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GameStop short-seller down 30% this year gets $2.8 billion bailout from the firms of billionaire investors Steve Cohen and Ken Griffin

Billionaire investor Steve Cohen.

  • Steve Cohen’s Point72 and Ken Griffin’s Citadel are investing $2.75 billion in Melvin Capital.
  • Melvin is down about 30% this year as its short positions are getting hammered.
  • Day traders have bid up the stock prices of GameStop, Bed Bath & Beyond, and other popular shorts.
  • Visit Business Insider’s homepage for more stories.

A pair of billionaire investors are swooping in to support a short-selling hedge fund in its battle against an army of irreverent day traders.

Steve Cohen’s Point 72, Ken Griffin’s Citadel, and other partners are plowing a total of $2.75 billion into Melvin Capital, the hedge funds said on Monday. They will receive non-controlling revenue shares in Melvin in return for their money.

Melvin will welcome the cash injection as painful short bets have left it down 30% year-to-date as of Friday, The Wall Street Journal reported.

Scores of retail investors, including some members of Reddit forum r/wallstreetbets, have targeted heavily shorted stocks in recent weeks. They drove GameStop’s stock price up as much as 145% on Monday, Bed Bath & Beyond up 58%, BlackBerry up 48%, and AMC up 39%.

Melvin takes more negative positions than most of its Wall Street rivals, exposing it to potentially heavy losses. It owned “puts” – bets that a stock price will fall – on 17 US-listed companies including GameStop and Bed Bath & Beyond at the end of September.

The firm’s strategy has paid off in the past. Melvin has returned an average of 30% annually since its founding in 2014, and had grown its assets under management to $12.5 billion at the start of this year, The Journal said.

Gabe Plotkin, a former star portfolio manager at Cohen’s SAC Capital, quit to start Melvin in 2014. He counted Cohen as a day-one backer.

Read more: GOLDMAN SACHS: These 22 stocks still haven’t recovered to pre-pandemic levels – and are set to explode amid higher earnings in 2021 as the economy recovers

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Citadel, Point72 Back Melvin With $2.75 Billion After Losses

(Bloomberg) — Hedge fund titans Ken Griffin and Steve Cohen boosted Gabe Plotkin’s Melvin Capital, injecting a total of $2.75 billion into the firm after it lost about 30% this year.

Citadel funds and firm partners will invest $2 billion, while Point72 Asset Management’s investment will be $750 million, the firms said Monday. In return, the investors will get a non-controlling revenue share in the six-year-old hedge fund. Melvin Capital may receive an additional $1 billion infusion from other investors on Feb. 1, according to a person familiar with the plans.

The capital infusion comes after Melvin Capital, which started the year with about $12.5 billion in assets, has seen its short bets, including GameStop Corp., go awry, spurring the losses, people familiar with the firm said.

This year’s stumble is rare for Plotkin. His firm has returned an average 30% a year since it was started in December 2014 after nearly a decade working for Cohen.

Short-selling has been a perilous business this year. The most-shorted stocks in the Russell 1000 index have climbed about 12% so far in January, while the index overall has risen 2.9% year-to-date.

Unlike some managers who have nearly given up on shorting in recent years as stock indexes marched ever higher, Plotkin has continued to make bets on falling stocks. At the end of the third quarter, for example, the firm had puts — or bets that prices would fall — on 17 U.S.-listed companies, according to a regulatory filing.

“Gabe Plotkin and team have delivered exceptional results over the history of Melvin,” Citadel founder Ken Griffin said in a statement. “We have great confidence in Gabe and his team.”

In a statement, Cohen said he has known Plotkin since 2006 and “he is an exceptional investor and leader.”

Plotkin spent eight years at Cohen’s predecessor firm, SAC Capital Advisors, and his firm has been one of that shop’s most successful spin-outs. Cohen previously invested about $1 billion in Melvin.

“I am incredibly proud to partner with Ken Griffin and Steve Cohen,” Plotkin said. “The team at Melvin is eager to get to work and reward the confidence of these two great investment icons.

(Updates with January loss in first paragraph.)

