Wall Street’s Most Reviled Investors Worry About Their Fate

Fahmi Quadir fears for her safety, so whenever she travels, she shares her GPS coordinates with her lawyer and a colleague. Nate Koppikar was once tailed by a private investigator into the bathroom in his own office. And Gabe Plotkin recently hired security after threats to his family.

Digging up dirt on big companies, it turns out, doesn’t make you very popular.

Ms. Quadir, Mr. Koppikar and Mr. Plotkin are short sellers — investors who profit off the failures of companies by betting that their share prices will fall. For this, they are reviled by executives and shareholders alike. Short-selling itself is banned in some countries. Dealing with such hatred, Ms. Quadir said, is “a cost of doing business.”

It’s always been a tough job, and especially so in the past year as stocks marched higher. The recent frenzy over GameStop made it worse. Everyday investors, many of them seething against what they see as a rigged system created to enrich Wall Street, bid up GameStop’s stock in part to attack short sellers, dealing them a fresh reputational blow.

Some are rethinking their strategies. They are wondering whether the practice, portrayed in the 2015 Hollywood movie “The Big Short,” still has a profitable future.

Short sellers, including hedge funds such as Mr. Plotkin’s Melvin Capital, had wagered that GameStop shares would fall while its mall-heavy business shrank further. Instead, the shares skyrocketed when a group of mostly amateur investors, coordinating via social media and determined to outsmart big Wall Street funds, went on a buying binge.

Their actions shook Melvin, whose troubles spread to at least one other fund, Point72, which had an investment in Melvin. Point72’s billionaire founder, Steven A. Cohen, who owns the New York Mets, deactivated his Twitter account after he and other Jewish money managers were targeted on social media, with some receiving personal threats and anti-Semitic hate speech.

GameStop vs. Wall Street

Let Us Help You Understand

    • Shares in GameStop, the video retailer, have crashed from their January highs, which were driven by memes on social media.
    • Amateur traders egging on one another on Reddit bet heavily on shares of the company in January, sending the price up more than 1,700 percent at one point.
    • The wave was in part aimed at hurting large hedge funds that had been short selling — betting against — GameStop stock. Some of those funds experienced huge losses as a result.
    • But many of the individual investors who pumped up the stock could lose huge amounts of money, too. Some believe the price will go back up and are refusing to sell, even as the share price has collapsed.
    • Now, regulators are looking into how the rally started and whether new rules should be created because of it.

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