GameStop shares move higher after Michael Burry says he’s been buying the stock
Investors are working where GameStop is listed on the New York Stock Exchange on June 12, 2024.
Brendan McDermid | Reuters
Investor Michael Burry, who became famous for his bet against the US housing market before the financial crisis, announced that he bought shares of a company that was once his favorite. GameStop.
“I own GME. I’ve been buying it lately. I’m looking to buy it soon at a price that could be 1x tangible book value/1x net asset value,” Burry said. Substack post It was published on Monday. “And being young [GameStop CEO] Ryan Cohen invests and deploys the company’s capital and cash flows. Maybe for the next 50 years.”
Shares of GameStop rose nearly 8% on Monday following the news.
Burry, who recently closed hedge fund Scion Asset Management, said his investment was a long-term value play rather than a bet on renewed meme stock speculation. GameStop was at the center of the meme stock craze that erupted nearly five years ago when retail traders coordinated in online forums to push shares to extraordinary heights, forcing hedge funds to cover massive shorts.
“I’m not counting on a short squeeze to generate long-term value,” he wrote. “I believe in Ryan. I like the setup, the management, and the strategy I see. I’m ready to stay long-term and I’m excited to see where this goes. I’m fifteen years his senior, but not too old to be patient.”
The stock has since given back most of those gains as trading activity normalized and speculative interest faded. They were last traded around $25 each.
Still, GameStop has benefited from periods of increased investor interest, raising billions of dollars through stock offerings and leaving a significant pile of cash on hand.
“Ryan is making lemonade,” Burry wrote. “He has a crappy business and is doing the best he can while capitalizing on the meme stock phenomenon to raise cash and wait for a big acquisition opportunity for his really growing cash cow business.”
The video game retailer began buying bitcoin last year, in a similar move made famous by MicroStrategy. Cohen said at the time that the decision to buy Bitcoin was due to macro concerns, because the digital currency could serve as a hedge against certain risks with its fixed supply and decentralized structure.
“I don’t know about this Bitcoin thing, but I can’t argue with what’s been done so far,” Burry said.