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Kuaishou, TikTok’s rival in China, wants to raise more than $6 billion in Hong Kong IPO

Kuaishou, a tech company based in Beijing, is seeking to raise as much as $6.2 billion in a stock market listing in Hong Kong, according to details of the planned IPO shared with CNN Business by a source familiar with the deal.

The company, whose name means “fast hand” in Chinese, plans to issue about 365 million shares priced between 105 and 115 Hong Kong dollars ($13.55 and $14.84). At the top of that range, it would raise 42 billion Hong Kong dollars, or $5.4 billion. Issuing more shares in an over-allotment option could bring its haul to $6.2 billion.

That puts Kuaishou on track to become the largest IPO since Saudi Aramco shattered records with a nearly $30 billion raise in December 2019, according to data provider Refinitiv. It would also be the world’s largest tech IPO since Uber (UBER) raised more than $8 billion in May 2019, according to Refinitiv data.
Kuaishou is an app where users can film short-form videos and live stream content. It gets most of its revenue from the live-streaming business, where users can buy virtual items and present them as gifts to their favorite hosts. Live-streaming transactions accounted for 84% of revenue in 2019, according to a prospectus filed to the Hong Kong Stock Exchange. It also makes money off of online advertising.

The company expects to price its shares by the end of this week, and list them on February 5.

Kuaishou did not immediately respond to a request for additional comment from CNN Business.

The firm, which is backed by Chinese social media and gaming giant Tencent (TCEHY), was founded 10 years ago and is one of the largest short-form video apps in China. It counted an average of 264 million daily active users for the 11 months through November, according to its prospectus.

Even so, that’s far short of industry leader ByteDance. The company’s Douyin app — the Chinese version of TikTok — had more than 600 million daily users in August, according to the company.

The listing also comes at a time when Chinese tech companies face intense regulatory scrutiny in China. Alibaba, Tencent and other big internet firms that operate popular apps and services have been warned in recent weeks about creating monopolies and abusing consumer data for profit.
And Jack Ma’s Ant Group, Alibaba’s financial affiliate, saw its own mega IPO scuttled by regulators late last year just days before it was set to start trading in Shanghai and Hong Kong. It would have been the biggest share sale in history.

In its prospectus, Kuaishou mentioned “the fact that the internet business is highly regulated in China” as a potential risk.

Ten cornerstone investors have already pledged to invest $2.45 billion in Kuaishou. They include Temasek, BlackRock, GIC, the Abu Dhabi Investment Authority, Fidelity and Invesco. The deal’s sponsors include Bank of America Securities, Morgan Stanley, and China Renaissance.

The IPO would also be a big deal for Hong Kong, which has spent the last year reinventing itself as a hot market for Chinese tech firms.
Since 2019, Alibaba, (BABA) NetEase (NTES)and JD.com (JD) have all held secondary listings in the Asian financial hub. The city also made changes last year intended to attract even more companies. Index compiler Hang Seng Indexes, for example, launched a Nasdaq-like technology index to track the largest tech firms that trade in the city.

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GameStop short-sellers lost $1.6 billion in a single day as Reddit traders rebelled against them

  • GameStop short-sellers have lost $3.3 billion betting against the stock in 2021, S3 Partners said.
  • Losses totaled roughly $1.6 billion on Friday alone as the stock rallied 51%.
  • GameStop has rocketed as Reddit traders drive bullish momentum to extraordinary levels.
  • Watch GameStop trade live here.

Investors betting against GameStop and the army of bullish retail traders have already lost billions in 2021.

Mark-to-market losses for GameStop shorts on a year-to-date basis reached $3.3 billion when trading closed on Friday, according to data from the financial-analytics firm S3 Partners. Losses totaled nearly $1.6 billion on Friday alone as shares rocketed 51% higher into the close.

GameStop stock has continued to climb as Reddit users and day traders have extended the unusual momentum trade into its third week. The company’s shares initially leaped on January 11 after it agreed with an activist investor to add three new directors to its board. The day’s gains drew in swaths of retail traders, including members of the popular WallStreetBets subreddit.

Online posts urging other investors to join the trade have since driven outsize bullish momentum for GameStop. The stock traded 115% higher as of 10:40 a.m. ET on Monday and is up more than 500% year-to-date.

