Van Chewie's founder is on the hunt. And he has bought a 9% interest in Gamestop.
Ryan Cohen Introduction
Ryan Cohen's involvement in GameStop will likely change the future of the company forever. On
August 18th, Cohen filed an initial
13D showing 9% ownership of GameStop. He filed an amendment the following day showing 9.6% ownership.
Ryan Cohen founded Chewy's before selling it to PetSmart in 2017 for $3.35 billion. He then exited Chewy in 2018 and according to a recent Forbes
interview in January has been looking for what's next.
In the interview he stated:
his father "was never one to relax and he always needed to be doing something to feel a sense of accomplishment." Cohen says he is the same way, and right now he is trying to figure out what the next "something" will be for him.
Furthermore, Ryan says:
"I look at almost everything that comes to me, but I say no to 99.9% of it. That was true at Chewy too in terms of just programming all of our executives that generally the best answer is no. As Warren Buffet says, the difference between successful and really successful people is really successful people say no all the time."
Ryan Cohen Investments Post-Chewy
According to a recent June, 2020 Bloomberg
article:
When Ryan Cohen sold the pet retailer he co-founded for $3.35 billion in 2017, he had a clear idea of what he'd do with his share of the proceeds.
He plowed virtually all of it-he declines to specify the amount-into just two stocks:
Apple Inc. and
Wells Fargo & Co. This is exactly the kind of thing financial advisers say never to do. Cohen, 34, is not bothered about that. "It's too hard to find, at least for me, what I consider great ideas," he says. "When I find things I have a lot of conviction in, I go all-in."
According to the article, Cohen's Apple stake increased by over 120% and his portfolio returned over 40% during the last 3 years. Perhaps even more interesting is Cohen's inherent contrarianism that DOMO Capital can completely resonate with:
Cohen uses the word "conviction" a lot. He says it's something he learned from his father, who ran a glassware importing business in Montreal where Cohen grew up. "He taught me how to block the noise from the masses," says Cohen. "To have a point of view and have conviction and not waver."
Not only does Cohen appear to focus on conviction and having a contrarian point of view, but he also looks to win big:
Cohen sees both companies as consumer businesses, a type of industry he understands from building Chewy. The online retailer is famous for such over-the-top gestures as surprising customers with birthday cards or custom portraits of their pets. He likens his obsessive focus on building Chewy to his approach to stock picking. "I don't want to swing for a single," he says.
Chewy and GameStop Similarities
The previously cited Forbes
article is rich with quotes from Ryan. Most importantly, what Ryan saw with
Chewy was a way to replicate old-fashioned customer service of a neighborhood pet store online as a differentiator to Amazon. In his words:
Chewy played by Amazon's rules for supply chain, logistics and the convenience of shopping online, but added its differentiator, the old-fashioned customer service of a neighborhood pet store, for its winning strategy.
I suspect that what Ryan Cohen see's with GameStop is a way to
replicate video game hardware/software/accessory knowledge online in a way that will differentiate GameStop's e-commerce business from competitors.
Cohen Will Take GameStop Private <------
The signs are clear, Ryan Cohen will likely take GameStop private. At what price, we do not know, but there is little question that it will happen.
In the Forbes interview in January it was stated:
Since leaving Chewy, Cohen has been looking at investments, both public and private, but hasn't yet seen, or come up with, an idea as good as Chewy.
"Sometimes the best strategy is just to be patient and wait for that," he said.
Furthermore, Ryan pointed out how Amazon has chinks in its armor due to a flood of third-party sponsored merchandise pushing aside organic search results and pushing aside best-selling products. Ryan states how he wants to be involved with a product that connects with customers emotionally. Certainly, as evidenced by the massive rise in e-sports, video games unquestionably connect with an enormous segment of the population.////////////
GME was down 11% on Thurs! To $6.50
The day before after the close earnings--
GameStop reports Q2 adj. EPS ($1.40), consensus ($1.13) 16:08 GME Reports Q2 revenue $942M, consensus $1.02B. Comparable store sales declined 12.7%, adjusting for fewer store operating days due to store closures as a result of the global COVID-19 pandemic. George Sherman, GameStop's CEO, said, "The second quarter saw strong progress toward our strategic initiatives, fueling an 800% increase in global E-commerce sales, a $133.7 million reduction in SG&A and a significant improvement in our balance sheet with $735.1 million in cash at quarter-end and a 50% reduction in inventory, as compared to the second quarter last year. These achievements combined drove $181.9 million in free cash flow for the quarter. I am extremely proud of our team, and their dedication to our mission, our strategy and safely serving our customers despite operating in an unprecedented environment."
GME- Stk is $6.00 and the question is at what price would they go provate I've always had a tough time analyzing the motivation of these situations if you own a lot of stk is it bettter to go private at a higher or lower price... especialy when you are going to wind up with everything.
The stock was over $1 higher when the announcement of the gathering of shares bythe Chewie foundwr so we can at lesast look to that top in the $7.25 area as an height ehich the take private will be over... --> So Upside of $1 to--->? What do you think Van...
