Bed Bath & Beyond BBBY traders learned last week about Jake Freeman, the 20-year University of Southern California student investor who outsmarted the entire class of "Ape" investors, including GameStop Corp. GME Chairman Ryan Cohen, who also cashed out his 9.5-million-share equivalent stake in the struggling retailer.
Freeman and his uncle, Dr. Scott Freeman, manage Freeman Capital Management. They invested $25 million in the retailer to build a 6.2% stake in the company before cashing out, netting around $105-$110 million just weeks later.
With the Bed Bath & Beyond investment now firmly in the Freemans’ rearview mirror, the pair have a new activist target: the Kevin O’Leary-backed, and Dr. Freeman co-founded microcap psychedelics pharma company Mind Medicine (MindMed) MNMD.
The Freemans revealed a 5.6% stake, or around 20 million shares in the biotech company, in an activist letter to MindMed dated Aug. 11 that outlined a value enhancement plan focused on getting MindMed’s core drugs to market faster, cutting cash burn and terminating MindMed's at-the-money equity offering.
FCM is now the second largest institutional owner of MindMed, and Citadel recently added to its position, making it the eighth largest shareholder.
In the letter, the Freemans, alongside Orbiter Research director Chad Boulanger, said the company can "create significant value for shareholders by focusing on the development of key drugs and reducing the company's cash burn," and describes the changes MindMed could make to improve its performance.
Scott Freeman expressed a desire to return to the company he co-founded and said he wants to "work hand-in-hand" with the board of MindMed as a new appointee.
The trio hopes to work collaboratively with the company, and says if MindMed doesn’t respond to their letter by Aug. 31, then FCM will consider requisitioning a shareholder meeting to place the company’s fundamental issues infront of MindMed investors.
MindMed News: On the same day that FCM sent the letter, MindMed appointed two independent members to its board, Dr. Suzanne Bruhn and Dr. Roger Crystal. The company said it hopes to use the new appointees’ “collective life sciences experience” to aid MindMed as it “advances through several key product development inflection points in the coming year.”
On Aug. 4, MindMed approved a 1-for-15 reverse share split of its common shares. As a result of the reverse share split, there will be approximately 28.4 million shares of common shares issued and outstanding.
The split will take effect after the closing bell on Aug. 26, and the stock will trade on a split adjusted basis on Aug. 29. In the press release, MindMed said the split is intended to “give the company greater flexibility in considering and planning for future potential business needs, and to address the Nasdaq minimum bid price requirement.”
The shares, which are worth 91 cents right now, will trade at $13.65 if the split were to take effect today. Considering the modest float, along with the fact that one-third of the float changed hands last week, the potential for a painful short squeeze is high.
If the r/wallstreetbets community shifts its attention from the Bed Bath & Beyonds and AMCs of the market, MindMed stock has the potential to see a squeeze akin to the recent Bed Bath & Beyond and AMC squeezes.
“As a co-founder,” Dr. Freeman said in an Aug. 16 interview on the YouTube channel Psychedelic Invest, “I’ve been sitting on the sidelines watching, and one of the reasons why I want to go back is that I think there are things that I think need to be done differently.”
MNMD Price Action: Shares of MindMed were trading 2.66% higher at 87 cents Monday afternoon.
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