Read more: BANK OF AMERICA: Buy these 31 unheralded stocks as the recovery’s hottest trades of recent months continue to gain strength in 2021

Though some think the gains have been fueled by a massive short squeeze, demand for shorting the stock remains strong. About 72 million shares – or 140% of GameStop’s float – were shorted as of Friday, according to S3. In the past seven days, the number of shares shorted climbed by 883,000, though the stock soared.

“There has been a queue of new short-sellers wanting to get short exposure in GameStop after its recent run-up,” Ihor Dusaniwsky, the managing director of predictive analytics at S3, told Insider, adding that brokers had been unable to meet the demand for shares to sell short.

Short-sellers and Wall Street have struggled to make sense of the retail-trader phenomenon. Only one firm, Telsey Advisory Group, has downgraded shares since they spiked earlier this month. The Street’s median price target is $11.96, implying a broad expectation of an 81% crash.

Read more: This actively-managed SPAC ETF amassed $60 million assets within a month of launching. Its founder breaks down how to pick blank-check firms – and shares 3 to watch in 2021.

Andrew Left of Citron Research, one of Wall Street’s most outspoken GameStop shorts, said on Friday that he would no longer comment on the stock. Left had posted a video on Thursday criticizing the bullish day traders and arguing that the stock would soon plummet to $20. WallStreetBets members chided Left with memes and derogatory comments.

The short-seller said on Friday that an “angry mob” of online traders had harassed him and tried to hack his Twitter account, leading him to end his commentary on the stock.

Left maintained his short thesis – but what began as a moderate short squeeze has evolved into a “vice-grip” on those betting against GameStop, Dusaniwsky said. He added that the stock’s extended rally would force shorts to reconsider their confidence in their position and likely kill off a great deal of GameStop bears.

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Tencent’s $232 Billion Rally Triggers Frenzy in Shares, Options

