Trump Media & Technology Group has been a wild ride for its hedge fund owners, several of whom jumped into the stock in the first quarter when the Securities and Exchange Commission finally approved its merger with a special purpose acquisition company after years of investigations and a corporate shakeup.
The merged company began trading on March 26, and the stock surged. By quarter’s end, a number of hedge funds had become among the top institutional owners of Trump Media, the company behind Trump’s Truth Social media platform, according to a Nasdaq analysis of their quarterly filings with the SEC.
The list of hedge fund owners was topped by Pentwater Capital, an event-driven firm based in Naples, Florida. By the end of March, Pentwater had become the top institutional owner of the media company, partially through warrants. It also hedged its bets with a sizable put position, according to its SEC filing.
The next-biggest owners were D.E. Shaw, Hudson Bay Capital, and Aristides Capital, respectively. Smaller positions were taken by Citadel, Exodus Point, Bracebridge and Point 72.
All were new positions. The firms either declined to comment on the record or did not return requests for comment. One manager told Institutional Investor that he had taken a boxed position, meaning he was also short the same amount of stock. (Shorts aren’t disclosed.)
The stock’s runup was suddenly halted when on May 3, the SEC charged the company’s auditor with “massive fraud,” and shares fell 9 percent. Trump Media quickly hired a new auditor, but when the company reported a first quarter loss of $328 million on May 21, the stock fell another 15 percent.
Hedge funds may well be among those selling out, but none of the above-mentioned names would confirm that.
The recent hedge fund embrace was a stark contrast to their quick exit when Donald Trump inked a deal to merge with Digital World Acquisition Company and go public nearly three years ago. Digital World raised $293 million in September of 2021 from a group of hedge funds including D.E. Shaw, Saba Capital Management, Highbridge Capital Management, and Lighthouse Investment Partners.
But the hedge funds who’d initially backed the SPAC quickly bolted once its deal with Trump was struck. Saba Capital’s Boaz Weinstein, for example, immediately sold all its unrestricted shares in the SPAC, saying it was “the right thing” to do. “Many investors are grappling with hard questions about how to incorporate their values into their work. For us, this was not a close call,” he told the New York Times.
Hedge funds’ newfound — although possibly short-lived — enthusiasm for Trump’s media company comes as they’re warming up to candidate Trump despite his legal troubles.
One big Trump donor, Susquehanna Trading’s Jeff Hass, took another view. Susquehanna, which at one time was the third biggest holder of Trump Media shares, unloaded more than 600,000 shares during the first quarter. That was more than 90 percent of its stake. Susquehanna did not return a request for comment.
The stock is also a fairly popular short, though borrowing costs are high, according to S3 Partners. It said that investors had shorted about 27 percent of the shares by mid-May. But the short has been a costly one so far in 2024, because the stock has more than doubled this year.
