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GameStopE7: Rule# 8 - Defend the bear thesis
37 Plays4 months ago
Paving a new path is challenging, learning from previous experiences is transformative and understanding counter arguments to your convictions is incredibly enlightening. As DFV/Roaring Kitty/Keith Gill said, "If this is your first night at $GME fight club, you have to defend the bear thesis."
Image Credit: Iuliia Duzhnikova
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Transcript
Return to Podcasting: Reflection on Perseverance
00:00:26
Manny Cray
Hey me! Hello! Hello! I'm back. I feel like it's been a long time. Maybe it hasn't been. but fuck you pay me Wall Street. That's what I got to say. Um, I decided to keep going forward. This is good. I had, I doubt, not gonna lie, I had some doubt. Uh, as I, the the disclaimer is probably not the best word, but my little statement before the always sad but truthful interview, it's like, wow, this shit is really, um,
00:00:58
Manny Cray
It's been put into perspective for me.
Wall Street Stakes and Retail Investors
00:01:00
Manny Cray
we've got we've got The opposition has a lot on the line. There's tens of billions of dollars, probably more, hundreds, worth of securities sold not yet purchased. So a lot on the line that is way deeper, multidimensional, than just a bunch of retail good people, trying to stick it to the man and get their buck. It's not that. It's not laughing at memes. It is, but it's not. And it's crazy how quickly this journey has gone there for me. I didn't think it was gonna, because I just thought it was gonna be memes, memes, memes, memes. And riddles, what's the riddle, what's the riddle? um Even the first episode, I'm like,
00:01:41
Manny Cray
All right, i wanted to I basically just want to talk about riddles. I want to talk about all my theories around these riddles and cryptic tweets and honestly.
Exploring GameStop History and Theories
00:01:53
Manny Cray
And then I'm like, well, okay, let's learn the story here. Let's start with the history of GameStop and then get into some of those theories. So as I'm learning as I go along, I'm kind of snowballing my knowledge.
00:02:04
Manny Cray
And even just that first episode, I'm just and all the research just to try to get like the main themes and still just not fully like conveying it. I don't think, I mean, I kind of i listened to it again since it's like, yeah, all right. Kind of got it. Um, probably really good introductory podcast for.
00:02:21
Manny Cray
Cause I'm, as I said in the last, I'm newer, I'm new um newer just June. I think a lot of people are in the same boat. There's a lot of really deep, intelligent posts and information out there that would go way over the normal person's head that looks at GameStop and thinks, LOL, what the fuck's going on? Um, so yeah, anyway, decided to keep going forward because I thought, you know, with all this, um, money at stake,
00:02:50
Manny Cray
Is this worth it?
Podcasting Worth: Evaluating Value and Safety
00:02:51
Manny Cray
I'm a nobody. I only got like 20 people per episode that listen to this and it's not worth it. Is it worth it? I'm not gonna be targeted. Am I gonna get targeted? No, I don't care about me. And that's kind of what i lean I always go back to. There's so much information out there. Already has been consumed. Deep fucking value. Roaring Kitty, Keith Gill. He's... He's the like the king of all this, right? And if he's not silenced, if he's laughing while losing million millions of dollars, what the fuck do does Manny Cray have to worry about? Absolutely nothing. So little security precaution here and there isn't gonna hurt. um You know, deleting all the content, yeah, you know, wipe the tear away, start a new account, big deal.
00:03:44
Manny Cray
So, I mean, it the transition kind of sucked. I'll just say that. So I pursued four different social media platforms.
Navigating Social Media Challenges
00:03:54
Manny Cray
We've got X, Reddit, Stocktwits, Blue Sky. Is that everything? That's four. Is that everything? Anyway, so.
00:04:03
Manny Cray
Experiences on all of them have been completely different. So on X, ah deleted everything, started a new account, instantly got suspended. Got verified, got suspended. Like, oh cool, you took my money and then you suspended me. Great.
00:04:17
Manny Cray
um So two verified posts, one is suspended. But logic side of me is like, okay, they probably just see a duplicity, even though I proactively reached out and um made my intentions clear, I'm gonna do this. And they're like, yeah, no problem. Just make sure when you're done, like delete this, blah, blah, blah. So I did it. And I waited to delete the the old account because just in case, I'm glad I did because the new account is suspended.
00:04:43
Manny Cray
So then I'm like, maybe it's an error. I did another one, um, different credentials on all three. I got suspended. Like, okay. Well, maybe somebody that isn't a bot following policy it was able to tie the account, the suspended account to this one. Maybe that is about who knows. Um, suspended that one almost immediately. Great. Okay.
00:05:06
Manny Cray
So here we are in X. Maybe I won't, I'll have some security, you know, new practice going forward, but be nice to wipe and just reset on new one, whatever. Reddit similar experience. You know, delete all of my content. That was the worst. I mean, six months of, like I said, theorizing on riddles and memes. That's what sucked me in. And that was, we're talking six months of content, 12 K karma.
00:05:34
Manny Cray
um Saved it all, backed it all up on my computer, but deleted from the web. Started a new account, suspended. Couldn't save profiles, couldn't do anything.
00:05:46
Manny Cray
um you know, just get wiped and immediately. And yeah, can upvote, post anything. So deleted that one, tried it again, thought maybe they're, you know, the title, Magnificent. The username is Magnificent Show. So maybe like they thought it was explicit and like they have some algos like, nope, can't have usernames like that. Who knows? So I did another one.
00:06:10
Manny Cray
It's currently working at host Manny Cray and a couple of posts instantly removed. ah No ability to upvote or downvote him. So, and I tried, I know it's a newer account, so I know that plays, it's part of it, but, and like no karma. So I know that's part of it, depending on the community, but looking at the community requirements, this was posted in deep fucking value community. Don't see any, you know, age.
00:06:37
Manny Cray
account age or karma requirements so i mean that happened a few times across a couple of different posts i tried couldn't do it and uh yeah then i tried roaring kitty community got a post to go through it actually it's really good it's right after earnings um i did it a little table you know uh gme's net income quarterly net income reported since 2020 And, um, just circled, Hey, this is when Ryan Cohen became CEO. We're talking like a year and a month ago in in September of 2023. So you can kind of see how the net income is improving drastically versus historical. And, uh, yeah, so we've got, you know, decent karma on that one, which I don't really care about, but there's a discrepancy. I can see the karma there. You know, this says.
