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Kelly Evans: Are meme stocks now an asset class?

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Scott Mlyn | CNBC

First they ignore you, then they laugh at you, then they fight you, then you win. 

Guess who's now in consideration to be added into the portfolios of professional money managers? Yup--the meme stocks.  

What began the year as a quirky sideshow (have you seen the run-up in shares of GameStop? *eyeroll*) is now morphing into a way for professionals to generate so-called "alpha," or portfolio outperformance. There's a reason "How to Spot the Next Reddit Favorite" was one of the top stories on Bloomberg over the weekend. Basically the pros are saying to the #retailarmy--you win, and we're piling in with you.  

"In my view, you can invest in the meme stocks, especially those that are levered with short-term debt," wrote Ben Emons of Medley Global to clients yesterday evening. Why? Because the pops in the stock price allow companies "to restructure [their] balance sheet and rebuild equity capital at favorable cost." 

Recall that AMC's credit rating was upgraded by S&P the other day for exactly that reason--that debt restructuring has now become somewhat less likely because of its reddit-fueled share offerings. The equity gains alone "improve the balance sheets of these companies because the leverage declines when the market capitalization goes up," Emons added.  

If this all just sounds like the "greater fool" theory, well, it is--except the retail army, and their targeted companies, have the last laugh right now. My friend's brother just made a down payment on a house thanks to his gains from GameStop. It's one thing to go let's see how high we can drive up the price! and another to go if we drive the price up high enough, for long enough, we can save this company.  

Again, call it crazy, but now the market pros are getting in on the game. Frankly, everyone is exposed because these stocks are growing so large they now have a significant weighting in indexes like the Russell 2000. The trick is keeping your "meme" basket fresh enough to capture the gains, which is why lists of stocks with high short interest are all the rage these days. 

 Names like Clover, GEO Group, GoodRx, and Blink Charging are all among the most-shorted names in the market right now, and a good proxy for how the pros are picking their meme baskets. I wish I could remember which guest recently told us on-air that he's been putting 5-10% of his portfolio into meme stocks, and enjoying their strong returns (up 150% this year, by some metrics). Perhaps one of you can remind me? Either way, point is--expect to hear this more often. Which either means, it's over--or it's here for good.  

See you at 1 p.m! 

Kelly

Twitter: @KellyCNBC

Instagram: @realkellyevans