Michael Burry’s optimistic stance on GameStop Corp. in 2019 it helped lay the groundwork for one of the biggest retail investor frenzy in recent history. Now, the famous fund manager is warning that the GameStop maniac the rally got out of control.
“If I put $ GME on your radar, and you did 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. “
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Read more: How WallStreetBets took GameStop to the moon
Burry is GameStop “neither long nor short,” he said in a brief email response to questions from Bloomberg on Tuesday. His investment firm held a 2.4% stake on September 30, after reducing its holdings in the third quarter, according to regulatory documents compiled by Bloomberg.
Burry, who became a household name after his mortgage business appeared on “The Big Short “, helped to draw attention to GameStop already in mid-2019, when its Scion Asset Management revealed a 3.3% stake in the beleaguered video game retailer and urged the company to buy back shares. His position has been cited by some of the traders who have flooded online forums in recent weeks with posts begging other punters to buy.
GameStop’s 642% increase since Jan. 12, plus another 41% gain from after-hours trading on Tuesday, captivated Wall Street, drawing a tweet of Elon Musk and frustrated short sellers, including Gabe Plotkin’s Melvin Capital and Andrew Left’s Citron Research. It also generated requests for investigation by the Securities and Exchange Commission, although experts say it is difficult to prove that postings in chat rooms are part of a crime scheme to manipulate the market.
(Updates with Burry’s comment in the third paragraph.)