(Reuters) – Hestia Capital Partners LP managing director Kurt Wolf joined GameStop Corp’s board to make the U.S. video game retailer more valuable. Then it became too valuable for him to stay on.

The hedge fund manager resigned his directorship this week because his investors fretted the bet on the company, which scored a paper gain of 3,500%, had become too large and risky, three people familiar with the matter said on Thursday.

Giving up the board seat allows Wolf to sell GameStop shares for his investors without restrictions to meet redemption requests, the sources said.

Hestia currently owns 318,600 GameStop shares valued at roughly $53.8 million. It oversaw $75.6 million in assets as of the end of March, with GameStop being its single largest investment.

Hestia has a mandate to invest in “deep value” assets that are unloved and undervalued. GameStop’s shares have been on a wild rally since January as amateur traders organized on social media platforms such as Reddit to snap them up, making them unsuitable for the kind of investing Hestia’s clients hired the fund for, the sources said.

Hestia returned 223.7% in the first three months of 2021 after gaining 162% last year, and Wolf now plans to unload the GameStop shares, the sources said.

Wolf did not respond to emails seeking comment. GameStop said in a filing on Thursday that Wolf’s resignation “is not the result of any disagreement with the company or the board.” It declined to comment further.

Hestia originally invested in GameStop in 2019 spending an average $5 a share. A year later, when GameStop was valued at roughly $250 million, Wolf criticized the board for poor strategic planning and capital allocation and asked for a board seat for himself. GameStop shares now trade around $169 and the company is valued at roughly $12.5 billion.

Emergent Capital Advisors, a hedge fund-of-funds that invests with roughly a dozen small firms like Hestia, was Hestia’s biggest investor and asked for its capital back. It had invested with Hestia through a separately managed account and asked Wolf to return control of the portfolio at the end of March. In January, Wolf had already sold roughly $20 million worth of GameStop shares on behalf of Emergent when the stock price was around $20 a share, the sources said.

A spokesman for Emergent Capital declined to comment.

Wolf joined GameStop’s board in June 2020. Within months, Ryan Cohen, the co-founder and former CEO of online pet food retailer Chewy Inc, joined Wolf on the board. He has since been spearheading its pivot from brick-and-mortar stores to e-commerce. GameStop said on Thursday Cohen would become chairman of its board later this year.

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