TipRanks

3 Top Dividend Stocks With Growth Opportunity; Goldman Sachs Says ‘Buy’

Investing is all about finding profits, and investors have long seen two main paths toward that goal. Growth stocks, equities that will give a return based mainly on share price appreciation, are one route. The second route lies through dividend stocks. These are stocks that pay out a percentage of profits back to shareholders – a dividend, usually sent out quarterly. The payments vary widely, from less than 1% to more than 10%, but the average, among stocks listed on the S&P 500, is about 2%. Dividends are a nice addition for a patient investor, as they provide a steady income stream. Goldman Sachs analyst Caitlin Burrows has been looking into the real estate trust segment, a group of stocks long-known for dividends that are both high and reliable – and she sees plenty of reason to expect strong growth in three stocks in particular. Running the trio through TipRanks’ database, we learned that all three have been cheered by the rest of the Street as well, as they boast a “Strong Buy” analyst consensus. Broadstone Net Lease (BNL) First up, Broadstone Net Lease, is an established REIT that went public this past September in an IPO that raised over $533 million. The company put 33.5 million shares on the market, followed by another 5 million-plus picked up by the underwriters. It was considered a successful opening, and BNL now boasts a market cap over $2.63 billion. Broadstone’s portfolio includes 628 properties across 41 US states plus the Canadian province of British Columbia. These properties host 182 tenants and are worth an aggregate of $4 billion. The best feature here is the long-term nature of the leases – the weighted average remaining lease is 10.8 years. During the third quarter, the most recent with full financials available, BNL reported a net income of $9.7 million, or 8 cents per share. The income came mainly from rents, and the company reported collecting 97.9% of rents due during the quarter. Looking ahead, the company expects $100.3 million in property acquisitions during Q4, and an increased rent collection rate of 98.8%. Broadstone’s income and high rent collections are supporting a dividend of 25 cents per common share, or $1 annually. It’s a payment affordable for the company, and offering investors a yield of 5.5%. Goldman’s Burrows sees the company’s acquisition moves as the most important factor here. “Accretive acquisitions are the key earnings driver for Broadstone… While management halted acquisitions following COVID-induced market uncertainty (BNL did not complete any acquisitions in 1H20) and ahead of its IPO, we are confident acquisitions will ramp up in 2021, and saw the beginning of this with 4Q20 activity… We estimate that BNL achieves a positive investment spread of 1.8%, leading to 0.8% of earnings growth (on 2021E FFO) for every $100mn of acquisitions (or 4.2% on our 2021E acquisition volumes),” Burrows opined. To this end, Burrows rates BNL a Buy, and her $23 price target implies an upside of ~27% for the year ahead. (To watch Burrow’s track record, click here) Wall Street generally agrees with Burrows on Broadstone, as shown by the 3 positive reviews the stock has garnered in recent weeks. These are the only reviews on file, making the analyst consensus rating a unanimous Strong Buy. The shares are currently priced at $18.16, and the average price target of $21.33 suggests a one-year upside of ~17%. (See BNL stock analysis on TipRanks) Realty Income Corporation (O) Realty Income is a major player in the REIT field. The company holds a portfolio worth more than $20 billion, with more than 6,500 properties located in 49 states, Puerto Rico, and the UK. Annual revenue exceeded $1.48 billion in fiscal year 2019 (the last with complete data), and has kept up a monthly dividend for 12 years. Looking at current data, we find that O posted 7 cents per share income in 3Q20, along with $403 million in total revenue. The company collected 93.1% of its contracted rents in the quarter. While relatively low, a drill-down to the monthly values shows that rent collection rates have been increasing since July. As noted, O pays out a monthly dividend, and has done so regularly since listing publicly in 1994. The company raised its payout in September 2020, marking the 108th increase during that time. The current payment is 23.45 cents per common share, which annualizes to $2.81 cents – and gives a yield of 4.7%. Based on the above, Burrows put this stock on her Americas Conviction List, with a Buy rating and a $79 price target for the next 12 months. This target implies a 32% upside from current levels. Backing her stance, Burrows noted, “We estimate 5.3% FFO growth per year over 2020E-2022E, versus an average of 3.1% fo rour full REIT coverage. We expect key earnings drivers will include a continued recovery in acquisition volumes and a gradual improvement in theater rents (in 2022).” The analyst added, “We assume O makes $2.8 billion of acquisitions in each of 2021 and 2022, versus the consensus expectation of $2.3 billion. [We] believe our acquisition volume assumptions could in fact turn out to be conservative as, eight days into 2021, the company has already made or agreed to make $807.5 mn of acquisitions (or 29% of our estimate for 2021).” Overall, Wall Street takes a bullish stance on Realty Income shares. 5 Buys and 1 Hold issued over the previous three months make the stock a Strong Buy. Meanwhile, the $69.80 average price target suggests ~17% upside from the current share price. (See O stock analysis on TipRanks) Essential Properties Realty Trust (EPRT) Last up, Essential Properties, owns and manages a portfolio of single-tenant commercial properties across the US. There are 214 tenants across more than 1000 properties in 16 industries, including car washes, convenience stores, medical services, and restaurants. Essential Properties boasts a high occupancy rate of 99.4% for its properties. In 3Q20, the company saw revenue increase of 18.2% year-over-year, reaching $42.9 million. Essential Properties finished the quarter with an impressive $589.4 million in available liquidity, including cash, cash equivalents, and available credit. The strong cash position and rising revenues had the company confident enough to raise the dividend in going into Q4. The new dividend payment is 24 cents per common share, up 4.3% from the previous payment. The current rate annualizes to 96 cents, and gives a yield of 4.6%. The company has been raising its dividend regularly for the past two years. In her review for Goldman, Burrows focuses on the recovery that Essential Properties has made since the height of the COVID panic last year. “When shelter in place mandates went into effect in early 2020, only 71% of EPRT’s properties were open (completely or on a limited basis). This situation has improved in the intervening months and now just 1% of EPRT’s portfolio is closed… We expect EPRT’s future earnings growth to be driven by acquisition accretion and estimate 2.8% potential earnings growth from $100 mn of acquisitions,” Burrows wrote. In line with her optimistic approach, Burrows gives EPRT shares a Buy rating, along with a $26 one-year price target, suggesting a 27% upside. All in all, EPRT has 9 recent analyst reviews, and the breakdown of 8 Buys and 1 Sell gives the stock a Strong Buy consensus rating. Shares are priced at $20.46 and have an average price target of $22.89, giving ~12% upside potential from current levels. (See EPRT stock analysis on TipRanks) To find good ideas for dividend stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights. Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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Black Holes Could Get So Humongous, Astronomers Came Up With a New Size Category

There are supermassive black holes. There are ultramassive black holes. How large can these strange objects grow? Well, there could be something even bigger than ultramassive: stupendously large black holes, according to the latest research.

