Famed investor Dr Michael Burry announced recently that he had received a subpoena from the US Securities and Exchange Commission as part of its investigation into the gaming retailer GameStop. 

Burry, who rose to prominence after correctly forecasting the collapse of the US housing market in 2008 and was played by Christian Bale in the film The Big Short, said in a since-deleted tweet: “So, who got an SEC subpoena over $GME? Actually, I know who, they’re on my subpoena. With all that's going on in the world…”

The bricks-and-mortar retailer was heavily shorted by hedge funds as the Covid-19 crisis unfolded. It came to dominate headlines at the start of 2021 when a group of retail traders mounted a successful campaign to squeeze Wall Street’s short positions. 

Between 1 and  29 January, GameStop saw its stock jump from $18.84 to a high of $483, around a 2,000% increase. So great was the shock that Melvin Capital Management, one of the company’s with the largest short positions, reported a first-quarter loss of 49%. 

Burry an early GME believer

In addition to a general anti-establishment fervour and its potential as an e-commerce giant, those redditors who made the case for GameStop in the early days of the push frequently pointed to the fact that Burry also liked the stock. 

In August 2019, when GameStop traded at below $4, Burry outlined his confidence in the company. The former doctor argued that the company’s “balance sheet is actually in very good shape”, adding: “I believe they will have the cash flow to justify a much higher share price.”

By the end of September 2020, Scion Asset Management owned a 2.4% stake in GameStop. 

Burry is not thought to have capitalised on the freak rise in value triggered by the volatile short squeeze, however. In January of this year, he argued that matters had gone too far, calling the rally “unnatural, insane and dangerous”.

Stressing his discontentment with being dragged into the SEC investigation that followed the furore, Burry instead called for the regulator to focus on the dealings of the current speaker of the US House of Representatives. He posted in a Tweet: “Maybe for stock tips go to someone the SEC can’t harass and tax 2x a year. TikTok Users Watch Nancy Pelosi For Stock Trade Tips From Congress Disclosures.”

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By noon (EDT), GameStop traded 3% higher at $190.65, up 1,005% since the start of the year. 

Further reading: GameStop stock prediction: is GME a good stock to buy?