Back on April 10, 2020, Michael Burry, who gained fame as a major character in the book and movie The Big Short, filed a 13D on Gamestop Inc. (GME) disclosing that his fund Scion Asset Management, LLC owned 5.3% of GME’s outstanding shares. With GME then traded around $4, Burry disclosed he’d previously sent GME’s board several letters recommending an aggressive share buyback. No one, including Burry, could have foreseen that GME shares would surge as high as $483 in late January of 2021 due to an epic short squeeze, sparked by RC Ventures 13D/A filings then fully ignited by retail Reddit traders. Unfortunately for Burry, it appears Scion sold all Gamestop shares before GME went stratospheric.
Scion Asset Management first reported a position in Gamestop for Q4 of 2018. At that time, Burry bought 536,862 shares at a cost estimated by WhaleWisdom to be $12.62. He added to the position in Q1 of 2019. But the the fund reported selling its entire 650,000 share position during the second quarter of 2019, losing possibly at much as 50% on the trade.
Scion sold all Gamestop shares in Q4. Did Burry leave $1B on the table?
However, in an abrupt turnaround, Burry bought 3,000,000 GME shares during Q3 of last year, making Gamestop Scion’s #1 holding. Then, in a 13D filing — a first for the publicity shy money manager — Burry sent a letter to the the board of directors of Gamestop, urging the Board to direct a $300M repurchase authorization. At the time, GME had a market cap of around $310M.
On Jan. 27, 2021, the closing market cap of GME was about $24.2 Billion. If Burry’s Scion sold all Gamestop shares on that day, the fund’s profit could have been in the neighborhood of $343 per share — possibly a $1B profit for a fund with recent AUM of about $390M.
But, according to today’s 13F filing, Burry sold all GME shares during Q4 of 2020 that ended on December 31. GME closed at $18.34 on that date.
When an astute value investor like Burry sells Gamestop below $19, what does that imply about the true private/business value of GME?
Of course, no one — including the guy who foresaw the implosion of subprime mortgages prior to the great financial crisis — could have predicted the insane surge of Gamestop in January of this year. Foreseeing such an event would be the equivalent of forecasting the winning numbers for Powerball.
Scion sold all Gamestop shares in Q4 at prices that likely represented a three or four bagger for GME. Burry did what value managers are paid to do — buy cheap and sell dear.
Speculators should take note: When an astute value investor like Burry sells GME at prices below $19, what does that imply about the true private/business value of Gamestop Inc?
Scion Asset Management Q4 2020 13F Portfolio
| Company | Symbol | Shares Held | Mkt Value | % of Portfolio | Prev % of Portfolio | Rank | Chg Shares | % Change | Qtr 1st Owned | Est Avg Price Paid | Recent Price | Source | Source Date | Date Reported |
| Citigroup | C(CALL) | 539,600 | $33,272,000 | 14.81 | 1 | 539,600 | New | Q4 2020 | 63.63 | 13F | 12/31/20 | 2/16/21 | ||
| Pfizer inc. | PFE(CALL) | 844,300 | $31,079,000 | 13.83 | 4.63 | 2 | 405,203 | 92% | Q3 2020 | 34.72 | 13F | 12/31/20 | 2/16/21 | |
| Kraft heinz | KHC(CALL) | 589,700 | $20,439,000 | 9.1 | 3 | 589,700 | New | Q4 2020 | 35.39 | 13F | 12/31/20 | 2/16/21 | ||
| Centurylink inc | LUMN | 1,150,000 | $11,213,000 | 4.99 | 2.44 | 4 | 350,000 | 43% | Q3 2020 | 9.99 | 11.78 | 13F | 12/31/20 | 2/16/21 |
| Now inc | DNOW | 1,500,000 | $10,770,000 | 4.79 | 5 | 1,500,000 | New | Q4 2020 | 7.18 | 10.33 | 13F | 12/31/20 | 2/16/21 | |
| Rpt realty | RPT | 1,000,000 | $8,650,000 | 3.85 | 2.22 | 6 | 350,000 | -25% | Q3 2020 | 5.44 | 10.59 | 13F | 12/31/20 | 2/16/21 |
| Uniti group inc | UNIT | 725,000 | $8,504,000 | 3.78 | 3.19 | 7 | 275,000 | -27% | Q2 2020 | 9.78 | 12.99 | 13F | 12/31/20 | 2/16/21 |
| Western digital corp | WDC | 150,000 | $8,309,000 | 3.7 | 2.77 | 8 | 100,000 | -40% | Q3 2020 | 36.55 | 65.57 | 13F | 12/31/20 | 2/16/21 |
| Allstate corp | ALL | 75,000 | $8,245,000 | 3.67 | 2.57 | 9 | 15,000 | -16% | Q3 2020 | 94.14 | 104.43 | 13F | 12/31/20 | 2/16/21 |
| Qurate retail group | QRTEA | 700,000 | $7,679,000 | 3.42 | 2.39 | 10 | 400,000 | -36% | Q3 2020 | 7.18 | 13.13 | 13F | 12/31/20 | 2/16/21 |
Scion’s Top New Buys in Q4 2020.