 

Such hypothetical black holes – larger than 100 billion times the mass of the Sun – have been explored in a new paper which names them SLABs, an acronym that stands for “Stupendously LArge Black holeS”.

“We already know that black holes exist over a vast range of masses, with a supermassive black hole of 4 million solar masses residing at the centre of our own galaxy,” explained astronomer Bernard Carr of Queen Mary University London.

“Whilst there isn’t currently evidence for the existence of SLABs, it’s conceivable that they could exist and they might also reside outside galaxies in intergalactic space, with interesting observational consequences.”

Black holes have only a few somewhat broad mass categories. There are stellar-mass black holes; those are black holes that are around the mass of a star, up to around 100 solar masses. The next category up is intermediate mass black holes, and how large they get seems to depend on who you talk to. Some say 1,000 solar masses, some say 100,000, and others say 1 million; whatever the upper limit is, these seem to be pretty rare.

 

Supermassive black holes (SMBHs) are much, much larger, on the order of millions to billions of solar masses. These include the SMBH at the heart of the Milky Way, Sagittarius A*, at 4 million solar masses, and the most photogenic SMBH in the Universe, M87*, at 6.5 billion solar masses.

The chonkiest black holes we’ve detected are ultramassive, more than 10 billion (but less than 100 billion) solar masses. These include an absolute beast clocking in at 40 billion solar masses in the centre of a galaxy named Holmberg 15A.

“However, surprisingly, the idea of SLABs has largely been neglected until now,” Carr said.

“We’ve proposed options for how these SLABs might form, and hope that our work will begin to motivate discussions amongst the community.”

The thing is, scientists don’t quite know how really big black holes form and grow. One possibility is that they form in their host galaxy, then grow bigger and bigger by slurping up a whole lot of stars and gas and dust, and collisions with other black holes when galaxies merge.

This model has an upper limit of around 50 billion solar masses – that’s the limit at which the object’s prodigious mass would require an accretion disc so massive it would fragment under its own gravity. But there’s also a significant problem: Supermassive black holes have been found in the early Universe at masses too high to have grown by this relatively slow process in the time since the Big Bang.

 

Another possibility is something called primordial black holes, first proposed in 1966. The theory goes that the varying density of the early Universe could have produced pockets so dense, they collapsed into black holes. These would not be subject to the size constraints of black holes from collapsed stars, and could be extremely small or, well, stupendously large.

The extremely small ones, if they ever existed, would probably have evaporated due to Hawking radiation by now. But the much, much larger ones could have survived.

So, based on the primordial black hole model, the team calculated exactly how stupendously large these black holes could be, between 100 billion and 1 quintillion (that’s 18 zeroes) solar masses.

The purpose of the paper, the researchers said, was to consider the effect of such black holes on the space around them. We may not be able to see SLABs directly – black holes that aren’t accreting material are invisible, since light cannot escape their gravity – but massive invisible objects can still be detected based on the way space around them behaves.

Gravity, for instance, curves space-time, which causes the light travelling through those regions to also follow a curved path; this is called a gravitational lens, and the effect could be used to detect SLABs in intergalactic space, the team said.

The huge objects also would have implications for the detection of dark matter, the invisible mass that’s injecting way more gravity into the Universe than there should be – based on what we can actually directly detect.

One hypothetical dark matter candidate, weakly interacting massive particles (WIMPs), would accumulate in the region around a SLAB due to the immense gravity, in such concentrations that they would collide with and annihilate each other, creating a gamma-radiation halo.

And primordial black holes are themselves a dark matter candidate, too.

“SLABs themselves could not provide the dark matter,” Carr said. “But if they exist at all, it would have important implications for the early Universe and would make it plausible that lighter primordial black holes might do so.”

