Meme-stock billionaire Ryan Cohen explains why he bet on GameStop and dumped Bed Bath & Beyond in a new interview. Here are the 10 best quotes.
- Ryan Cohen reflected on his GameStop bet and explained his sudden sale of Bed Bath & Beyond stock.
- The GameStop chairman underlined the difficulty of modernizing the ailing video-game retailer.
Ryan Cohen has explained his contrarian GameStop bet and underscored the difficulty of revitalizing the video-game retailer. He also revealed why he dumped his nearly 12% stake in Bed Bath & Beyond in August, only seven months after building it.
The GameStop chairman and Chewy cofounder, known for being an activist investor and meme-stock specialist, cited Carl Icahn and Warren Buffett as key influences. He emphasized the impact of higher interest rates on investors and called out overpaid bosses during a recent interview with GMEdd, a website that collates research from GameStop's retail investor base.
Here are Cohen's 10 best quotes, lightly edited for length and clarity:
1. "I invested in GameStop because I thought it was cheap. I thought the intrinsic value of the business was worth more than the price that I paid. There was a tremendous amount of skepticism around GameStop, and those are the things that I like."
2. "Chewy was like a new construction. We built the business from the ground up, knew the business inside and out. GameStop is different, we inherited a bunch of legacy everything, and underinvestment across the entire business — people, the entire technology stack — just decades of neglect. It's hard to turn around a brick-and-mortar retailer that's under the kind of pressure that GameStop was and continues to be under." (Cohen said he was motivated by the challenge of transforming the company.)
3. "There's no amount of money that can get the kind of branding that we got. It made the company world-renowned, it brought a lot of attention. It was hugely beneficial for the GameStop brand." (Cohen was referring to the media frenzy when GameStop became a meme stock and skyrocketed in value at the start of 2021.)
4. "Chewy almost killed me. I didn't want to put myself in the same position, in terms of just the level of sacrifice that's required to be the CEO." (Cohen was explaining why he decided to become GameStop's chairman instead of its CEO.)
5. "My views of the business clearly changed. I was highly critical of the strategy in the letter that I put out. It's rare to see a company go from aggressively repurchasing shares to losing a lot of money. When I saw that, and I saw the results, my views changed of the business and ultimately I sold." (Cohen was detailing why he sold his Bed Bath & Beyond stake, dashing shareholders' hopes that he would lead a turnaround of the homeware retailer.)
6. "There's a lot to learn from Carl Icahn. He is the OG activist, and he's been doing it for a heck of a long time. I have a hybrid approach, I'm ready to go activist if the opportunity is right. But I could sit on my hands and invest in a great business with a competent management team, the way that Warren Buffett does it, and let your capital compound for you. I'm pretty agnostic in terms of what the approach is, whether it's activism or passive investing." (Cohen spoke before Bloomberg reported that Icahn has a short position in GameStop.)
7. "Higher interest rates are a game changer. It's changed how we allocate capital at GameStop, and that's not just GameStop specific, it's every single business."
8. "Before, you had 0% interest rates so there really was no discount rate, and there really wasn't much of a difference between long-term cash flows and short-term cash flows. Now you have a real discount rate, you've got the 10-year Treasury north of 4%, so the value of short-term cash flows is much greater than long-term cash flows." (Cohen was explaining that higher interest rates make it more appealing for investors to earn money today instead of years from now, as they can invest it for a sizeable, virtually risk-free return.)
9. "I don't understand what's going on in Corporate America. It's a whole other world. It's like "Looney Tunes", it's some kind of Fantasyland or sick dream. It doesn't make any sense to me." (Cohen was criticizing executives who collect huge paychecks even when their companies and shareholders are losing money.)
10. "I think I'm the same as when I was 7, 17, or 27. I'm 37 today, I haven't really changed. I'm still a kid, still pretty immature. I have a pretty strange, dark sense of humor, and I don't plan on changing."
Read more: Activist investor Ryan Cohen lays out the crucial skills he learned from Warren Buffett and his father, and explains why he's all-in on Apple
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