How Ryan Cohen’s Investing Skills Can Help GameStop Thrive Like a Mutual Fund – Investopedia

GameStop’s Momentous Move: CEO Ryan Cohen Gets to Oversee Equity Portfolio

GameStop Corp.’s board of directors continues to make dramatic changes, most recently allowing the company to invest in equity securities and granting authority to CEO Ryan Cohen to oversee the investments. Analysts have pointed out that the decision signals to shareholders that GameStop management believes investing in other companies’ stocks is better than buying back its own shares, while others view Cohen’s record as an activist investor as a potential boon to the company’s portfolio.

What Does This Policy Change Mean for GameStop?

GameStop’s new investment policy marks a dramatic shift in the company’s financial strategies. Typically, transactions involve marketable securities such as bonds, certificates of deposits, mutual funds, and other items that can be easily liquidated and converted into cash. This move to invest in equity securities, however, is highly unorthodox and has been met with alarm from several analysts. Furthermore, this decision can signal to shareholders that GameStop management believes investing in other firms’ stocks is preferable to buying back its own shares—a dangerous position to take.

The Role of Ryan Cohen

Given the unusual nature of this policy change, shareholders and analysts alike have paid close attention to CEO Ryan Cohen’s previous investments. As the founder of pet supplies e-commerce site Chewy, Cohen successfully raised the company’s profile and annual sales before selling it to PetSmart for a reported $3.3 billion in 2017. Since then, Cohen’s successful investments have included Apple Inc. and Wells Fargo & Co., both of which have seen significant gains since the time of his purchase.

Most recently, Cohen also purchased a stake in GameStop totaling approximately 13% of all outstanding shares. After skyrocketing during the meme stock wave in 2020 and early 2021, shares have since fallen to just slightly above the price at the time of Cohen’s investment. Additionally, he made a 9.8% acquisition in Bed Bath & Beyond, selling his $120 million investment for a profit of approximately $60 million within five months.

Conclusion

GameStop’s shift to an equity securities portfolio continues to make headlines as CEO Ryan Cohen looks to utilize his track record of successful investments as a potential boon for the company. While analysts have criticized the move, and some believe it signals a position of GameStop management taking bets on other stocks rather than its own, the new investment policy may prove to be a lucrative one.

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