00:07:28
Manny Cray
was like 366 upvotes or something. I can't remember. And then ah my profile said 333
Resolving Platform Issues: A Positive Turn
00:07:37
Manny Cray
karma. I'm like, do I have a deficit? Why do I have a deficit? Or what's the discrepancy? and i so Was I started with a deficit was what i my thought was. Or do I have some comments that got downvoted to oblivion? I checked the comments. There's only like 11 of them that I respond to.
00:07:54
Manny Cray
Um, no negative. So it's like, that's just interesting. Hey, just calling it out. Just highlighting little boop as my highlighter sound effects. Um, just highlighting it, you know, just thought it was interesting. Uh, stock twits. Let's talk about that really quick. Stock twits, twits, twits, uh, twits. Yeah. I mean that experience was great. It sucked. It was rocky at first.
00:08:18
Manny Cray
because, you know, start the new account. I had an old account, you know, stopped using that like months and months ago. um Pretty much since I...
00:08:28
Manny Cray
since I started my GameStop journey. But this experience immediately got muted. I would post something on games GME muted. Boop. Email would say, you've been muted for violation blah, blah, blah. I responded. And then they go, oh, sorry, we're like fixing our rules or whatever. You're unmuted. And I went back in my account, post was live. I'm like, great, cool.
00:08:51
Manny Cray
And that was on a Saturday after Thanksgiving. I was like, damn customer service at Stockton, which is great. That process repeated like four or five times. And I still got the the same response from customer service. Like we're sorry, manicure. We, uh, push that through for you. Cool. And then now it just works. You know, there's one thing that happens where sometimes my replies, my comments will just, reply, hit the button and then go to like, even my phone kind of vibrates or something. And I don't even have like vibrant mode on my phone.
00:09:21
Manny Cray
So it's like, whoa, where'd that go? And so I've just learned before I reply, I just got to copy it. And then, you know, if it gets removed, just go back and paste it and hit try it again, then it goes through. So that's only hiccup. So excellent, excellent customer services. Talk to it's great for them. Great for them. Really cool experience over there too. Uh, way different. I mean, X, the so there's a reason why there's so many different social media platforms because experience is wildly different.
00:09:50
Manny Cray
wildly different experiences across all of these social media platforms.
Comparing Social Media Experiences
00:09:54
Manny Cray
Um, yeah, obviously X is more about like, look at me, I gotta be like this thing that you want to follow. And then Reddit's more about that community. Like, you know, what can you bring to the table to get everyone engaged? And then going through that engagement in the comment section and evolving or getting challenged on your thoughts,
00:10:17
Manny Cray
That's incredible. I love that experience. And stock twits is, I feel like it's very extreme on both sides. No matter which ticker you're commenting on, you see people that are all in bulls or all in bears and there's no in between. There's no, um,
00:10:35
Manny Cray
openness to to hear other thoughts. So that gets a little old, but you don't have to treat it that way. ah You can see people that are saying one thing that you feel like might be misinformed and you kind of come at them a little bit and be like, ah, you might want to consider this. Or they could say something and you could be like, hey, tell me more about that. That's, I don't really have that considered in my bold thesis. And that's kind of the theme of this episode.
Understanding Bear Thesis in Investments
00:10:58
Manny Cray
We're getting to it. We're finally starting to get to it.
00:11:01
Manny Cray
kind of a slow burn. But we're going to get to this, ah defend the bear thesis, which I think is one of the most important lessons that you could make in investing. I mean, that you could could gain in investing. You have to apply this to your investment decisions. This is maybe the best way of saying that. So they're really weird. And I think this translates to so many different ah fats facets of life You know, you have to, there was such a good example. I mean, all right, two, two really good examples to this. The first one got to start with, um, roaring kitty on X, where he posted in 2020 before one of his live streams. And he says, Hey, if this is your, if this is your first night at GME fight club, you have to defend the bear thesis. And he called that the eighth and final rule of GME fight club. And he's right. You have to know both sides. You have to know your opposition.
00:11:52
Manny Cray
Uh, if you're just as, if you're passionate ah about the prospects of GME, there are parties that are just as passionate about, um, you know, the downfall of GME. So understand what they see to help you better understand what you see. And the other example I was going to say is Larry Chang had a really cool post.
00:12:13
Manny Cray
And I'm not going to do it justice um or fully remember exactly what he said. But it was something with his Harvard class. He wrote a paper. And his professor said, um redo it. But this time, um redo every page with intention or meaning or something. I can't remember. So then he rewrites the whole thing and makes sure every page um He thinks about every page and and you know edits it with meaning or whatever. And then professor gives him back his paper and says, great, but now go through and give meaning to every single paragraph. So no fillers, like go back through and really think about your stance on this situation or topic or whatever. So he takes in, it's frustrating. He goes through and rewrites the whole damn thing.
00:13:00
Manny Cray
It takes him longer and longer each time. And then he gives it to his professor, and professor professor's like, great, now you know give meaning to each and every individual sentence. So same process, frustrated, what the hell, takes two weeks. Here you go, here's the damn paper again.
00:13:15
Manny Cray
Professors like, rethink, you know, give meaning to each and every individual word. So then it's like, what the fuck? And then but bla bla la it goes through this whole process, submits this paper, feels great about it, has a deep, profound understanding of this topic that he would have never had um on that first paper submission. So what a really cool lesson, right? Professor agrees, it's like, this is incredible. Now, give me a paper with a counter argument.
00:13:43
Manny Cray
And just think about that. That's so cool. That's such a cool lesson to deeply, deeply understand your stance and then to do the same exact thing, the same process with the counterpoint.
00:13:57
Manny Cray
That's important. That's what you should be doing when you're investing. So I've had that idea with this engagement ball with all these different social media platforms. I mean, I'm having more interaction with people that um laugh at the idea of ah people being invested in GME. So hearing their perspectives, getting challenged to critically think through that. And if that changes my viewpoint at all.
