Cohen makes millions at Bed Bath & Beyond, while meme marketers retreat

(Bloomberg) — Billionaire Ryan Cohen made a $68.1 million profit on the sale of his stake in Bed Bath & Beyond Inc., marking a 56% return on an investment he held for roughly seven months.

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Retailers who poured millions of dollars into the struggling retailer, on the other hand, may just be starting to feel the pain — especially if they were late to the deal.

Shares of Bed Bath & Beyond, already down nearly 20% on Thursday, fell another 27% in late trading after Cohen’s departure was revealed in a regulatory filing. It’s shaping up to be a repeat of other meme moments, with the price’s drop as dramatic as its rise.

The worst part for the Reddit crowd: Cohen’s involvement in the stock itself fueled their enthusiasm. The price at one point this week had more than quadrupled from a recent low in July, with at least some pointing to a revelation that the chairman of GameStop Corp. still holds his share, which at the moment exceeds 10% of the company. It included call options that would be in the money only if the stock continued to rise.

But at that point, Cohen started selling.

His RC Ventures paid $121.2 million between mid-January and early March to acquire 7.78 million shares and options to buy another 1.67 million shares, a regulatory filing shows. It unloaded all of them this week for a total of $189.3 million, according to a statement Thursday after the U.S. market closed.

An influx of cash from retailers has pumped up Bed Bath & Beyond’s stock in recent weeks, even as the company’s financials have been deteriorating. They bought $58.2 million of the stock on Wednesday, a day after grabbing a record $73.2 million. Net purchases for the three weeks totaled $229.1 million, according to data compiled by Vanda Research.

Meanwhile, the Union, New Jersey-based company has hired law firm Kirkland & Ellis to help it deal with unmanageable debt, according to a person familiar with the decision. The restructuring and bankruptcy firm will advise the retailer on options for raising new money, refinancing existing debt or both.

Bed Bath & Beyond’s bonds and loans are already trading at troubled levels. The sharpest drop came after the company reported dismal earnings on June 29, although debt fell again after Cohen’s filing.

As of Thursday’s close, the retailer’s market value was about $1.5 billion.

In a filing Thursday, the company said it had “worked expeditiously over the past several weeks with external financial advisors and lenders to strengthen our balance sheet” and would provide more information at the end of the month.

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