Legendary investor Bill Miller’s fund sold virtually all of its GameStop stock before the January short squeeze, missing out on a potential $800 million windfall.
Miller Value Partners invested in the video-games retailer in early 2014. It initially bought 1.2 million shares, then boosted its stake to almost 1.7 million shares by the end of 2015, SEC filings show. Its position was worth as much as $68 million earlier that year, when GameStop shares were trading around $43.
If Miller’s fund had held on to its shares, they would have been worth as much as $808 million on January 28, when GameStop’s stock price briefly skyrocketed to $483. Even if they declined to cash out then, their stake would be worth about $270 million at the current stock price of around $160.
However, Miller and his team slashed their position by 97% to roughly 32,000 shares in the first quarter of 2018. “We’ve owned this investment for a number of years and it has yet to work,” Samantha McLemore, Miller’s co-portfolio manager of the Opportunity Equity strategy, explained at the time. While GameStop remained “one of the cheapest companies on the market,” she and Miller ditched it to “avoid perpetual losers.”
Notably, the fund’s Income Strategy bought GameStop shares in May 2019. However, Miller and his son swiftly dumped them after the retailer scrapped its dividend and failed to lay out a clear turnaround plan.
“We cut bait so quickly that we didn’t even own the stock for a full quarter,” Bill Miller IV said in a letter to investors, describing the move as their “biggest mistake” in the period.
The third and final strategy, Deep Value, appears to be holding on. Daniel Lysik, the portfolio’s manager, described GameStop shares as “significantly mispriced” in the first quarter of 2019, and trumpeted their “significant upside potential” last October.
Miller’s fund owned a total of 116,000 GameStop shares at the end of December, or about 7% of the amount it held back in 2015. Assuming it hasn’t already sold them, they would fetch around $20 million today.
Miller Value Partners declined a request for comment from Insider.
Here’s a chart tracking the size and value of Miller’s GameStop holdings over the past seven years:
Trading app Robinhood said 9.5 million customers traded cryptocurrency during the first quarter of 2021, soaring from 1.7 million crypto traders on the platform in the last quarter of 2020.
Robinhood shared the figure in a blog post on Thursday in which it highlighted its Robinhood Crypto platform that it launched in 2018. “This year in particular has been a big one,” it said about activity in 2021.
There’s been a pickup this year in the number of financial institutions and other companies saying they will allow their customers to use or to gain access to cryptocurrencies and the blockchain technology that backs them. Investment bank Goldman Sachs is looking into ways to support their clients’ desire to own cryptocurrencies and other digital assets, CEO David Solomon said Tuesday in a CNBC “Squawk Box” interview. Tesla’s CEO Elon Musk last month said the electric vehicle maker will accept bitcoin as payment.
Robinhood said its customers have access to seven tradable coins including bitcoin, dogecoin and ethereum.
“The prospect of an open and decentralized global financial system, one where everyone can have access to financial services, strongly aligned with Robinhood’s mission–so democratizing cryptocurrency trading felt like a natural next step,” said Robinhood.
Even if you’ve never used Reddit, you’ve no doubt heard of it; it’s one of the largest sites in the US, and with more than 2 million “subreddits,” it has a stunning depth and breadth of content.
With all that activity, it’s not surprising that Reddit has become a hub for digital piracy, and the site has struggled with managing copyright violations for several years. A subreddit called r/piracy (all subreddits begin with an “r/”) in particular has become the focus of some unwanted attention.
Reddit’s piracy subreddit, explained
While other subreddits have occasionally shared copyrighted material, the r/piracy forum is, by design, for individuals interested in the tools, techniques, and resources of online piracy.
With more than 640,000 members, it was created in 2008 with the mission of being “a community dedicated to the discussion of digital piracy,” according to its own description. That you can find discussions of the vulnerabilities of piracy laws on Reddit is unsurprising.
“Google ‘reddit piracy’ and you’ll find lots of active links, where Reddit users openly discuss the weakness and vulnerabilities of various piracy laws,” said Monica Eaton-Cardone, chief operating officer of Chargebacks911.
Given the subject matter, the piracy subreddit attempts to thread a particularly precarious needle. According to the rules of the subreddit, “submissions must be related to the discussion of digital piracy.” The rules of the forum specifically prohibit activities like linking directly to pirated media, requesting activation keys, asking others to download pirated content, or asking how to pirate specific copyrighted works (though generalized conversations about pirating techniques are acceptable).
