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(Bloomberg) -- It was US President Donald Trump’s furious Oval Office clash with his Ukrainian counterpart last Friday that convinced fund manager Hugo Squire it was time to buy bonds in Eutelsat Communications SA.

The French satellite operator’s debt was trading at near-distressed levels, with some money managers citing it as a popular short bet for hedge funds and trading desks. This week though, the unfolding signs of a geopolitical shift, and Europe’s race for an alternative to Elon Musk’s Starlink are driving a stunning reversal, lifting shares by about 400% and pushing its bonds well above face value.

“With this credit something has fundamentally changed,” Squire, a portfolio manager at Schroders Plc, said in an interview. “Europe will have to stand on its own two feet in all areas defense-related and that will be beneficial to Eutelsat.”

A spokesperson for Eutelsat declined to comment.

Squire’s trade, initiated Monday morning, has paid off. Eutelsat’s April 2029 bond has rallied more than 12 cents this week, and all its other issues are also up sharply.

“It’s almost like a GameStop experience,” he added, referring to the 2021 saga of the video-game firm whose overnight transformation into a retail-trader favorite left hedge funds licking their wounds.

Eutelsat’s outsized rally isn’t exactly down to the retail-buying rush that characterized Gamestop Corp.— fund managers such as Squire have also jumped in. But the build-up in bearish positions has certainly been a factor, with its bonds heavily targeted by short sellers in recent months, according to people familiar with the matter.

Its stock was also shorted, with some 13% of its free float out on loan as of Feb. 28 — the day of Trump’s televised exchange with Volodymyr Zelenskiy — according to data from S&P Global Market Intelligence.

For all those short sellers, the turnaround has been brutal — the stock surge alone has cost traders approximately $237 million in mark-to-market losses, financial analytics firm S3 Partners estimates.

The short bets were motivated by worries that Eutelsat would face stiffer competition from Starlink, especially as Musk gained influence after the election of Donald Trump. That narrative has reversed rapidly, with the French firm now considered a key player in Europe’s efforts to support Ukraine and to ramp up its own defenses.

Eutelsat is the closest competitor to Starlink in low earth orbit (LEO) satellites, which typically operate just over 300 miles from the earth’s surface and play an essential role in providing services for the Ukrainian military.

“We are starting to look at them in a different way now,” said Catherine Braganza, a senior credit analyst at Insight Investment Management Global Ltd. “There will be a large capex requirement for companies like Eutelsat — I expect it will be partly funded by the sovereign, or by infrastructure funds. In the space of a week, Europe is starting to do things.”

Short positions in the satellite sector have previously proved profitable for hedge funds such as Hamza Lemssouguer’s Arini and asset manager Diameter Capital Partners. Both firms cited the position earlier this year in letters to investors that were seen by Bloomberg. However, hedge funds regularly trade in and out of positions. Spokespeople for Arini and Diameter declined comment.

Eutelsat shares and bonds pulled back a touch on Friday, but remain on track for bumper weekly gains. There are also signs investment bank analysts are changing their pessimistic stance — on Friday, Goldman Sachs Group Inc. upped its recommendation on the stock to neutral, reversing a bearish rating it issued less than two weeks ago.

Until now, short positions on Eutelsat stock have been extremely crowded, making it the second-most expensive European stock to borrow against among firms with over $50 million in short interest, according to Ihor Dusaniwsky, S3’s managing director of predictive analytics. That’s increased its appeal to retail stock investors, who sometimes seek to make a profit by squeezing out bearish bets.

Eutelsat “checks all the boxes” for retail traders, said Ivan Cosovic, founder of data tracking firm Breakout Point in Dusseldorf, Germany. He cited the stock’s elevated short positions, persistent declines over past years and exposure to the European defense spending theme.

Its popularity with retail investors has lifted trading volumes, with about 22.5 million shares changing hands on Wednesday, the highest one-day volume on record. Eutelsat also became the most discussed stock on Boursorama.com, an investor forum owned by Societe Generale SA, that’s popular among French retail traders.

For small investors, Eutelsat is the perfect “buy-the-dip” trade, Cosovic said.

--With assistance from Nishant Kumar, Neil Callanan, Neil Campling and Laura Benitez.