00:14:22
Manny Cray
So that's what I wanted to to talk about. it's It's kind of fascinating because I kind of had like 10 ideas for episodes when I started out. And ah now I just kind of keep adding ideas and I just keep pushing out my pre-plan stuff. Anyway, so let's let's get into it. And I'm going to, I know I just ah started off talking about all this precaution.
00:14:43
Manny Cray
and security and stuff, but I also, I don't want to shy away from anything personal. Personal connects us. Obviously I'm not going to say like personal information, but like personal experience on things. And I'm just going to talk through my investment experience. And I'm not sure if this is going to resonate or not, but I think it's just, I think it's a really important story to tell as it will relate to, you know, defending the bear thesis and making sure in the importance of understanding both sides with this story. Okay. So my investment experience, you know, when, when did this start?
Investment Journey: Wins and Lessons
00:15:17
Manny Cray
It's like 2019, I had an incredible DraftKings lineup.
00:15:24
Manny Cray
where I placed like third in a contest for like an NBA contest and won a lot of money for me, still a lot of money. It's like $20,000.
00:15:35
Manny Cray
So really cool. I'm like, okay. Wow. This is how people do it. Like at the time that was like half my salary. I'm like, holy shit. God, I got paid nothing back. But still, you know, like that, that's a lot of money, but you have to have this money. You have to have that start and then you can invest it and make it grow. Um,
00:15:55
Manny Cray
But first, like how much do I owe own taxes? 40 percent. OK, so that's like half of it. So and then how much do we owe for, you know, our other debts? OK, OK, that's another half. All right. Now I've got like five thousand dollars. OK, so that immediately just goes, but hey, not to discredit, ah not to discredit, like putting five K towards debts stemming from, you know, wedding, honeymoon, whatever. That was great. But then ah there's like five K left over after that in taxes.
00:16:23
Manny Cray
which is a huge fall, right? um But still, I'm thinking, let's let's try to learn the stock market. And didn't invest a whole 5K. I was nuts. you know I was just trying to like learn a little bit about this. And I was nuts when it came to investments, because I didn't know what the fuck I was doing. I was thinking, this company could be doing good. They have earnings. Let's see how it shakes out. And it did not go well for me. I did not do good.
00:16:53
Manny Cray
And I just did that with a small amount until ah it was time to pay the tax man. And then just like flat line just didn't touch investments. Then fast forward, I think it was like 2022. You know, I still dabble with the drafting. So that's what this podcast was initially built off of. I was doing a podcast on daily fantasy sports.
00:17:15
Manny Cray
I obviously had some success. um I had more successes as we went. Nothing as big as that payout. Some really close, really close payouts. site I mean, the I think the best moment for me was Humble Brag, I was the sole leader on the Milliemaker contest leading half, actually into the fourth quarter of afternoon games. So I thought I had a great chance. And then, uh, yeah, it just takes, you know, some random person getting two touchdowns and then I fall down to like 20th place. Then, you you know, that you got a million dollars by your name turns into the thousands, like a quick woo.
00:17:52
Manny Cray
Okay. If you're not in there, like top three out of what? Half a million people or something. I can't like 300,000. Anyway, the odds are against you. So I kind of got out of that, but you know, I'd have some success and then in 2022 sometime I'm like, let's just, let's relearn and approach the spot. You know, just learn a little bit more about the stock market.
00:18:12
Manny Cray
So I think I started, and I'm just going to put some money on draft Kings. Cause the stock around then was around 12 bucks or something and not knowing anything. Um, if I just left it at that and just was a patient investor, I mean, it's trading around in the forties somewhere. I'd been like, wow. Okay. But that's the thing. Like, this is what I like about the Zen master because then it's like in hindsight, if you just sat it there.
Patience and Strategic Investment Choices
00:18:38
Manny Cray
You could have four extra cash over two years, um two and a half years, whatever. In the process, learning nothing. And what are the odds you actually held it until this point? What if you sold it when it went to 25? You know, whatever. So just thinking about that journey, right?
00:18:57
Manny Cray
and then some I can't remember how it happened, but bluebird bio got on my radar. And I thought this ticker is really fascinating. You know, I'm looking at this company. um They have really compelling, ah you know, results science behind their gene editing therapy for sickle cell a anemia, sickle cell disease.
00:19:21
Manny Cray
And there wasn't really anything that could treat this that existed today. And gene editing was like a really innovative therapy that we haven't really seen anything of. And this company had ah the first two therapies approved for gene editing before that. So I'm thinking,
00:19:41
Manny Cray
ah This is really cool. And what a cool way to like feel really good about your investment Company that's trying to change lives and learning about I didn't know anything about sickle cell disease But learning about what people have to go through like their whole body It just sounds like their whole body is just painful It's like a poison and just all that discomfort and then layering on the other stuff where it's like that's predominantly a disease that impacts people of color black people and When you think about it that way, like the the resources aren't really as favored towards people of color, black people. So it's like, we need to help. We need to help. They need, they need help. Like we can't have these, um, stereotypes prevent us from helping groups of people. So I was really passionate about that investment. I thought this was going to bring a lot of, um, you know, remedy to a lot of people that were suffering from this disease.
00:20:39
Manny Cray
And they're kind of leading the way. They had one other competitor. Um, this CRISPR, uh, and CRISPR just kind of, I just remember it and just remembering the string cause it's like two years ago.
Gene Therapy Investment Complexities
00:20:50
Manny Cray
So I'm building my bull case for Bluebird Bio. And yeah, their competition CRISPR, their their parent like their partner company was Vertex. And um that gave them a lot of firepower. Like this is a big company that was going to compete with Bluebird for treating sickle cell disease. And looking at what's kind of great about Stocktwits, I remember back then is you're on the blue board.
00:21:17
Manny Cray
And everyone's sharing like these findings, this research, this and that. There was some carryover from time to time with CRISPR and BLU. And we'd kind of poke fun of each other. Like say you suck because of this, your therapy is not good because of that, whatever. And it just kind of forces you to learn about their perspective. I was always very open to that. And that's honestly, it was really good for me to be. And I'll tell you why I dodged a bullet. Spoiler alert.