A scan of r/piracy reveals an active community (at any given time, there are more than 1,000 users online) with threads about a diverse range of topics, including tips and tutorials on using popular tools and utilities, troubleshooting tips (“why are my 4K movies purple?”), and news about sources for copyrighted content.
Unlike many online forums elsewhere on the internet, though, r/piracy is a moderated community (Reddit moderators are unpaid volunteers from the community) and the discourse is largely civil and on-topic.
The state of piracy on Reddit
Reddit has been attempting to address piracy on its platform for several years, with serious efforts to mitigate copyright infringement beginning around 2019. Eaton-Cardone said, “Reddit has banned some of the more blatant abusers – /r/NFLstreams, /r/NBAstreams, /r/soccerstreams, /r/UFCstreams, /r/WWEstreams – but Reddit is one of the largest sites in the world. Policing it is extraordinarily difficult.”
Nir Kshetri, a professor at the Bryan School of Business and Economics, explained why Reddit was compelled to act: “When it was shut down, r/NBAstreams had 474,000 subscribers who could access pirated NBA content for free. The subreddit r/soccerstreams had more than 400,000 subscribers who had access to pirated soccer streams.”
Rather than shutting down r/piracy outright, as happened with those other subreddits, Reddit decided in 2019 to delete all of r/piracy’s posts and comments created prior to September 2018 – a decade’s worth of content, erased from the Reddit archives.
In Reddit’s transparency reporting, it’s clear that the platform has been increasing its content monitoring exponentially. In 2018, Reddit received 9,534 copyright notices, which resulted in 26,234 content removals. In 2019, Reddit received 34,989 copyright notices, which resulted in 124,257 content removals – nearly five times that of the year before. In 2020, Reddit received 86,866 copyright notices and removed 375,774 pieces of content – three times as many as in 2019.
Based on the takedown requests – and actual takedowns – Reddit appears to have a piracy problem, and r/piracy moderators have existential concerns about the future of their subreddit. “We are now on thin ice,” moderators wrote in one post, and added that the subreddit is in jeopardy. “We definitely do not want to be banned like r/megalinks, which was a subreddit specifically tailored to providing links to pirated content.”
Cleansing Reddit won’t eliminate piracy
Even if members appear to follow guidelines and avoid posting links to copyrighted material, some users say that the subreddit is still a direct vector to piracy.
Will Peach, a fourth-year medical student who regularly uses the r/piracy subreddit, said, “It happens via the backdoor. Recommendations are made in various threads and then DMs [direct messages] are sent privately. Piracy happens via other portals, like Google Drive. But it almost always starts on Reddit.”
Reddit moderators appear to be enforcing guidelines in hopes of staving off a full shutdown of the r/piracy subreddit, yet they’re also planning for the worst.
Allan Borch, founder of the tech marketing blog Dotcom Dollar, said, “[They] already have a list of forum replacements, including rival discussion site Raddle.me.” Referring to the purge of posts older than 2018, Borsh added, “Indeed, those posts 10 years in the making aren’t actually gone. They’ve already been archived on GitHub. Piracy might move away from Reddit, but that doesn’t mean it’s dead.”
AMC shares fell Thursday after the movie-theater chain’s chief spoke about the company’s plan to issue 500 million shares.
AMC in a March regulatory filing said it wanted to increase the number of shares to total more than 1.02 billion and for shareholders to vote on the matter on May 4.
“We’ll be sensitive to dilution issues, but at the same time there’s an opportunity to bolster our cash reserves and there’s an opportunity to buy back debt at a discount or pay deferred theater rents,” AMC CEO Adam Aron said on CNBC’s “Squawk on the Street” program. “There are a lot of good reasons for shareholders to give us the authority.”
The company is already seeing benefits from the vaccination of millions of Americans from COVID-19 as well as from the release of new movies, Aron said.
Shares of AMC fell by as much as 6.3% to $9.56 before trimmed losses to 5%. The shares, which have grown in popularity among investors on Reddit’s Wall Street Bets forum, have leapt from around $2 each at the start of 2021.
Tokyo now has a Reddit-inspired bar where seasoned traders provide newbie investors with trading tips, Bloomberg reported.
An investing influencer, who goes by the name Satoshi Uehara on Twitter, opened “Stock Pickers” in early March after a crowd-funding campaign raked in more than $50,000, or about six times the target.
The bar’s PR manager, Riki Yamauchi, told Bloomberg many novice investors visit the bar to meet Uehara and other experienced traders to gain an understanding of investing and stock valuations.
