Can't, stop won't stop gamestop. The following video is an interesting tale of how this guy rode this wave thanks to these guys and somehow got annoyed by it. [ Music ]! Well, it's highly likely that in the last couple of weeks, michael barry has made an absolute fortune.
If you don't know michael bury, he is this guy from the big short and he essentially made his fortune by shorting. The us housing in 2008., so michael, bury bought a pretty substantial amount of game stop in q3 2019.
At the time it was his largest positioning, and since that time it has basically stayed as the largest positioning in his portfolio now. Gamestop is predominantly a physical retail, a physical video game retailer over in the united states and it trades under the ticker gme and as of michael, bury's.
Most recent 13f filing, which was from q3 2020 scion asset management, currently holds 1.7 million shares. In gamestop now, unfortunately, we don't have any newer data than that q4 2020 13f filings are due in about two and a half weeks.
But anyway, going back to the story. Michael barry buys into gamestop q3 2019. It's. His biggest bet in his portfolio and even from that point up until the most recent 13f filing he's, done pretty well on the stock.
But look at what & # 39. S happened to gamestop in the past few weeks. On the 12th of january, the stock was at 19.95, then, on the 13th of january it jumped 57.39 to 31.40 cents. Then the next day it was up another 27.
Then, over the next four trading days it gained roughly 7, but the party wound right back up. That was not the end of it. On january, the 21st the stock was at 43, then the next trading day 65, then the next trading day 76 and then the big one.
Yesterday the stock rose 92 from 76 to 148 and now, even after hours, it's up 41, another 41. So chances are when you're watching. This gamestop has had another ridiculous day. Now have a listen to this, so scion capital owned 1.
7 million shares of gamestop at the end of september. That's from the last 13, a filing assuming barry hasn't altered the size of the holding. It is ballooned in value from about 17 million u.s to 250 million dollars.
As of tuesday's close that's, almost a 1400 gain in only four months. This is insane because michael barry made about 800 million dollars from shorting the housing in 2008, and that took years for his plan to come to fruition.
He ended up making 100 million dollars for himself and about 700 million dollars for his investors, but it took so long now in the space of like four months, he's, potentially made 233 million dollars boom.
Just like that now i do have to say remember that this is just a potential right, because unfortunately, we don't, get real-time updates of what these guys are doing with their stock . Investing as we said before, we're, going off of the most recent 13f filing that we have, and there is the potential that michael barry might have cashed out his positioning at any point along this curve.
But there is also the potential he's held on, so this is assuming that he has just held on and gone along for the ride. Now you would have thought he'd, be really happy with this and laughing all the way to the bank, but strangely enough he was actually pretty annoyed.
In fact, after the trading day of tuesday, he fired off a couple of tweets which he then soon deleted a couple of minutes later. This is what he said. If i put gme on your radar - and you did well - i'm genuinely happy for you.
However, what's going on now? There should be legal and regulatory repercussions. This is unnatural, insane and dangerous. He added tagging the securities and exchange commission's enforcement arm. So he's, not actually too thrilled with what's going on.
But that begs the question: well, what is the situation with gamestop? What the hell is actually going on? Well, it all comes back to a little subreddit called wall street bets. This is basically a subreddit filled with mostly stock gamblers, but it is actually pretty fun to kind of like follow along and have a look at what some people actually do.
The big bets that some people make with options and so on in the stock . But anyway, with gamestop gamestop is a business that's, kind of been in a slow decline and that's, led a lot of people and like a lot of hedge funds to short the stock and what short selling is.
Is it's essentially, where you borrow someone else's shares and you sell them immediately. Okay and then you hope that the share price goes down, because eventually you have to buy back the shares to then return the shares back to their owner.
So it's, a weird and wacky process, where you're, making money from the stock price going down. You're selling the shares first at the high price. Okay, so you're, making your money first, but of course you're borrowing the shares when you borrow something you have to give it back so that's.
The inescapable thing about short selling is that eventually you have to buy back the shares return them to their owner now. The problem with short selling is well what, if you borrow the shares, sell them, and then the stock price starts going up and it goes up a little bit more and it goes up a little bit more and it keeps going up and all of a sudden.
Yes, it's, an unrealized loss, but you can see, as the share price goes up. You're, just losing more and more money. So you can there's, a lot of risk. There's, potentially unlimited risk, because you can just keep losing more and more and more money.
Now, eventually, when the losses add up - and you just can't keep going, you have to cover your short positioning. So you have to say enough's enough. I'm going to buy back. These shares return them to their owner and be done with it, but the problem with that is that in that process you are buying shares that's.
