- Joel Greenblatt’s fund sold almost all of its GameStop and AMC shares before the meme-stock boom.
- Gotham Asset Management owned as many as 1.2 million GameStop shares and 550,000 AMC shares.
- The value investor could have raked in $US400 ($AU555) million if he hadn’t slashed those holdings.
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Greenblatt is Gotham’s investing co-chief and teaches a value-investing class at Columbia University. His fund first bought into GameStop more than a decade ago, and grew its position in the video-game retailer to 1.2 million shares worth $US41 ($AU57) million at the end of 2014, regulatory filings show. However, it slashed that stake to fewer than 17,000 shares by the end of 2020.
Gotham exited the position in the first quarter of this year, potentially selling its remaining shares for north of $US5 ($AU7) million during the short squeeze. However, if it had kept its 1.2 million shares and sold them when GameStop’s stock price hit $US300 ($AU416) in January, it would have pocketed $US370 ($AU513) million. If it had declined to sell, the stake would be worth $US200 ($AU277) million today – an almost five-fold gain in under seven years.
Greenblatt’s fund also lost out on AMC. It owned around 550,000 of the cinema chain’s shares worth about $US9 ($AU12) million in mid-2018, but steadily reduced that position and only had 7,000 shares left as of June 30 this year. Left intact, its stake would have fetched as much as $US34 ($AU47) million in June when AMC’s stock peaked, and would be worth about $US20 ($AU28) million today.
Gotham’s entire US stock portfolio was worth $US2.4 ($AU3) billion at the end of June, and its largest positions were a $US52 ($AU72) million stake in Microsoft and a $US43 ($AU60) million stake in Amazon. As a result, a $US400 ($AU555) million windfall from GameStop and AMC would have significantly boosted to its performance.
Greenblatt wasn’t the only value investor to miss out on the meme-stock boom this year. Bill Miller’s fund, Miller Value Partners, owned 1.7 million GameStop shares at the end of 2015, but sold over 90% of them by the end of 2020. Its stake would have been worth over $US270 ($AU375) million today.
Similarly, Michael Burry – the investor of “The Big Short” fame who started his Scion Capital hedge fund in 2000 with seed money from Greenblatt – invested in GameStop in 2019, helping to pave the way for the short squeeze this year. He built his stake to 3.4 million shares by April 2020, a holding worth $US560 ($AU777) million today. However, he exited the position in the final quarter of 2020.