00:21:42
Manny Cray
But you know at the time you know you're comparing these two companies, you've got CRISPR, um would have to share a portion of their sales with Vertex because of that partnership. Bluebird is sole owner. So they'd get 100% of the sales. ah They had higher rate rated ah clinical results. There was a third party called ICER. I-C-E-R, I can't remember what the acronym stands for. um But they published these results.
00:22:09
Manny Cray
and graded bluebird biotherapy higher than CRISPR. There's also a round longer than CRISPR, so there's more data and information on it. which would look good, you would assume, um from an FDA perspective ah through the approval process. And then, ah they ah because they already had two other therapies that were FDA approved, they had a network of quality treatment centers that um would support this therapy. So they had like faster so speed to market with the therapy and getting that to patients.
00:22:42
Manny Cray
And to seem like, wow, this is a really cool, compelling story. It could impact the lives of many people in need. And I got emotionally attached to it, you know, but I was also like, CRISPR is looking to the same thing. They have more resources. You know, I'm weighing this decision and it came down. Oh, I think it's so crazy. So came down to the end where CRISPR tried to rush and get like a faster FDA approval decision ah before bluebird and A lot of the people in the community were thinking that was going to be to their disadvantage because there's not as much data and information on their product. So um it comes to the week where there's going to be a decision on approval or not approval. And you know engaging in the community, I'm risk adverse. That's my choice. I thought, if I'm wrong, I'm wrong. And I you know just have to watch everybody else multiply their investment.
00:23:39
Manny Cray
um If I'm right, maybe there's a pullback and I can buy back in on the you know lower or whatever. So I just said, hey, this risk is not for me. And, um, yeah, what happened is so, uh, this is crazy. So, uh, CRISPR, their therapy got approved, but at the same time, FDA, yeah because they're going to go through this process with CRISPR and it's a very similar product, um, or therapy with a bluebird, they proved them both at the same time. But here's the key difference. The key difference. Um, bluebird had like a black label. So like a disclaimer on their therapy.
00:24:18
Manny Cray
And CRISPR didn't, which was surprising, because CRISPR was not as much data and information on it. And I can't remember the reason why the FDA give gave. But the other huge thing was because um you know they are the first to treat approved therapy, to treat sickle cell disease. you know They got a priority review voucher, which those are worth a bunch of money. And you use those.
00:24:46
Manny Cray
um You know, in the space as a, if you're developing more products, you can kind of fast track approval for other new innovative therapies. Like if they want to treat a different rare disease in the future, they could use that and like slice the, the review process time in half, like from a year to six months, something like that. I'm, you know, generalizing, but, or guessing, um, but that's the gist. So a lot of times the companies will use those priority review vouchers and sell them to other companies. Like are other large companies.
00:25:18
Manny Cray
that already have all these resources that just need speed of market. um And what what Bluebird did was they they did a presale under the condition, if they get this PRV, they are going to sell it to this other party for $103 million. dollars And that was a strategic press release um that they put out there way before this approval. So if you're looking at that, you're like, wow, this is a, I mean,
00:25:47
Manny Cray
bioscience like this company only had cash runway to survive until like the end of like another three or four quarters or something. So strapped for cash needs money. If they don't get this ah priority review voucher, obviously they're gonna have to um have an offering. They're gonna need cash. So again, that that was just way too much on the line. I avoided that risk. They didn't get the PRV. The competition did. um Share price was around like five bucks.
00:26:18
Manny Cray
And just, I remember there was like, two I felt so bad for everybody. There's two halts down to like high twos. It held around like three for about a week or two weeks or something before then an inevitable offering, which without any leverage, your offering um has to be significantly lower. So if you want anybody to buy your shares,
00:26:41
Manny Cray
Which they sold, what are my notes? This is, I know this is long wind, but I promise you this can all tie in and I hope it helps provide some perspective as we look at GameStop.
00:26:52
Manny Cray
But there were, they sold 83 million shares, just over 83 million, um, at a dollar 50. So half the price of what it was trading at, at the time that was released. So it, you know, sucks its way down again. And the reason why, here's the thing. I mean, I have been following and researching this company for eight months again, not a month, not a lot to, to like seriously be hurt by this, even if I held, but you know, seeing that dip and I was...
00:27:24
Manny Cray
That's, that's what my approach was. I'm, I'm thinking I'm going to avoid this high risk situation. And if it's favorable for bluebird, I'm going to have to consider buying in at a higher price and that'll be my decision to make. And that could be a really good decision. Or if it's not favorable, you know, there could be a pullback and I can buy another lower price too. That could be good too. I didn' decided not to even touch it after that because of that press release that there was a presale on the PRV.
00:27:52
Manny Cray
I'm saying that because as it was revealed, as the approval happened, there was a statement essentially saying by the FDA that they never qualified for the PRV. So that to me immediately changed my perception of Bluebird. I thought their leadership was dishonest. um There's no way in hell they didn't know this therapy didn't qualify for the PRV. So I thought it was misleading to investors to have a presale of something they knew they would never qualify for. So that was my opinion, you know, and maybe there's some other details there that I missed, but I saw that I avoided the risk, um, prior and, uh, never bought back in and now it's trading at like 40 cents. And I even remember and not to, I tried to to share my opinion after.
00:28:43
Manny Cray
you know That first drop, they didn't get the PRV before the offering. I said this was misleading. so Hopefully, somebody saw that and was open-minded to it and avoided that. so All this to say people, you know and deep fucking value said it too, reserve the right to change your opinion. Things can drastically, no matter how involved or invested you are in something,
00:29:05
Manny Cray
always be um keep your head on a swivel just be aware of all the factors that are going on here be aware of the bear thesis because it could be very valuable and right now there fuck there's like nothing nothing on the horizon that could make me think you know i need to drastically change my opinion of GameStop, but, you know, obviously things can change. So that's why I'm saying that.
Confidence in GameStop and Beyond
00:29:33
Manny Cray
Don't take that as, you know, I've got, oh, I got cold feet. I don't have a cold feet. I definitely have zero, zero temperature on my feet. Um, feet are very cozy. Um, so very confident. That's why, I mean, I'm talking about this for 30 minutes already. Um, I'm passionate and like, what is this episode seven or some shit?
