🤑 I sold some of my shares of GameStop $GME last Friday 𝙛𝙤𝙧 𝙥𝙧𝙤𝙛𝙞𝙩𝙨 𝙖𝙫𝙚𝙧𝙖𝙜𝙞𝙣𝙜 𝙖𝙗𝙤𝙪𝙩 𝟭𝟬𝟬𝟬% after I've been holding this stock since September 2019.
🧺 The main reason why I sold is because GameStop reached over 40% of my portfolio and 𝙄 𝙝𝙖𝙫𝙚 𝙖 𝙧𝙪𝙡𝙚 (learned from one of Warren Buffett's old partnership $BRK.B letters) not to put more than 40% of one's portfolio in a single stock.
🧪 But I also sold because of valuations. Let's look how the 𝙘𝙖𝙩𝙖𝙡𝙮𝙨𝙩𝙨 changed since I've been investing in GameStop:
September 2019: Cigar butt stock, activism from Michael Burry, console cycle
April 2020: Cigar butt, pure value stock, Short squeeze, cycle
September 2020: Value, cigar butt, cycle, activism from Ryan Cohen
January 2021: cycle, short squeeze, activism from Ryan Cohen, speculation
💸 Despite the short squeeze which I predicted more than a year ago happening, it is being fueled by 𝙨𝙥𝙚𝙘𝙪𝙡𝙖𝙩𝙤𝙧𝙨 𝙛𝙧𝙤𝙢 𝙒𝙖𝙡𝙡𝙨𝙩𝙧𝙚𝙚𝙩𝙗𝙚𝙩𝙨 subreddit. GameStop is not a value stock anymore and it has exceeded its intrinsic value. As a value investor, I have to take profits.
🐶 For the time being, we don't know the 𝙚𝙛𝙛𝙚𝙘𝙩𝙨 𝙤𝙛 𝙍𝙮𝙖𝙣 𝘾𝙤𝙝𝙚𝙣 on GameStop yet. We cannot account this on the intrinsic value of GameStop. I still believe in GameStop long-term but at current price, the expected returns in 5 years (with the information we have) is negative.
🩳 Why didn't I take all profits? It is because of market sentiments. We have a 𝙨𝙝𝙤𝙧𝙩 𝙨𝙦𝙪𝙚𝙚𝙯𝙚 happening. It will probably continue for sometime. My average buying price of GameStop is less than $4, so I can afford to keep riding this wave and gradually take profits. It is more likely that we're going to see a fast short squeeze like the one with Volkswagen $VOW3.DE in 2008 than with the ongoing RH $RH short squeeze.
Watch the full video on YouTube:
Here’s the full analysis of GameStop:
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