“People’s mentality is changing — you really have to think about how to structure your wealth,” Yamauchi, who is a financial professional himself, said. He said many youngsters have become more open to investing after Japan’s economy saw 30 years of near-stagnation.
Millions of retail investors accounted for a large part of stock-market activity during the pandemic, when people were stuck at home and began exploring easy-to-navigate online trading platforms.
At the bar, there are books on value investing and advice from legendary investor Warren Buffett. A model cannon used to symbolize the central bank’s asset-buying capacity can be found in one part of the bar, where a sign states: “Don’t fight the NIPPON GINKO (the Bank of Japan).”
Customers can also order investing-themed drinks, according to Bloomberg. The “Margin Call” – made with vodka, grenadine, and Campari – is said to have a biting taste meant to stir up bitter feelings traders may experience when summoned with the brokerage demand. The “Lehman Shock” is a punchy drink named after the investment bank at the centre of the global financial crisis. The “Abenomics” – made with cherry blossom syrup and grapefruit juice – is said to be less heavy than investors would hope.
“Stock Pickers” is not just popular among the newbie investors. It’s also had many visits from institutional investors. That may be because of Reddit and GameStop, according to Yamauchi. “People really care about what retail is thinking,” he said.
The bar opened when Tokyo was still in a state of COVID-19 emergency, but is able to function under shortened operating hours.
Shares of GameStop rose 5% on Tuesday after the video game retailer announced the appointment of Elliott Wilke as chief growth officer, boosting the company’s to pivot to e-commerce driven by board member and former Chewy CEO Ryan Cohen.
Wilke will join the company on April 5 after a seven-year stint with Amazon where he held senior roles in Amazon Fresh, Prime Pantry, and Worldwide Private Brands. At GameStop, he will oversee growth strategies and marketing, with a focus on increasing customer loyalty.
GameStop also named Andrea Wolfe, former Chewy vice president of marketing, as vice president of brand development, and Tom Petersen, former Chewy vice president of merchandising, as vice president of merchandising. Both executives started on March 29.
Cohen has been vocal about turning the video game retailer that was at the center of the Reddit-trader phenomenon into an e-commerce powerhouse.
GameStop, “needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences,” Cohen wrote in the letter, “not remain a video game retailer that overprioritizes its brick-and-mortar footprint and stumbles around the online ecosystem.”
The Grapevine, Texas-based company earlier in March also named Jenna Owens, a former Amazon executive, as chief operating officer. Owens also used to work at Google.
GameStop’s appointment of Wilke and other industry veterans marks yet another recruitment by the once-struggling video game retailer ever since the mania in January. The company-which sells video game hardware, video game accessories, electronics products, among others-found itself suffering as more people download games, significantly reducing customer footprint in physical stores.
Despite the massive hype, the video game retailer’s fourth-quarter earnings last week missed Wall Street’s estimates in the first financial report since the Reddit-driven rally.
Among the many aftereffects of the GameStop saga earlier this year is an increased interest in Reddit as a source of stock picking advice and investing tips, a recent survey shows.
A survey by Travis Credit Union conducted between February 15 to March 2 among 2,052 Americans revealed that 70% who said they invest look to Reddit for stock tips.
“Today, there’s a lot of positive energy around the stock market as a new generation gets involved through new technology,” said Andy Kerns, Creative Director at Digital Third Coast, which managed the survey for Travis Credit Union.
As for their favorite trading platform, 39% said it was Robinhood, followed by E-Trade at 19%, WeBull at 12%, and Fidelity at 10%.
A majority said they check their accounts daily, while 32% check theirs weekly.
Among all the respondents, 1,275, or 62%, said they have invested only recently. Most said they used what they called “extra spending money,” though one in four surveyed said they invested less than $500.
The rapid rise of retail investors has been a powerful force in the stock market, enabled by a range of factors including commission-free trading, distribution of government stimulus checks, and heightened pandemic boredom as many people continue to work from home.
While more than 57% who were surveyed think the boom in retail trading was “great,” around 10% found it “problematic.”
The retail investing trend hit a fever pitch in January, when an army of retail traders coordinating on Reddit’s Wall Street Bets forum sparred with short-focused hedge funds and pushed their favorite stocks higher.
But the notorious subreddit had claimed they were not the ones behind silver’s rally as they were more focused on members buying into GameStop, AMC, and other heavily shorted stocks.
“The Silver Squeeze is a hedge-fund coordinated attack so they can keep fighting the $GME fight,” one user wrote last month.