00:29:52
Manny Cray
very passionate about GameStop and the prospects here. But again, lessons learned have to understand the other side. So I'm taking some of these conversations and challenges that I've gotten from various social media platforms, and I'm putting them together as a bare thesis, and I want to kind of go through them with you. ah So let's get into it.
00:30:14
Manny Cray
Or, okay, okay just one more one more experience of mine. um After Blue, then what's next? You know, I've learned a lot. I kind of feel like I lost a child. You know, this is crazy what happened.
00:30:30
Manny Cray
um Yeah, so then I looked, I came across, you know, I always had this company on my radar. They were very intriguing to me. And of course you're like kind of ah scanning for the next thing. And Rocket Lab, RKLB, was fascinating. So I did my due diligence, looked in the into the company and decided this looks like really good value. You know, you've got A competitor to ah SpaceX, um but they're kind of like the the FedEx, like the small parcel competitor to to to SpaceX, so smaller payloads, but great looking rockets, high success rate. They only had, is either is for sure, two failed launches out of like 40 something at the time.
00:31:18
Manny Cray
um and they had a huge correction pulled back significantly after their second anomaly that um uh wasn't allowed them to um you know offload their payload or whatever i can't remember anyway so yeah it looked like a really good opportunity and i started going in right around the time um they had their launch after that failure Company learned a lot from them. From that failure, they get a lot of data. Every time there's a failure in rocket science and launches, that's significantly valuable data to learn from, because it doesn't happen often. That's why it's called an anomaly. ah So yeah, really cool company. They're getting contracts. Huge, talking like half a billion dollar government contracts. They're stacking up. Things are looking cool. CEO is a genius.
00:32:11
Manny Cray
Um, based out of New Zealand, it was just a really cool company. So I kind of started to do the same thing. Stock stock twits. I'm like, you know what? I'm just going to go long-term here.
00:32:23
Manny Cray
I'm going to reduce the stakes even more and just not worry about it. It's kind of my idea. Of course, you get involved, you get more interested. I started being risk adverse around like Fed meetings, which, hey, knock on wood again, I avoid another disaster with an offering because of that. It got super lucky. That was completely coincidental.
00:32:46
Manny Cray
And um yeah, pulled back like 25% or something. So yeah, I was just sitting there until Keith Gill came back. And at the time, it I mean, dip down to like 350, back up above four. And then there's going to be a really good point to me telling this story, I promise.
00:33:04
Manny Cray
And then I started getting involved at GameStop after the live stream in June, so I left. um I pulled eventually pulled that investment out in Rocket Lab. And when I look at it today, it's it was like hovering mid-fours back then.
00:33:23
Manny Cray
Uh, just hit like 25 the other day or 24. So we're looking at like a six X return in a very short amount of time. And you would think I am like kicking myself, pulling my hair out. Can't believe it. I mean, that's not the point of investing to me. I don't want this to be, um, earth shattering, life changing. All this, of course I'd love it to be on the, on the positive side, but absolutely not on the negative side. So I start there.
00:33:50
Manny Cray
And um yeah, 6X would be significant. It would have been awesome. However, going back to that DraftKings example, what what would I have learned? You know, and I've learned a tremendous amount of information with GameStop just by being part of this, studying it, that I would never would have gained that knowledge with S6X. And I feel like that's more valuable to me. And that's not me just trying to convince myself. Honestly, I was happy. I was really happy. I saw the the story go the other way.
00:34:22
Manny Cray
for all the investors at Bluebird. And I'm seeing it go in the right way for people at Rocket Lab, or all the people invested at Rocket Lab. And it's it's really cool. It's cool to see that. So really happy for all those people. Hope everyone's stuck with it. And that's the thing. um I can sit here and speculate what I have held the whole time.
00:34:42
Manny Cray
When would I have been like, okay, honestly, I probably would have been, you know, just trying to take the pressure off things probably would have been single digits. I'm like, it's good. It's great. I just need enough with this time to move on and just focus on life um with my, like, the <unk> honestly, we're talking such small games, ridiculous, but it's just fun. It's just fun. And I like to start small. I remember.
00:35:11
Manny Cray
Back in 2019, how cool it was when it was really bad, didn't know anything, but just being really proud of those small victories where it's like, just be proud with winning lunch today. I know we're older and like retirement's unachievable and shit, but like just be proud of that. I got lunch money today. So changing my perspective there, learning a lot.
00:35:35
Manny Cray
I think my um exit strategy has changed a lot, too. um We'll see if that's good or bad. And, OK, now, sorry, sorry, that that was the last pump fake.
GameStop's Strategic Evolution vs Bear Thesis
00:35:46
Manny Cray
So now, um as the Zinester says, good or bad, was it bad? Was it good? Let's find out. you know There's a turn around every turn around every turn. OK, 36, sorry, people. We're going to get into the bear thesis of GameStop. Let's defend it.
00:36:05
Manny Cray
And I've heard a lot of really good arguments. I'm just gonna start with, let's start the easy one, the blockbuster argument. And this is one I see on StockTwits all the time. It's like, oh yeah, how why would anybody ever invest in this company? It's it's blockbuster. And that is so 2020. That's the 2020 bear thesis. Okay, it's completely outdated. So much has changed since then. People, people, people.
00:36:34
Manny Cray
on both sides, on the both side and on the bare side. Evolve your thesis. Always evolve your thesis. don't Don't feel like you've accomplished. You're never accomplished. Evolve, evolve, evolve. And I think we can debunk this one right away um in 2020 even when Ryan Cohen wrote a letter to the board at the time. I mean, his intentions counter that narrative.
00:37:00
Manny Cray
he literally I'm going to pull this up so I can read it. I've got it in this tab. He he literally wrote, and quote, GameStop needs to evolve into a technology company that delights gamers and delivers exceptional digital experiences, not remain a video game retailer that over prioritizes its brick and mortar footprint and stumbles around the online ecosystem.
