Hedge fund strategies wary of meme stocks (FundFire)

The social media banter on Reddit and other forums influencing the trading of certain stocks is something that hedge funds are now weighing in their trading decisions. Not trading meme stocks, adding new guidelines to shorting stocks, or relying on unique investing strategies are all being considered by hedge funds and other institutional players. FrontLine’s Founder and President Amy Lynch expects that many firms are reevaluating their risk parameters and have completely removed exposure to meme stocks because of the extreme price fluctuations. Ms. Lynch also comments that as the pattern of trading volatility in meme stocks continues over time, the regulators should have greater insight toward determining fraud or identifying specific bad actors. See FundFire (subscription required), “’Powerful’ Reddit Base, Meme Stock Rise Force Hedge Funds to Adapt”