Big Short legend Michael Burry makes surprise bet on beaten-down stock - sending shares soaring
Famed investor Michael Burry has quietly snapped up shares in one-time meme stock favorite GameStop.
Burry, who became a household name after predicting the 2008 crash and inspiring the film The Big Short, revealed he has been buying the stock in recent weeks.
News of his position, which emerged just after 11.30am ET on Monday, sent shares sharply higher, jumping as much as 8 percent. The stock finished the day at $24, up about 4 percent.
‘I own GME. I have been buying recently,’ Burry wrote in a Substack post published Monday. It is not clear how much stock he has bought.
He said he believes he is buying the shares at close to the company’s underlying book value - a classic value-investing play rather than a speculative gamble.
Book value is what a company would be worth if it shut down tomorrow and sold everything it owns, like property and stock, then paid off its debts. Burry thinks it can grow, which would see the share price rise.
The investor also pointed to the influence of Ryan Cohen, the billionaire entrepreneur who took control of GameStop after building online pet retailer Chewy into a multibillion-dollar company.
Cohen is now chairman of GameStop’s board and has been pushing to overhaul the business, sitting on a large cash pile and looking for ways to reinvest it for future growth.
Michael Burry, founder of Scion Capital and the real-life investor behind The Big Short, has bought shares in GameStop
GameStop shares jumped as much as 8 percent on Monday after news broke that Big Short investor Michael Burry had been buying the stock
It emerged last week that GameStop is shutting around 470 of its 2,000 stores as it looks to further cut costs.
Founded in 1984 as Babbage’s, a small Texas-based software retailer, the company grew into the nation’s largest specialty video game chain during the console boom of the 1990s and 2000s.
At its height, GameStop was a fixture of malls and strip centers, known for midnight launches of blockbuster titles like Call of Duty and Grand Theft Auto.
The shift to digital downloads and online marketplaces hit the chain hard and shopper numbers fell.
Burry said he believes that strategy could take decades to fully pay off, adding: ‘Perhaps for the next 50 years.’
The move comes years after GameStop was at the center of a historic meme-stock frenzy in 2021. Several big Wall Street hedge funds had bet that the companywould go bankrupt.
But Americans trading at home during the pandemic piled into the shares and caused the price to spike, which forced the hedge fund to scramble for the exit.
Burry stressed he is not relying on another short squeeze to make money. ‘I am not counting on a short squeeze to realize long-term value,’ he wrote. ‘I like the setup, the governance, the strategy as I see it.’
Gamestop has brought in Ryan Cohen, co-founder of online pet retailer Chewy, as chairman
Trader Michael Capolino, left, and specialist Thomas McArdle on the floor of the New York Stock Exchange on Monday during a session that saw GameStop stock jump sharply
Snow blankets the Fearless Girl statue outside the New York Stock Exchange on Monday as a powerful winter storm hits the Northeast
Gamestop is also shutting 470 stores in January. The closures will leave the once-booming video game chain with less than 2,000 stores — a far cry from its peak of over 6,000 locations
Burry, who recently shut down his hedge fund Scion Asset Management, said he is willing to hold the stock for the long haul - even joking that, despite being older than Cohen, he is ‘not too old to be patient.’
Burry’s moves are closely watched on Wall Street after he made a fortune predicting the 2008 financial crisis — a bet later immortalized in the film The Big Short.
In November, markets were thrown into turmoil after it emerged that he had placed huge bets against two of the world’s AI darlings, Nvidia and Palantir.
Burry disclosed positions worth hundreds of millions of dollars betting the stocks would fall, prompting a sharp sell-off that wiped tens of billions from Nvidia’s market value and dragged down the wider market.
The broader market recovered but Nvidia's stock price is down 5.5 percent since then, and Palantir's is down by 11 percent.
