Michael Burry, of The Big Short fame, took a bullish stance on GameStop in 2019, but now warns that the rally has gotten out of hand.
Michael Burry’s optimistic attitude to GameStop Corp. in 2019 helped lay the foundation for an epic retail investor madness. Now the famous fund manager is warning that the rally has gotten out of hand.
“If I put $ GME on your radar, and you did it right, then I’m genuinely happy for you,” Burry, best known for his forward-looking bet against mortgage securities for the 2008 financial crisis, said in a tweet Tuesday. “But what’s going on now – there should be legal and regulatory ramifications. This is unnatural, insane and dangerous. “
[File: Bloomberg]
Burry, whose investment company said it had a 2.4% stake in GameStop on September 30, said in an email interview on Tuesday that he is now “neither long nor short”. He declined to comment on when he sold the stock.
Burry became a household name after his mortgage business was featured in ‘The Big Short’. He helped draw attention to GameStop in mid-2019 after his Scion Asset Management revealed a 3.3% stake in the beleaguered video game store and urged the company to buy back shares. Burry’s stock has been cited by some of the traders who have flooded online forums in recent weeks with messages urging their fellow traders to buy.
GameStop’s 642% increase since Jan. 12 has mesmerized Wall Street, provoked a tweet from Elon Musk, and led short sellers including Gabe Plotkin’s Melvin Capital and Andrew Left’s Citron Research. It has also sparked calls for an investigation from the Securities and Exchange Commission, although legal experts say it is difficult to prove that chat room posts are part of an illegal plan to manipulate the market.
Burry’s warning has so far done little to dampen retail investors’ enthusiasm: GameStop was up an additional 45% in pre-market trading from 8:38 a.m. in New York, although it more than doubled in overnight trading .