Traders work at the post where GameStop is traded on June 12, 2024, on behalf of the New York Stock Exchange.
Brendan McDiarmid | Reuters
Michael Burry, the investor who became famous for betting on the US housing market ahead of the financial crisis, has revealed he was buying shares in the former meme darling. game stop.
“I own GME. I have recently purchased it. I expect it to reach 1x tangible book value/1x net asset value soon,” Barry said in a Substack post published Monday. “And then we get a young[GameStop CEO]Ryan Cohen to invest and deploy the capital and cash flow of the company, probably for the next 50 years.”
GameStop stock soared more than 6% on Monday on the news.
GameStop stock in the past day
Barry, who recently shut down his hedge fund Scion Asset Management, said his investments were long-term value plays, not bets on new meme stock speculation. GameStop was at the center of the meme stock frenzy that erupted about five years ago. At the time, individual traders working together in online forums pushed the stock to abnormally high levels, forcing hedge funds to take on massive short covering.
“I am not relying on a short squeeze to realize long-term value,” he wrote. “I believe in Ryan. I like the structure, the governance and the strategy that I see. I intend to hold for the long term and look forward to seeing what happens next. I’m 15 years older than Ryan, but I’m not too old to be patient.”
The stock has since regained most of its gains as trading activity normalized and speculative interest waned. The last trading price was about $25 per piece.
Still, GameStop took advantage of a period of heightened investor interest to raise billions of dollars through an initial public offering, leaving it with a sizable pile of cash.
“Ryan is making lemonade out of lemons,” Barry wrote. “He’s running a crappy business and is leveraging the meme stock phenomenon to raise money and squeeze as much as he can while he waits for an opportunity to make a big acquisition of a truly growing dollar-coal business.”
The video game retailer began buying Bitcoin last year in a move similar to the one made famous by MicroStrategy (now known as Strategy). Cohen said at the time that the decision to buy Bitcoin was driven by macro concerns, as the digital coin, with its fixed supply and decentralized nature, could act as protection against certain risks.
“I don’t know about Bitcoin, but I can’t argue with what’s been done,” Burley said.
Barry isn’t the only high-profile investor to bet on the company these days. Just last week, Cohen acquired 1 million shares of GameStop stock, according to disclosures filed with the Securities and Exchange Commission. In a Jan. 21 SEC filing, he said it is “essential” for CEOs of public companies to purchase stock with their own personal funds “to further strengthen alignment with shareholders.”
