Michael Burry says he was subpoenaed by the SEC as GameStop saga drags on
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Famed investor Michael Burry revealed on Twitter that he received a subpoena from the Securities and Exchange Commission in connection with its investigation into GameStop, a wildly speculative stock that the “Big Short” investor once bet on.
So, which person got an SEC subpoena for $GME?” I actually know the person, as they are on my subpoena. With all that’s going on in the world…” Burry said in a now-deleted tweet on Friday. Burry attached a Sept. 21 copy of the SEC Letter.
Scion Asset Management’s Burry is a celebrity for his betting on mortgage securities prior to the 2008 crisis. Burry is featured in Michael Lewis’ “The Big Short”, and later the Oscar-winning film.
For the last few years, the hedge fund manager traded GameStop shares while also commenting publicly on the meme stock. According to InsiderScore.com, Burry revealed his $6.8million position in the video retailer at the close of 2018. The investor cut, exited, and returned to the stock several times over the following quarters. His stake in the video game retailer was more than $17million at the close of the third quarter 2020. He closed his position the next quarter.
Back in 2019, the bullish investor told Barron’s that new consoles from Microsoft and Sony would “extend GameStop’s life significantly,” which fueled a rally in shares. However, when the massive GameStop short squeeze shocked Wall Street in January, Burry turned into a vocal critic of the stock, saying the trading in GameStop is “unnatural, insane, and dangerous” and there should be “legal and regulatory repercussions.”
CNBC reached Burry through Scion Asset Management, but they didn’t respond immediately to our request. CNBC was told by a spokesperson for the SEC that they “do not comment on whether or not there is an investigation.”
GameStop drama continues
Eight months after the epic short squeeze, the GameStop saga continues to drag on with retail investors still propping up the stock way above analysts’ price targets.
Today, only a small number of analysts cover the stock. Many others have given up on the company since the meme mania. Among the 4 analysts tracked by FactSet that are left, the average 12-month price projection calls for a 60%-plus decline to $71 apiece, according to FactSet. On Friday, the stock was closed at $185.16
Wall Street research firm Ascendiant Capital Markets on Monday slashed its price target on GameStop to just $24, citing increased competition in digital gaming space.
Analyst Edward Woo stated that reddit trading will be a catalyst for stock in the short term but could fade as digital threats increase. We remain concerned about GME’s long-term prospects once the hardware sales slow down and the installed base matures.
Investors are bracing for an imminent report from SEC Chair Gary Gensler on the Reddit-fueled trading frenzy as well as his recommendations on what, if any, changes should be made in the U.S. trading system.
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