Michael Burry, the contrarian investor who became a household name after successfully betting against the U.S. housing market before the 2008 financial crisis, disclosed Monday that he has been quietly building a position in GameStop, sending shares of the one-time meme stock darling soaring more than 8 percent in heavy trading.

In a Substack post that sent shockwaves through trading desks and retail investor communities alike, Burry wrote simply: "I own GME. I have been buying recently. I expect I am buying at what may soon be 1x tangible book value / 1x net asset value."

The Investment Thesis

Unlike the frenzied speculation that drove GameStop to stratospheric heights during the legendary January 2021 short squeeze, Burry's interest appears rooted in old-fashioned value investing principles. He praised Chairman Ryan Cohen's transformation of the struggling video game retailer, framing his investment as a long-term bet on leadership rather than a momentum play.

"I'm getting a young Ryan Cohen investing and deploying the company's capital and cash flows. Perhaps for the next 50 years," Burry wrote, drawing an implicit comparison to the kind of patient, compounding returns that made Warren Buffett a legend.

His assessment of GameStop's current situation was characteristically blunt: "Ryan is making lemonade out of lemons. He has a crappy business, and he is milking it best he can while taking advantage of the meme stock phenomenon to raise cash and wait for an opportunity to make a big buy of a real growing cash cow business."

A Redemption Trade

For Burry, this investment carries a particularly personal dimension. He revealed that he sold his entire GameStop position in late 2020, missing the epic short squeeze by mere weeks. At the time, he held roughly 3 million shares with a cost basis around $3.32 per share, exiting when the stock hit the mid-teens.

Had he held through the January 2021 frenzy, when GameStop briefly touched $483 per share, his position would have been worth well over $1 billion. Instead, he walked away with a solid profit but missed what would have been one of the most spectacular gains in market history.

"I've thought about GME for years since I sold too early. But for years the stock has had way too much premium versus NAV. And I always think of stock prices as premiums to, or discounts to, value."

- Michael Burry, Scion Asset Management founder

Trading Volume Goes Parabolic

The market's reaction to Burry's disclosure was immediate and dramatic. By noon Eastern Time, more than 11.9 million GameStop shares had changed hands—more than six times the typical volume at that time of day. The stock closed up 8.3 percent at $34.82, adding roughly $750 million to the company's market capitalization.

Options activity was equally frenzied, with call options volume outpacing puts by more than 3-to-1 as traders rushed to position themselves for potential upside.

GameStop's Transformed Balance Sheet

The GameStop that Burry is buying into today bears little resemblance to the struggling brick-and-mortar retailer that first caught his attention. Under Cohen's leadership, the company has executed a series of equity raises that have built a formidable cash position, while also making unconventional moves into cryptocurrency.

GameStop now holds $519 million worth of Bitcoin on its balance sheet, making it one of the largest corporate holders of the cryptocurrency alongside MicroStrategy and Tesla. Over the last nine months, the company has generated $410 million in free cash flow—a remarkable turnaround for a business that many had written off as a dying relic of the pre-digital gaming era.

What It Means for Investors

Burry's track record demands attention. His bets against subprime mortgages in the mid-2000s earned his fund over $700 million and cemented his reputation as one of the most astute contrarian investors of his generation. He has since made profitable calls on water rights, farmland, and various market dislocations.

However, his record is not unblemished. He has been early—sometimes painfully early—on numerous trades, and recently closed his hedge fund Scion Asset Management to focus on personal investments. His GameStop stake appears to be part of this new, more personal approach to investing.

For retail investors who still hold GameStop shares from the meme stock era, Burry's endorsement may provide some validation. For others, it serves as a reminder that even the most reviled stocks can attract serious capital when valuations become compelling enough.

As one Wall Street analyst noted: "When Michael Burry shows up, it's usually worth paying attention. He's not always right, but he's rarely boring."