Well-known investor Michael Bury received a subpoena from the Securities and Exchange Commission on Twitter in connection with an investigation into GameStop, a highly speculative stock that “big short” traders once bet on. clarified.
“So who got the SEC summons over $GME? Really, I know who has my summons. Whatever’s happening all over the world…” Barry said on Friday. Said in a deleted tweet. He has attached a copy of the SEC letter dated September 21.
Bury, head of Scion Asset Management, rose to prominence by betting on mortgage securities prior to the 2008 crisis. Barry was featured in Michael Lewis’ book The Big Short and subsequent Oscar-winning films.
Hedge fund managers have traded GameStop shares and publicly commented on meme stocks over the years. In late 2018, Bury first disclosed a $6.8 million position in video game retailers, according to InsiderScore.com. Over the next few quarters, investors repeatedly trimmed their shares, left and rejoined. Its stock was worth more than $17 million by the time it closed its position in the next quarter at the end of the third quarter of 2020.
In 2019, a bullish investor told Barron that new consoles from Microsoft and Sony would “significantly extend the life of Gamestop.” But when a major GameStop short squeeze stunned Wall Street in January, Bury said GameStop’s transactions were “unnatural, insane, dangerous” and “legal and regulatory implications.” The stock became a critic of The Voice, saying it should be.
Bury’s Scion Asset Management did not immediately respond to CNBC’s request for comment. An SEC spokesperson told CNBC that officials “have not commented on the possibility of an investigation.”
The Gamestop drama continues
Eight months after the epic short squeeze, GameStop’s story continues to drag, with retail investors still supporting stock prices above analysts’ price targets.
After the meme craze came to power, only a few analysts threw in the towel to cover the stock. Of the remaining four analysts tracked by FactSet, the average 12-month price forecast calls for a decline of more than 60% to $71 per capita, according to FactSet. Friday’s stock price closed at $185.16.
Wall Street research firm Ascend Capital Markets on Monday slashed GameStop’s price target to just $24 due to intense competition in the digital gaming space.
“Reddit trading is likely to boost stock prices in the short term, but is likely to decline over a year as the digital threat mounts,” said analyst Edward Wu. “As hardware sales settle as the installation base matures, we remain very concerned about the long-term outlook for GME’s core video gaming business.”
Investors are preparing for an impending report from SEC Chairman Gary Gensler about the Reddit-fuelled trading frenzy and his suggestions on what changes, if any, to the US trading system should be made.
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