| Symbol | Shares | Market Value | % of Portfolio | Rank | Change | Est Avg Price | Recent Price |
| C(CALL) | 539,600 | $33,272,000 | 14.81 | 1 | New | 63.63 | |
| KHC(CALL) | 589,700 | $20,439,000 | 9.1 | 3 | New | 35.39 | |
| DNOW | 1,500,000 | $10,770,000 | 4.79 | 5 | New | 7.18 | 10.33 |
| WFC | 250,000 | $7,545,000 | 3.36 | 11 | New | 30.18 | 33.53 |
| GEO | 845,152 | $7,488,000 | 3.33 | 13 | New | 8.86 | 8.84 |
| TAP | 150,000 | $6,779,000 | 3.02 | 15 | New | 45.19 | 44.01 |
| CXW | 1,000,000 | $6,550,000 | 2.92 | 16 | New | 6.55 | 7.73 |
| HFC | 250,000 | $6,463,000 | 2.88 | 17 | New | 25.85 | 31.75 |
Scion’s Top Sales in Q4 2020
| Stock | Symbol | Type | Shares Held | Previous % of Portfolio | Ranking | Change in shares | Change Type | Qtr first owned | source_date | source_type | Avg Price | Recent Price |
| Gamestop corp. class a | GME | 0 | 5.2609% | -1,703,400 | soldall | Q4 2018 | 13F | 12/31/2020 | 5.08 | 52.4 | ||
| Alphabet inc. class c | GOOG | CALL | 0 | 17.7989% | -40,000 | soldall | Q2 2020 | 13F | 12/31/2020 | 2104.11 | ||
| Cvs health corp. (melville shoe) | CVS | CALL | 0 | 8.1712% | -462,100 | soldall | Q3 2020 | 13F | 12/31/2020 | 74.21 | ||
| Goldman sachs group inc | GS | CALL | 0 | 4.4785% | -73,600 | soldall | Q2 2020 | 13F | 12/31/2020 | 306.32 | ||
| Facebook inc | FB | 0 | 3.965% | -50,000 | soldall | Q1 2020 | 13F | 12/31/2020 | 261.9 | 270.5 |
Contact Mark about investing based on SEC filings and smart money disclosures.
Disclaimer:
This investment blog (the “Blog”) is created and authored by Mark W. Gaffney (the “Content Creator”). The Blog is provided for informational and entertainment purposes only (collectively, the “Blog Service”). The information in the Blog constitutes the Content Creator’s own opinions. None of the information contained in the Blog constitutes a recommendation that any particular security, portfolio of securities, transaction, or investment strategy is suitable for any specific person. You understand that the Content Creator is not advising, and will not advise you personally concerning the nature, potential, value or suitability of any particular security, portfolio of securities, transaction, investment strategy or other matter. To the extent any of the information contained in the Blog may be deemed to be investment advice, such information is impersonal and not tailored to the investment needs of any specific person.
From time to time, the Content Creator or its affiliates may hold positions or other interests in securities mentioned in the Blog. The Content Creator or affiliates may trade for their own account(s) based on the information presented, and may also take positions inconsistent with the views expressed in its messages on the Blog.
The Content Creator may hold licenses with FINRA, the SEC or states securities authorities. These licenses may or may not be disclosed by the Content Creator in the Blog.
Investing in the investments discussed in the Blog may be risky and speculative. The companies may have limited operating histories, little available public information. The stocks discussed may be volatile and illiquid. Trading in such securities can result in immediate and substantial losses of the capital invested. You should only invest risk capital not required for other purposes, such as retirement savings, student loans, mortgages or education.
