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Michael Burry reiterated his GameStop bet in a Substack post on Monday.
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Investor “Big Short” wrote that a “bad business” has become the “ball of the ball” in 2021.
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Burry sold out before the meme boom because he was “blindsided” by the risks and saw few rewards.
When it comes to regrets, Michael Burry has a few.
The investor of “The Big Short” fame, who bet on GameStop years before it became a meme, explained why he sold the stock before it skyrocketed in a Substack post Monday night.
Burry, who recently transitioned from hedge fund manager to online writer, first invested in GameStop in the summer of 2018. He thought the video game retailer’s stock was undervalued and saw a number of catalysts that could take it higher, he wrote.
These included a console refresh in 2020, the possibility of an acquisition, the potential sale of the Spring Mobile business, and strong cash flows and a large cash pile that allows for a “very large and consequential buyback,” Burry wrote.
He exited the position in the second quarter of 2019 after the stock failed to budge. But he reinvested in July 2019, buying the stock “with both hands” and making it one of his larger holdings, in part because the short-term rise in interest presented a new catalyst, he wrote.
Do you have investment regrets like missing out on Michael Burry’s GameStop? Share them with this reporter at: tmohamed@businessinsider.com
“I visited a GameStop store to make sure I wasn’t crazy,” Burry wrote. “It didn’t work. Even things that weren’t on sale looked like they should be on sale.”
Burry wrote to GameStop’s board of directors to demand changes at the company. He said his public activism drew emails from Keith “Roaring Kitty” Gill, a retail investor who would become the face of GameStop’s meme mania, and Chewy co-founder Ryan Cohen, who would become GameStop’s CEO.
Burry said he bought GameStop a second time at an adjusted average price of 83 cents, or less than 1/26 of the stock’s current price of $22.
He bought nearly 5% of the stock and held it for more than 16 months. “Most of the time, I borrowed my shares at very good rates – high double digits – which was profitable and a big part of the deal,” he wrote.
Burry cashed in through the end of November 2020, selling his shares for an average of $3.38 each, or more than four times what he paid.
Weeks later, retail investors on forums like r/WallStreetBets put historic pressure on GameStop short sellers, sending the stock to an intraday high of over $120 on January 28, 2021.