How you close a short positioning you buy shares now, if a lot of short sellers are all covering at once, then all of a sudden there's more and more and more buying, which contributes to the buying pressure which drives the stock price up.
So a situation you can get is sometimes a heavily shorted stock. If the share price starts going up, then that causes some short sellers to cover they buy the shares to return to the owners that increases the buying pressure and the shares go higher.
That then puts more pressure on all the other short sellers that held on some of them cover that pushes the stock price higher and then the whole process keeps cycling and more and more short sellers have to cover, and then that is when, if it gets out Of control that's when you get this a short squeeze and who's behind it? These guys, as per this business insider article scores of retail investors, including some members of reddit forum wall street bets, have targeted heavily shorted stocks.
In recent weeks, they drove gamestop's, stock price up as much as 145 on monday bed bath and beyond up 58 blackberry up 48 and amc up 39. So what they do is collectively they try and buy into these heavily shorted stocks to try and get the stock price just to tick up enough to start that short squeeze, and then they just don't sell then to compound that there's also the potential for what's called a gamma squeeze, because a lot of these investors on wall street bets have been buying call options on gme stock and then what a gamma squeeze is is essentially, the maker is hedging their exposure Because they've sold a lot of these call options and the easiest way to reduce their risk in that situation is just to simply buy the underlying stock, so buying game stock stock game stop stock, and then what that does is, of course it Adds another layer of buying pressure onto gamestop stock that's really hard to say so, very confusing, but overall that's, how it started.
But of course now this story has gone through all of the us media, and now everybody's. Talking about it. So a lot of the stuff that's happening right now, while there's, still a lot of short selling playing out and all that sort of thing, a lot of stuff now is just people hearing about it and just trying to Get involved in the craziness, but i just find this a really interesting kind of tale of dave.
It's like retail investors, wall street bets versus hedge funds and one of the main players in the hedge fund space. The short side of this whole equation has been melvin capital management. They formed a 55 million short positioning and then it just blew up in their face so much so that they & # 39.
Ve now got two billionaires called steve cohen and ken griffin, which are currently bailing them out because they & # 39. Ve, already lost 30 percent this year alone. But i think the funniest side of things is not even just looking at the shorts that are getting destroyed.
It's. Looking at some of the people on wall street bets that are literally just becoming like overnight millionaires, i mean there's, this guy, that's now up to 11 million dollars with a gain yesterday of over three million dollars um or There's, this guy, that paid back his 23 000 student loan from his gains.
There's, this dude that has 50 000 in and he made 208 thousand dollars. In one day i mean even elon. Musk has now poured some fuel on this fire after the end of trading yesterday, he just tweeted gamestonk, with a link to the wall street bets uh site, which is obviously got so many posts about game stock and after hours, trading is already up 41, which is Just insane, but overall i hope this situation.
I hope it kind of goes without saying you know the value investors, the people that you know like to do their research on different businesses and buy in based on cash flows and intrinsic value. I hope it goes without saying that these situations, as an investor you should definitely avoid.
I mean yes there. You see the daily rise of like 90, something percent you're, like oh, my gosh. What if i had done this? What if i'd, got in i'd, i'd, be a millionaire or whatever, but over obviously, over a long period of time it's.
It's, just an incredibly risky strategy for an investor to do this sort of stuff, especially when now you've, had a meteoric rise in the share price gone way further than it really should have, and you've.
Still got it quite heavily shorted it's, just a really uh it's, just it's, just a very volatile situation. So, typically speaking, i mean for those that are thinking about gamestop. Maybe you've. Just stumbled into this video because you have been caught up in the hype and you're thinking about buying gamestop purely on the fact that it's going up a lot at the moment.
The one question i would say you should ask yourself is: what are the shares of game? Stop worth put a dollar figure on it. If you can confidently answer that question with reasoning, then fair enough, you do whatever you want.
If you can't answer what the shares of gamestop as a business are worth based on their cash flows and their growth trends, then it's, definitely one that you should step away from protect yourself, [, Laughter, ], but overall guys That is the story of gamestop and it's.
Also, the story of michael bury's largest positioning, potentially making him like 233 million dollars in four months now, as i said before, we don't know if that's 100. What's happened because he might have cashed out earlier, but it's.
Still very interesting, michael bury strikes again with the help of wall street bets. So anyway, guys. I hope you enjoyed the video leave a like on it. If you enjoyed it or if you found it useful, uh comment down below like what do you think of this battle between the hedge funds and wall street bets and the short squeeze and all that sort of stuff? Let me know what you think down in the comment section below: did you get into gamestop? Maybe you were just someone that held it as an investment, and then this happened and now you're, just like a millionaire.
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