00:37:23
Manny Cray
so complete counter argument of Blockbuster. That's not their strategic vision to maintain brick and mortar and evolve that experience and completely turn around just that experience. There's a larger strategy at play to get GameStop current with today's time. So GameStop, you know, the Blockbuster game, the bare thesis is outdated. let's Let's move on from that one. And I That's what I'll say too. I'm trying, I'm not going to try to demean any of these points. And if I come across a little passionate about them, that's fine. And I'll also say, God, I should have said this at the beginning, but obviously I don't want anyone's decisions to be influenced by anything I'm saying in this episode. Um, zero financial advice, always, always, always entertainment.
00:38:14
Manny Cray
Okay. So the next, let's keep moving down this bear thesis. Another point in the bear thesis, you know, GameStop has zero competition. I heard this. I'm trying to make sense of this. So, so the idea that there is no competition for GameStop. They're the only nationwide, uh, retail chain that provides You know, gaming, gear, games, video game consoles, accessories, hardware, ah collectibles. They're the only retail, national retail chain that does this. And I think that's just to me, that's that's not an argument because obviously there are national retail chains, multiple, multiple national retail chains.
00:38:59
Manny Cray
that offer all of these ah products and services. Well, I guess not services, if you think about the card grading service. But tons of competition. That one doesn't make sense to me. And I think the the point that the bear thesis is trying to make when you bring this one up is there should be nothing holding GameStop back from revealing ah you know thoughts around their transformative strategy.
00:39:28
Manny Cray
and I've always said that's that should not be an expectation. you should not Investors don't need to know what your strategic strategy is to transform the business. That's a competitive advantage for your competitors. to give It's like like giving your playbook to your opponent before game day. That's how I view that.
00:39:49
Manny Cray
Um, so that went to me to say there's no competition and nothing to worry about and reveal all of your strategic decisions. Uh, that's just, that one doesn't make sense to me. So that's my counterpoint. Uh, so the competitive landscape and now, now looking at, you know,
00:40:10
Manny Cray
looking at previous failures. So the NFT marketplace and that failure. So then putting that as a blemish against Cohen's record, which is fair. Yeah, that's fair. They invested a lot of time and energy into this thing. It didn't work. They had to pull it.
00:40:26
Manny Cray
Um, okay, fair. And to me, I mean, newer, uh, investor to this story, you know, just since June, so I wasn't really part of that. I don't know the details quite as thoroughly as somebody that did live through that. So my perspective is definitely a fair point. However, looking at the landscape back then, you know, the, the relic, regulatory, uh, the reg regulatory challenges and uncertainties, um,
00:40:55
Manny Cray
that put handcuffs on this whole thing. So there's too many challenges ah from from that perspective that that made it not really a viable option. That's kind of why NFTs died so quickly. you know There wasn't a clear way to regulate it and make it a good practice that people could do without harming people um through scams and you know all this other stuff. So part of that makes sense.
00:41:21
Manny Cray
why they added all the plug and all the regulatory regular. That's fucking weird is driving me nuts right now. The regulatory uncertainties. um You know, as we look, we've, we've seen the the upcoming administration seems to be more crypto friendly. So if something was to turn around there, if there was to be more, um, you know, clarity in the space,
00:41:46
Manny Cray
that could turn things around. And if there's a resurgence, they're already invested in this idea. They have some sort of a foundation to build up from it. they'd be Potentially, they'd be ready for it. If that were to change, they'd be ready for it. So for me, that just feels like that's baked in. Personally, it just feels like it's baked in as a failure. um If it turns around, that could be a level up. That's how I view it.
00:42:12
Manny Cray
So I get the bear case there for sure, but that's a bull case. And I think that's something, I think on a lot, of like a lot of these, like some of the other ones, I'll say this less, but on a lot of these, we could speculate all day long. You know, what do you have to add to your speculation? Is one case more compelling than the other? Not necessarily, maybe not, maybe, maybe so, maybe not. Um, but at the end of the day, it's you have three actions. You can either do nothing about it.
00:42:40
Manny Cray
watch the story unfold, or you can bet for and against it. So I don't know. that's I think that's a really good ah debate. So I don't think anyone's right or wrong on that one, um but that's my view of And now and it's like, okay, there's zero kind of I was kind of touching on this, but the lack of future guidance. I see this so often across all the social media platforms. GameStop, nobody knows what their plan is, man.
00:43:08
Manny Cray
Cohen's not doing shit. He's just sitting on all this cash. They aren't doing shit. They gotta let investors know. Let investors know what they're gonna do. And I kind of touched on some of these points where, hey, I think think they are informing investors. Ryan Cohen is informing, and forming and that board, the whole strategic leadership team is informing investors what their plans are, what their strategies are.
00:43:35
Manny Cray
You know, I just read the the release, just read the release on Tuesday, two days ago. It says directly, like word for word. um It says, here's our three core objectives. Our current guidance on these three core objectives. First one is around establishing omni-channel retail excellence. The second one, achieve profitability. And it expands a little bit about how they can do certain things. And then the third one was leverage brand equity to support growth.
00:44:04
Manny Cray
so That's a plan. it's it's Here's our strategy. Here's all of our
Defending Leadership and Strategic Moves
00:44:09
Manny Cray
objectives. Here's how we're planning about achieving these objectives. you know So to me, that is informing investors. That's what GameStop is going to do. So to be upset by that and to call it hypocritical that when Cohen sent that letter to the board in 2020 and demanded understanding of their their objectives, that wasn't evident at the time.
00:44:34
Manny Cray
And here we are today. Cohen is sharing that information to investors. What more do you want from the guy? Yeah, everybody wants to know what the fuck GameStop's gonna do with 4.6 North of $4.6 billion dollars in cash. It's just sitting there. It's making their books um profitable. And they certainly have a plan. Or I guess, okay, okay, bear case, bear case. They might not have a plan.
00:45:03
Manny Cray
ah Cohen could just be sitting on that cash for retirement and is just ready to walk away. That could be that could be a bear case. So that's fair. Another thing you could speculate on. My speculation is based on everything we've seen Cohen communicate, starting back in 2020 in that letter, even before then, ah indicates that he's very serious about this opportunity. You know, he pursued seat as a chairman, um going from an investor with 9% ownership At that moment, I don't know if people thought he was going to eventually just become the CEO. He was just a large shareholder. So going from activist investor to chairman to CEO, he just became CEO last year in September. It's been barely over a year.
