Michael Jordan is reportedly close to selling his NBA franchise to the billionaire hedge fund at the center of the WallStreetBets/GameStop saga

Michael Jordan paid $275 million for a majority stake in the Charlotte Hornets in 2010. Now, according to ESPN, the NBA legend is in talks to sell that stake to a consortium led by Gabe Plotkin and Rick Schnall, minority owners of the Hornets and Atlanta Hawks, respectively .

Plotkin may be familiar Wealth readers in another context. The hedge fund billionaire was at the center of the GameStop saga at the height of the meme craze during the pandemic.

In 2021, retailers communicating on online forums such as Reddit, particularly the r/WallStreetBets page, rallied to push GameStop’s stock higher, often trading on the commission-free brokerage platform Robinhood. Plotkin’s Melvin Capital Management shorted or bet against the video game retailer. The army of traders also bought other stocks that the hedge fund had shorted.

In January 2021 alone, Melvin Capital lost about $6.8 billion, suffering one of the fastest declines for a hedge fund since the financial crisis of 2008. Fellow hedge funds Point72 and Citadel made cash investments in Melvin Capital during the so-called a brief contraction, but just over a year later they pulled their investment. Melvin Capital eventually announced that its fund would close in June 2022.

The saga prompted a House committee hearing in February 2021, with many lawmakers worried about the ability of social media chatter to cause real-world problems.

It also showed how strong retail investors have become.

Plotkin, who was a superstar in the hedge fund world — posting returns of about 30% a year for six years using bearish bets — stepped down from managing outside capital and wrote to investors: “I apologize. In hindsight, and despite our intentions, we now recognize that we focused on future returns and team continuity without sufficiently considering your investment losses.”

Citadel CEO Ken Griffin later criticized the meme stock traders who made the huge short press.

“Does that make you feel good?” he asked at an event hosted by Bloomberg Intelligence in New York last year. “You’re not taking Gabe’s money. You withdraw money from a retirement plan that belongs to 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 that wants to buy the team.)

The Hornets have never won an NBA championship and currently have a record of 22-49. They were valued at $1.7 billion Forbes in October, ranking it just No. 27 among the league’s 30 teams in terms of value. The Golden State Warriors took the top spot with $7 billion.

Jordan, a six-time NBA champion, will retain a minority stake if the deal is completed, according to ESPN.

Subscribe to Well Adjusted, our newsletter full of simple strategies for working smarter and living better from the Fortune Well team. Sign up today.

Source link