The fund, which made $700 million off GameStop, knew it was time to sell after a tweet from Elon Musk

A hedge fund got the GameStop trade spot on last year – buying and selling under $10 when meme stock was at its peak.

The sell signal used? A tweet from Elon Musk.

Here’s how the top-performing hedge fund of 2021, Senvest Management, made $700 million in profits on GameStop and grew its annual returns to over 85%. Trading was the company’s best in the 25 years of its existence.

“His accumulation with that tweet for us was…we all looked at it and thought how can you top that?” said Richard Mashaal, founder, CEO and co-CIO of Senvest Management, in an interview. “And so that meant peak momentum for us and we proceeded to leave the rest of our position.”

The Tesla CEO tweeted “Gamestonk!!” on January 26, 2021, after the bell. The next day, GameStop peaked at $347.51 apiece when Senvest dropped his bet.

The meme stock saga began just days into 2021 when retailers on Reddit’s WallStreetBets forum banded together to bid on GameStop’s stock, which was heavily discounted by hedge funds. The retail buying triggered massive short-covering by hedge funds which further fueled the rally.

Mashaal decided to buy shares of GameStop in September 2020 amid a flurry of sell ratings from analysts and unprecedented high short interest.

“It’s a classic contrarian game for us,” said Mashaal. “Wall Street doesn’t make very many sell recommendations, and GameStop has had a lot of them and very few, if not, buy recommendations. And then of course the short interest, which was over 100% of the shares outstanding. . .. So either would be a pretty glaring indication that this stock has fallen out of favor.”

Senvest is indeed an anomaly in the hedge fund industry, where many players have been burned by the unprecedented short squeeze.

Melvin Capital has been one of the biggest losers amid the meme stock mania. His staggering losses prompted Citadel and Point72 to invest nearly $3 billion in Gabe Plotkin’s hedge fund to shore up his finances. Melvin suffered a 39% loss in 2021 after the short squeeze at GameStop.