Also, we couldn’t resist calculating the size of a 1 quintillion solar mass black hole. The event horizon would end up over 620,000 light-years across. Uh. Stupendous.

The team’s research has been published in the Monthly Notices of the Royal Astronomical Society.

 

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China’s Love of TikTok-Style Apps Powers $5 Billion IPO

Kuaishou Technology has its eyes on the world’s biggest initial public offering in more than a year, seeking to raise about $5 billion from a Hong Kong share sale as short-video and live-streaming apps surge in popularity in China.

Kuaishou—which competes with ByteDance Ltd., the rival Chinese company behind TikTok and its sister app Douyin—started taking investor orders Monday. With the offering, which could value it at more than $60 billion, Kuaishou is joining a string of tech companies from China that have listed in Hong Kong.

Kuaishou, which means “fast hand” in Chinese, is backed by Tencent Holdings Ltd. It was co-founded by Su Hua and Cheng Yixiao, software engineers who previously worked for Google China and Hewlett Packard , respectively.

Both Kuaishou and ByteDance have capitalized on growing demand from younger Chinese people to watch and record short videos on their smartphones. Its namesake short-video platform is the world’s second-largest, according to data cited in its prospectus, and there were 305 million average daily active users of its apps and mini-programs in China for the nine months as of September.

With a minimum deal size of $4.95 billion, the IPO would be the largest in the world since late 2019, when state-controlled Saudi Arabian Oil Co., commonly known as Aramco, raised $29.4 billion, Dealogic figures show.

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$1 billion Mega Millions winning ticket sold in Michigan

One winning ticket was sold in Michigan for the $1 billion Mega Millions jackpot, making it the third-largest lottery prize in U.S. history.

The winning numbers drawn Friday are: 4, 26, 42, 50, 60 and a Mega Ball of 24. The winning ticket was purchased at a Kroger store in Novi, Michigan — a city about 8 miles northwest of Detroit, according to the Michigan Lottery website.

The Mega Millions top prize had been growing since September 15, when a winning ticket was sold in Wisconsin. The lottery’s next estimated jackpot is $20 million.

Friday night’s drawing comes two days after a ticket sold in Maryland matched all six numbers drawn and won a $731.1 million Powerball jackpot.

Only two lottery prizes in the U.S. have been larger than Friday’s jackpot. Three tickets for a $1.586 billion Powerball jackpot were sold in January 2016, and one winning ticket sold for a $1.537 billion Mega Millions jackpot in October 2018.

The jackpot figures refer to amounts if a winner opts for an annuity, paid in 30 annual installments. Most winners choose a cash prize, which for the Mega Millions jackpot is $739.6 million.

The odds of winning a Mega Millions jackpot are incredibly steep at one in 302.5 million.

The game is played in 45 states as well as Washington, D.C., and the U.S. Virgin Islands.

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Michigan Mega Millions ticket wins $1.05 billion jackpot

DETROIT (AP) — Someone in Michigan bought the winning ticket for the $1.05 billion Mega Millions jackpot, which was the third-largest lottery prize in U.S. history.

The winning numbers for Friday night’s drawing were 4, 26, 42, 50 and 60, with a Mega Ball of 24. The winning ticket was purchased at a Kroger store in the Detroit suburb of Novi, the Michigan Lottery said.

“Someone in Michigan woke up to life-changing news this morning, and Kroger Michigan congratulates the newest Michigan multimillionaire,” said Rachel Hurst, a regional spokeswoman for the grocery chain. She declined to comment further.

The Mega Millions top prize had been growing since Sept. 15, when a winning ticket was sold in Wisconsin. The lottery’s next estimated jackpot is $20 million.

Friday night’s drawing came just two days after a ticket sold in Maryland matched all six numbers drawn and won a $731.1 million Powerball jackpot.

The jackpot figures refer to amounts if a winner opts for an annuity, paid in 30 annual installments. Most winners choose a cash prize, which for the Mega Millions game would be $776.6 million before taxes.

Only two lottery prizes in the U.S. have been larger than Friday’s jackpot. Three tickets for a $1.586 billion Powerball jackpot were sold in January 2016, and one winning ticket sold for a $1.537 billion Mega Millions jackpot in October 2018.

