Michael Burry, of the famous The Big Short, took an optimistic stance on GameStop in 2019, but is now warning that the bull has gotten out of hand.
Michael Burry’s optimistic stance at GameStop Corp. in 2019 it helped lay the groundwork for an epic retail investor frenzy. Now, the famous fund manager is warning that the rally has gone out of control.
“If I put $ GME on your radar, and you do well, I’m genuinely happy for you,” said Burry, best known for his prescient bet against mortgage bonds before the 2008 financial crisis, in a tweet on Tuesday. “However, what is happening now – there must be legal and regulatory repercussions. This is not natural, insane and dangerous. “
[File: Bloomberg]
Burry, whose investment firm said it owns 2.4% of GameStop shares on September 30, said in an email interview on Tuesday that it is now “neither long nor short”. He declined to comment when he sold the shares.
Burry became a household name after his mortgage business appeared on “The Big Short”. He helped draw attention to GameStop in mid-2019 after its Scion Asset Management revealed a 3.3% stake in the video game retailer and asked the company to repurchase shares. Burry’s participation was cited by some of the traders who have flooded online forums in recent weeks with posts pleading with other punters to buy.
GameStop’s 642% increase since Jan. 12 has captivated Wall Street, elicited a tweet from Elon Musk and diverted short sellers, including Melvin Capital by Gabe Plotkin and Citron Research by Andrew Left. This also sparked inquiries from the Securities and Exchange Commission, although legal experts say it is difficult to prove that postings in chat rooms are part of an illicit scheme to manipulate the market.
Burry’s warning so far has done little to dampen retail investor enthusiasm: GameStop rose 45 percent more in the pre-market at 8:38 am in New York, although it more than doubled in the early morning trading.