00:45:49
Manny Cray
um So, I kind of went down to tangent, but like the point with that one is demanding understanding of what the hell he wants to do with this cash. That's probably the next point. you know ah Challenging Ryan Cohen's leadership and financial strategy. You can't expect him to reveal that. that's that's valuable to your competitors, especially if we have no idea what kind of strategy has been developed across these years. And Cohen hasn't had ah the steering wheel or the resources to implement any of these strategies that they've developed for these years until he became CEO back in September of 2023.
00:46:32
Manny Cray
and Since then, just over a year ago, a year and one month and a half ago, he um right i guess you're in two months or whatever anyway he so established a new investment policy in December, which I thought was significant. so Now they can invest cash in a wide range of securities, including stocks. I've talked about that before. That's very compelling to me, especially when you have so much cash.
00:46:56
Manny Cray
And that's also frightening, um which could be part of the bear case and has been part of the bear case and other articles I've read. So he's established that. So it could be great. Could be risky. OK. Close down hundreds of stores, underperforming stores that have um you know been harmful to the business business. And that is when you look at a transformative period in a company,
00:47:22
Manny Cray
um you're trying to trim the fat of the former antiquated business model. And those are the types of things they're doing. So within year one of CEO, let's ah shut down hundreds of stores. So hundreds of stores underperforming.
00:47:39
Manny Cray
Makes sense. Shut down some European locations, Germany, Italy. They sold, sold stores in Italy. You can see that in the release. I think it was somewhere around 60 million, million, 60 million ish dollars.
00:47:54
Manny Cray
after everything was considered. um so So did that. And established all these offerings to give GameStop this opportunity to have um acquire about $3.7 billion dollars in cash.
00:48:11
Manny Cray
This year. So that's a lot. That's actually a lot. And then the PSA partnership, um, it's, he actually has done and accomplished a lot in his first full year as CEO. And all of this happened before his one year anniversary. And when you think about this cash that was just acquired, it's been six months. Okay. That is unexpected. Acquired wealth, $3.7 billion. dollars They had just under a billion before this.
00:48:39
Manny Cray
They acquired an additional $3.7 billion. <unk>port opportunitye This opportunity existed unless you believe that he's in cahoots with deep fucking value, which would be highly illegal. Highly illegal, which could be a bear case. Maybe there's a thread that's found and they you know there's all these legalities that's something from it. but I highly doubt it. I i just would think they would be very, very careful careful about doing anything like that. or innards If there is ever they ever presented with this idea, they would have quickly stepped away from it. So I personally believe this was unforeseen.
00:49:18
Manny Cray
They saw the opportunity and carried out the offerings, capitalized, and the share price has just gone up since he became CEO. It's like up 20 or 80-ish percent. It's around 14 bucks.
00:49:32
Manny Cray
When he became CEO, now we're sitting at 28, 29 bucks. So and questioning Ryan Cohen and saying he's done nothing. I mean, you're saying he's done nothing for four years is what the bear, what I've been having conversations about. I've been hearing it's been four years. No, it hasn't been four years. He's been CEO for barely over a year. So that's my counterpoint. They're kind of passionate about that one, if you couldn't tell.
00:49:59
Manny Cray
um And when you acquire that much wealth, I'm sure your strategy adjusts a little bit. I'm sure your your strategy, you were going to have this plan like, what's achievable? What's the first step? How do we prioritize?
00:50:12
Manny Cray
and go from there, but when you suddenly have a huge abundance of cash, that's going to change your priorities a little bit. Like, oh, actually, we could speed this up. What if we don't approach this first? Let's go for this one instead, and then we can these other dominoes can fall in place faster. That's what I'm thinking is going on. It's been six months since they've acquired $3.7 billion. dollars so let's Let's pump the brakes there. Come on in, and the board GameStop does not have to reveal what their transformative strategy is. Investors don't need to know that. Investors can trust that it's going to be great, or they can doubt it and invest against it, or you can just watch it unfold. Again, it's all speculation. It's wasted in energy. Wasted energy. You just have to do your own due diligence and figure out how you would like to, um what kind of action you'd like to take or not take.
00:51:05
Manny Cray
So that's your decision. Anyway, that was a long winded one, but that was a really good one. And I think that's compelling, could be compelling on both sides, um but you know how I feel. And the PSA partnership touched on that a little bit. So some view that as a failure or a dying industry. So it could be, it could be, I mean, someone stranger on the internet shared some numbers for me. And yeah, that could be true, but counterpoint, this could create a
00:51:36
Manny Cray
You know, a resurgence in that space because I, even just me, my perspective, I've i've never, my life have thought about getting cards graded. Never crossed my mind could never care about that. But the idea of this becoming kind of trendy and easy to do at a GameStop location.
00:51:55
Manny Cray
OK, I'm calling my mom and saying, hey, where's that Charizard card from like 25 years ago? You know, I'm curious about that. I've got some I've got some great football cards from back in the day. I've got some autographed cards. I've got Jersey cards. I'm going to go get those graded at some point.
00:52:12
Manny Cray
So to say that's a dying industry but potentially, but this is creating, um, it's breathing new life into it. So whether or not it's dying, it's, it's generating income for GameStop. So it's so far, it's been a good partnership. I mean, we'll know more about that as time unfolds. And I'm sure there's like a honeymoon honeymoon period. Um, but is that the end game for him? Just great encourage to have that service. I don't think so. So being more forward looking.
00:52:38
Manny Cray
I mean, bears, bulls, you have to think, is that it? Like, ah do you think this can go further? There's gonna be some digital component tied to it and some other thing that ties back into their NFT marketplace. um And all the possibilities yeah that could stem from that just make yeah know my mind just kind of spin, spin, spin. Bears could laugh at that and say, that's ridiculous. That's ridiculous. NFTs, blah, blah, blah. So, okay, those are some good considerations.
00:53:06
Manny Cray
and yeah so I think this is a really good one to close on um on the bear case. I'm probably missing a bunch, but these are all the like recent memory discussions I've had that have helped me critically think through why I'm a passionate investor in GameStop and why what I should consider to not be.