In Grosse Ile, a suburb south of Detroit, 126 people bought more than 600 tickets for the Friday drawing but didn’t win the jackpot. They hoped to win enough money to replace a publicly owned bridge on their island in the Detroit River that has been closed indefinitely for major repairs. The only other transportation option for the island’s 10,000 residents is a privately owned toll bridge.

“We used this to lift our spirits and dream a little bit,” said organizer Kyle de Beausset. “Of course we’re open to any help with the bridge, but I can’t imagine the winner would want to finance it.”

The odds of winning a Mega Millions jackpot were incredibly steep, at one in 302.5 million.

The game is played in 45 states as well as Washington, D.C., and the U.S. Virgin Islands.

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Mega Millions Ticket for $1 Billion Jackpot Was Sold in Michigan

The winning ticket for a $1 billion jackpot, the third-biggest lottery prize in U.S. history, was sold at a Michigan grocery store, according to state lottery officials.

The winning numbers, which were drawn on Friday night, were picked by a customer at a Kroger grocery store in Novi, a city of about 60,000 people that is 30 miles northwest of Detroit.

State lottery officials said the identity of the winner will not be known until the person contacts them. Michigan law requires that winners of games played across states, such as Mega Millions and Powerball, be publicly identified, said Jake Harris, a spokesman for the state lottery.

The winner can choose to collect the prize through an initial payment and then annual payments for 29 years, or receive a one-time cash payment of about $739 million. In that case, the winner would get about $530 million, after taxes, state lottery officials said.

If the winner chose an annual payout, the initial payment would be about $11.3 million after taxes, with payments increasing 5 percent every year. The final payment would be about $46.7 million after taxes, Mr. Harris said.

The odds of winning the jackpot were 1 in 302,575,350, according to Mega Millions. The winning numbers in the Mega Millions lottery were 4, 26, 42, 50 and 60, with a Mega Ball number of 24.

The numbers were picked two days after the numbers were selected for a winning ticket in a $731 million Powerball jackpot, which was sold in Lonaconing, Md., a down-on-its-luck former mining town in the virus-battered northwestern corner of the state. The winning ticket was sold at Coney Market, a convenience store that sells subs and pizza in Lonaconing, a town of about 1,200 in Allegany County, which has the most Covid-19 cases per capita in the state. About a quarter of the population of Lonaconing lives below the poverty line, according to census data.

A spokeswoman for Kroger congratulated the winner in Michigan and the mayor of Novi, Bob Gatt, said the news came a month after the city was named “the second-most innovative city in the country” by Entrepreneur magazine.

He described Novi as a rapidly growing city that had once been a rural outpost of Detroit but was now a hub of car manufacturing that was attracting tech companies like Google.

Mr. Gatt said he was “ecstatic” for the winner. “I’d be better if I had the winning ticket,” he said.

The jackpot was the second-largest prize in the history of Mega Millions.

In 2018, a person who chose to remain anonymous won $1.537 billion in South Carolina. That prize remains the world’s largest lottery prize ever awarded on a single ticket, according to Mega Millions.

The biggest lottery prize ever awarded in the United States was a $1.586 billion Powerball jackpot in 2016, according to The Associated Press. It was divided among three ticket winners in California, Florida and Tennessee.

A lingering mythology holds that the winners of big jackpots become cursed after their strokes of good fortune. There are numerous accounts of winners who, unequipped to manage their newfound wealth, go on to struggle with drugs or alcohol, ruined relationships and insolvency.

While one influential study in 1978 found that lottery winners were not any happier than their neighbors or more optimistic about the future, other studies have countered the notion of the so-called lottery curse.

The studies suggest that the winners’ general psychological well-being bounces back over time.

In 2018, a New Hampshire woman filed a lawsuit to keep her name from being released to the public after she won $560 million in the Powerball lottery.

Lawyers for the woman, who called herself Jane Doe in the lawsuit, said she wished to use a portion of her winnings for charity “far from the glare and misfortune that has often fallen upon other lottery ‘winners.’”

A judge allowed her to remain anonymous.

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