Bayoukhi, who was among users calling for betting on silver, said one can just scroll back five to six months on the WSB forum to find several silver-related posts. Some posts would even mention the Hunt Brothers who managed to push silver prices from $6 an ounce to over $50 an ounce within a year more than three decades ago, he said.
“We’ve kept track of absolutely everything,” he said. “That’s in our extras section, or the information section on Wall Streets Silver reddit. We literally have a section for Wall Streets Bets posts for silver that they’ve deleted or kept up.”
But anyone attempting to post about silver on WSB, including Bayoukhi, was banned from the community because the majority of them didn’t want focus to stray from GameStop, he said. Still, at least 30 to 40% of the WSB forum loves silver, he said. This indicates there was conflicting opinion among members of the subreddit, with some wanting to continue the GameStop short-squeeze, while others wanted to expand it to silver.
“That’s why most of their users are coming to us for silver, because they’re tired of just talking about one stock all day.”
Shortly after Reddit day traders drove up the prices of GameStop earlier this year, silver prices rocketed to their highest since 2013, driven by messages urging Reddit day traders to buy the metal and hike its price. Some members of the community claimed to not be a part of it and banned posts that mentioned silver.
Bayoukhi compared silver to fiat currencies. When asked why he likes silver, he said traditional currencies aren’t backed by anything and 99% of them have failed historically. On the other hand, silver is used in everyday life, such as in solar panels or industrial goods, has affordability, and works as a real store of value and hedge against inflation, he said.
GameStop shares are likely to get just a limited bump up in volume activity and price from the $1,400 stimulus checks that most Americans are receiving to help them financially cope with the coronavirus crisis, according to Bank of America.
This year’s rush by retail investors into the videogame seller’s shares has resulted in the stock price climbing at high as $348 from nearly $19 at the end of 2020. Much of the fervor around the often-volatile stock has come from retail investors on the Reddit social-media platform, who ramped up a battle against institutional short-sellers in late January.
Over the past two months, Bank of America has analyzed the impact on GameStop shares from non-fundamental factors including the number of conversations on Reddit relating to the stock, trading volumes, and short interest. The factors “have shown a tight relationship and large increases have corresponded to several big surges in GME’s share price,” the firm said.
Then the bank began taking into consideration the $1,400 checks the government starting sending out this month. It analyzed the number of conservations mentioning stimulus, as well as “stimmies” and stimmy”, on online forums then plotted the data against GameStop’s share performance.
In late December and ahead of the round of $600 stimulus payments sent under the Trump administration, “there was indeed a spike in stimulus mentions and this was followed by an even larger increase over the past two weeks,” from March 2 through March 17.
“These spikes also coincided with significant increases in GME’s share price,” wrote the bank in a note led by Curtis Nagle, director of equity research at Bank of America.
But “the impact going forward may be limited given two factors,” the bank said. First, conservations involving stimulus “appear to have peaked” and GameStop shares have declined over the past few days. Secondly, the number of recent conversations including both GameStop and stimulus “is low. GME trading volumes are also steadily declining and short interest is down materially.”
The next event on the radar for GameStop investors is the release of the company’s fourth-quarter earnings after the bell on March 23. “We expect an underwhelming quarter given previously announced holiday sales results that were very disappointing,” said BofA.
It noted that GameStop shares over the past five months “have reacted very positively to a string of announcements” including a digital revenue-sharing arrangement with Microsoft and the appointment of Ryan Cohen to be in charge of a new committee aimed at driving a turnaround plan. Cohen is the cofounder of pet products retailer Chewy and GameStop’s largest individual shareholder.
Bank of America maintained its underperform rating on GameStop shares “on significant earnings risk ahead.”
United Talent Agency did not immediately respond to Insider’s request to confirm the news about Rogozinski. With UTA, Rogozinski may appear in podcasts and speak at a conference in the fall, Bloomberg reported.
Hollywood has been picking up on the GameStop frenzy. MGM, for example, bought the film rights to a proposed book that will cover the saga. And last month, Deadline reported that Netflix is in talks to make a movie about what happened. That’s just two of the nine projects already in the works about GameStop, Bloomberg reported.
Rogozinski founded the Reddit group, r/wallstreetbets, in 2012, while he was working as an IT consultant. But the group only recently became popularized, as its members have helped pave the way for a frenzy in meme stocks, such as GameStop, AMC Entertainment, Blackberry, and Bed Bath & Beyond. In an interview, Rogozinski said seeing the GameStop rally was like watching a trainwreck in real-time.