GameStop's Transformative Potential
00:53:24
Manny Cray
you know so the perfect storm that happened the first time in the first squeeze, hearing this a lot. It's, yeah, well, you had, you know, 200% short interest. You had, um, this perfect storm of the pandemic and that all that stuff will just, that's not happening this time around. So I think that's all fair. That's all really fair.
00:53:52
Manny Cray
But to assume everybody that's invested in GameStop is just hoping for a short squeeze event, that's different. I mean, that's not, I mean, the entire situation is different now. I mean, that's the same argument on the bull side. You're right. It's a completely different situation.
00:54:09
Manny Cray
So my perspective of that is, yeah, I mean, there could be some components of that, where yeah, short interest is what, around 8%. But when you think about everything, ah all the other fundamentals, when you think about GameStop as an organization going through a transformative period, and how people have investing in the old business model,
00:54:32
Manny Cray
um with some speculation on what it could be if they do something so unexpected and profound and completely um blindside industries.
00:54:45
Manny Cray
I mean, that's pretty profound to me. And seeing what Cohen's strategic vision has been for that, what his ideas were, now that he has the capital for that, that is very intriguing to me. So if you completely make something different, here's what it was, here's all these fors and all these against for that thing, and then bloop, evolution, now look at this thing.
00:55:10
Manny Cray
It's a frenzy. It's mania. Just like the first time. just Just like the first time. So I'm thinking about that type of mania. And then you can layer on top of that. I mean, if you listen to the last episode with Always Sad But Truthful, ah he wrote some incredible DD on the GameStop swap. So when you think about ah you know all these cycles, all these swaps,
00:55:35
Manny Cray
the two year swaps, six, six months swaps, all these different mechanics that, uh, anyone who's naked shorting, um, can, can use leverage, you know, leverage ETF, the creation and redemption process, all this stuff, just to hide your short position, just so you can, you never have to close your short position. So if those theories are true, short interest percent is not properly represented.
00:56:03
Manny Cray
Okay. So yeah, that, I mean, if I'm a bear hearing theories like that, I'm probably going to roll my eyes a little bit and nod and just go, okay. But I mean, there is some research out there to support it that, you know, shorts potentially never closed. So if you think about it that way, and if you Make a company become something completely different, and you're stripping away the opportunity for those shorts to ever officially close their positions. Because if you're one of those entities that are you're waiting for that perfect moment for the company to die, to die, to die, to die, it's going to die eventually. It's Blockbuster, all these bare cases, all these points that we just went through. You're hoping for all these things. That's when you're hoping to close your position.
00:56:51
Manny Cray
for a huge profit. So if you steal that from the opposition, you have a brand new company, you're not going to have the opportunity to close like you did with old GameStop. So that's the perfect storm that I'm seeing today. And I could be wrong. I could change my mind.
00:57:12
Manny Cray
That's why we need to understand the bear case. um Defend the bear thesis. I don't know if I necessarily did the best job of defending the bear thesis, but I'm understanding it. And I see both points and obviously I'm passionate right now. But thinking about those examples I shared earlier, I think this is really important because there's so many new investors that fell into GameStop, that's all they know.
Open to Change: Balancing Confidence and Adaptability
00:57:36
Manny Cray
Just be aware things can change.
00:57:39
Manny Cray
Okay. So obviously we're all passionate about GameStop. So many things could change that could completely change our perspective. What if Cohen had to step down for health reasons or something? See what I'm saying? And then like you have who know? I mean, I would trust the board to make good decisions from there, but what if There's a bad actor, there's, you know, what if somebody, who knows? I mean, I'm thinking about heavyweights right now. Remember in heavyweights, everyone's going to fat camp and they're really excited and happy and they always have such a good time at fat camp. And then Ben Stiller takes over.
00:58:12
Manny Cray
um the the found actually the founder in that fat camp was played by Ben Stiller's dad and mom. Sold it off to a new company and comes Ben Stiller here to put everybody um through an intense workout program and get everybody in shape and everyone hates it and it's terrible and it's hell. So who knows? There could be unforeseen things that happened that will change our perspective um for the better or for the worse. So think about my experiences.
00:58:44
Manny Cray
where the bluebird bio, I had passion there and leadership changed my perception. I thought, again, I'm just going to say it again because I think it needs to be said again. I feel like they misled investors um with the pre-sale of the PRV that, hey, guess what? They were never qualified to have. So to show investors that we're going to have $103 million dollars in cash if we get this thing, we've already sold it if we get it, but we're not qualified to get it. Okay, that was shady. But up until that point, I didn't see any shadiness from leadership.
00:59:19
Manny Cray
And here we go. Now this sucks in like 40 cents. Or on the other side, Rocket Labs. Holy shit, compelling and amazing story. Even to this day, I'm still enamored by them. They they had a ah test fire on their new engine, um Neutron. They're going to have a new rocket that can deploy the same payloads as um SpaceX, Falcon 9, or whatever. um So yeah, they're going to try to compete with SpaceX. They came from nothing.
00:59:50
Manny Cray
They're an incredible company too. And that was a really good ending to that story. So think about the extreme on both sides and those experiences I shared. And just be careful. you know I feel very confident. I feel the most confident I've ever felt, but I don't have the best track record. I'm not the person to be listening to. um I've never closed out a green year.
01:00:17
Manny Cray
This is, actually hey, I'm in the green this year. Look at that. ah Not by much, not by much, minuscule. But hey, you know what? um Green is good. And I hope, God, I hope you all like you know can. I hope we all get there ah with a victory. hope I hope that all happens. I feel really good about it. Looking at the bear case, quote unquote, defending it and looking at the bull case,
01:00:44
Manny Cray
this feels really good. I feel really good about this. I'll keep talking about this. I'm going to have more episodes I'm going to want to keep talking about. I have a bunch of friends that I'll keep talking to about this and annoying about this. so i'm i'm very I have a very positive outlook on everything.
01:01:00
Manny Cray
So hopefully you learned something from this defend the bear thesis rule number eight of the GME fight club. Um, I think that's very valuable and apply that to other situations like that Larry Chang example. Think about how valuable that is deep in and further your understanding. Never stop learning, never stop evolving defend the bear thesis and let's have fun and be smart along the way. Bye everybody.