Capital announced that its fund would close in June 2022.
The saga triggered one House Committee hearing in February 2021, with many lawmakers concerned that social media chatter could cause real problems.
It also showed how powerful had become small investors.
Plotkin, who was a superstar in the hedge fund world and for six years posted annual returns of around 30% on bearish bets, retired from managing debt and wrote to investors: “I apologize. With hindsight, and despite our intentions, we now recognize that we have focused on future returns and team continuity without sufficiently considering your investment losses.”
Citadel CEO Ken Griffin later criticized the meme stock traders who pulled off the mammoth short squeeze.
“Are you feeling good about it?” he asked at an event hosted by Bloomberg Intelligence in New York last year. “It’s not Gabe’s money you’re taking. They take the money from a pension scheme owned by a teacher.”
In 2020, prior to the GameStop trade saga, Jordan sold a significant minority stake in the Hornets to Plotkin and D1 Capital CEO Daniel Sundheim. (According to ESPN, Sundheim is part of the consortium the team wants to buy.)
The Hornets have never won an NBA championship and currently have a 22-49 record. They were valued at $1.7 billion from forbes in October and ranks it only 27th out of the league’s 30 teams in terms of value. The Golden State Warriors took first place with $7 billion.
Jordan, a six-time NBA champion, would retain a minority stake if the deal goes through, according to ESPN.
This story was originally featured on Fortune.com
More from Fortuna:
Source : finance.yahoo.com