Mashaal: These things are certainly nerve wracking when they start happening and sort of start having a life of their own. What was that like for you? Take us into the offices of Senvest during that time period and the calculus of whether to hold or whether to sell when the stock started skyrocketing. Picker: So Ryan Cohen takes a board seat, he gets several others onto that board, and then the stock, from there, really kind of started to go haywire. So there was the thinking that this activist got involved in the management or on the board of GameStop, that he could then affect real positive change and help a transformation story. And he did this in the face of severe competition from Amazon. And this was no regular activist, this was Ryan Cohen, Ryan Cohen had tremendous success founding Chewy, a pet food e-commerce company.
Hedge fund gamestop driver#
Those were going to be introduced in the November timeframe, so we were in September, so we thought that could be a driver of positive results, and with a higher revenue, lower costs, that would really have a positive effect on profitability.Īnd then, as well, you had an activist in the wings. We were at the beginning of a new Xbox and Sony PlayStation console cycle.
And then another positive was the new console cycle. And so that sort of convinced us that the company had breathing room. They had debt, so really trying to raise cash. So we saw some really good things happening there in terms of e-commerce, in terms of cost cutting, and just in general, repairing the balance sheet. So that's the negative side of it, but the positive side is, we saw management who had been there for over a year come in and do a hell of a lot of cost cutting, really reacted to the inability to operate their stores normally because of the pandemic and really push their foot to the pedal on e-commerce. Actually the high short interest concerned us a little bit, in a way, because that also meant it was a battleground stock and we don't usually like to get involved in a battleground stock and, boy, this really turned out to be a big battle. So both of those would be pretty glaring indicators that this was a stock that was out of favor. And then, of course, the short interest, which was over 100% of the shares outstanding, which is certainly the first time in my career - our fund's going on 25 years so it's quite a long time - that I've ever seen anything like that. Wall Street doesn't issue very many sell recommendations and GameStop had plenty of those and very few, if not, no, buy recommendations. So how many sells and buy recommendations. Mashaal: There's a couple of really easy indicators. How do you kind of look at those things when making a decision to invest in a company that has been out of favor? And kind of figuring out what catalysts could make it return to favor? Picker: You were looking at the short interest as well, which I think was similar to some of the back and forth that we saw over the Reddit forums with the retail investors. That's what we look for - things that are really out of favor that have the potential to come back into favor. There's one word that's synonymous with Senvest: it's contrarian. So that was September, so well before the stock caught fire, and it's a classic contrarian play for us. Richard Mashaal: Surely we didn't know what would happen but you know, we did get in in September. Leslie Picker: You had been invested in GameStop for months prior to the frenzy that we saw in January 2021. (The below has been edited for length and clarity. Senvest Founder & CEO Richard Mashaal sat down with CNBC's Delivering Alpha newsletter to discuss how he navigated his firm's position in GameStop and shared lessons he learned along the way. Those gains contributed to Senvest's more than 85% returns last year, making it the top performing hedge fund of 2021. GameStop became Senvest Management's single best trade of all time, notching $700 million in profit for the firm.
Hedge fund gamestop professional#
Professional investors also got in on the action but not all of them were on the short side of the trade.
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