The South Korean hedge fund that made a bold bet on GameStop Corp. almost a year ago. becomes less optimistic about the US video game retailer’s share after a seemingly endless rally that many short sellers misled.
Kim Doo-yong, CEO of Must Asset Management, said the stock’s high volatility and its more than tenfold increase since its Bloomberg’s last interview in March 2020 give rise to his less rosy outlook.
The Seoul-based hedge fund, which has 602 billion won ($ 546 million) in assets under management, had a 4.7% stake in GameStop as of April 2020, according to Bloomberg data based on an application. That made the Korean fund one of the largest investors in the Grapevine, Texas-based company.
Kim declined to comment on the fund’s current position in US listed equities, a favorite of retail investors who have gained increasing influence on the markets during the pandemic. GameStop shares spiked on a wave of short hedging and day trading after Ryan Cohen, the activist investor and online pet store Chewy Inc. co-founder, joined the board on January 11.
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“We have become less optimistic and more neutral on GameStop,” Kim said in an interview with Bloomberg on Monday. “This stock will remain highly volatile and unpredictable in the short term.”
Swimming against a declining stream of analysts, Kim told Bloomberg in March last year that GameStop is “the only place” where potential customers can try out companies’ games in person. He still believes in the business.
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“We are still very positive about the new management at GameStop,” said Kim. “We believe Ryan Cohen and his team can repeat the success he achieved at Chewy.com.”
Kim said he recently made a bet on another US company. The fund increased its holdings in US-listed Kaleyra Inc and now has a 5.2% stake in the software company.