GameStop mania may not have been the retail trader rebellion it was perceived to be, data shows

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  • Data shows institutional investors as drivers of large portion of the wild price action in GameStop last week.
  • GameStop was not in the 10 most-bought names by retail investors last month, according to JPMorgan.
  • “What was going on in the stocks forced the hedge funds to trade to cover, or they might have been playing, too, to win,” Piper Sandler analyst Richard Repetto told CNBC.

A look at the 10 most-purchased stocks by retail traders during the market mania last month is missing one key stock: GameStop.

AMC Entertainment and Plug Power, two names caught up in the trading frenzy along with GameStop, were popular buys among retail investors, JPMorgan found, yet the brick-and-mortar video game retailer that seemingly put Wall Street on its heels is notably absent from the list.

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The prevailing narrative was that a band of Reddit-inspired small traders rose up against Wall Street by buying GameStop en masse, forcing a short squeeze by professional hedge fund managers, who were forced to cover their negative bets or risk catastrophic losses.

But several signs are pointing to institutional investors as big drivers of the wild price action on the way up.

“Although retail buying was portrayed as the main driver of the extreme price rally experienced by some stocks, the actual picture may be much more nuanced,” JPMorgan global quantitative and derivatives strategy analyst Peng Cheng told clients in a note. JPMorgan’s quant team uses public data from exchanges and applies a proprietary methodology to identify which flows are from retail traders. GameStop was number 15 on the firm’s retail buying list for January.

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