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BBBY Stock: Did GameStop Chairman Ryan Cohen Anticipate the Rally?

GameStop Chairman Ryan Cohen's mega-bullish investment in Bed Bath & Beyond a few months ago seems to have anticipated the massive rally in BBBY.
  • GameStop Chairman Ryan Cohen's investment in Bed Bath & Beyond has many similarities to his GameStop acquisition.
  • Cohen is still in the $60- to $80-per-share call options expiring in January 2023.
  • BBBY comprises only a small percentage of Cohen's portfolio.
Figure 1: BBBY: Did GME Chair Ryan Cohen Anticipate the Rally?

Figure 1: BBBY: Did GME Chair Ryan Cohen Anticipate the Rally?

Who Is Ryan Cohen?

Ryan Cohen is one of the most influential personalities among retail investors who bet on so-called "meme stocks." Irreverent and not opposed to risk, Cohen, the founder of Chewy  (CHWY) - Get Chewy Inc. Class A Report, is an activist investor with a successful track record.

His fame among meme-stock investors started with a bold investment in GameStop  (GME) - Get GameStop Corporation Report in September 2020. Cohen bought nearly 10% of the company and increased his position in December to 12.5% — before the massive short squeeze of January 2021.

When making his investment, Cohen expressed interest in being more involved with the company in order "to produce the best results for all shareholders." This led to his position as GameStop chairman.

Interestingly, in 2019, "Big Short" investor Michael Burry bought a sizable position in GameStop after considering the high short interest in the stock and realizing that the business was undervalued.

Burry even sent letters to GameStop management, recommending the repurchase of $238 million worth of shares.

However, Burry failed to anticipate "meme mania" and sold his position in the fourth quarter of 2020.

Cohen, on the other hand, hasn't sold any of his overvalued GameStop shares, instead buying even more in March of this year.

Did Ryan Cohen Buy BBBY?

In March, Ryan Cohen bought a 9.8% stake in Bed Bath & Beyond  (BBBY) - Get Bed Bath & Beyond Inc. Report. And, as with GameStop, he has expressed interest in being actively involved in the company's decision-making.

Like GameStop, Bed Bath & Beyond is a retailer with fragile business fundamentals. It has also been heavily shorted by bears.

BBBY shares fell nearly 70% after Cohen's investment. But in the last month, thanks to the stock's popularity among meme investors on Reddit, shares have rallied more than 400%.

Perhaps Cohen is better than anyone at dealing with meme-stock investors. And he may have had a stroke of genius by predicting that what happened to GameStop in 2021 would also happen to Bed Bath & Beyond.

What Else Does Ryan Cohen Own?

Cohen also bought BBBY option calls expiring in January 2023 at an exercise price between $60 and $80 per share. (Keep in mind that Cohen bought his BBBY shares at an average price of $15 per share.)

Recently, Ryan Cohen disclosed that he was still in his call options:

This super-bullish bet reveals how confident Cohen was that a massive surge in Bed Bath & Beyond shares would occur.

It's worth noting that Cohen's stake in Bed Bath & Beyond comprises only a small percentage of the portfolio of RC Ventures, his holding company.

His BBBY investment is worth about $154.4 million, roughly 10% of the total market value of the firm's investments. The rest of the firm's portfolio is in GameStop, of which RC Ventures owns $1.516 billion worth.

Outside RC Ventures, Cohen has other holdings. After the $3.35 billion sale of Chewy, Cohen invested a large part of his fortune in Apple  (AAPL) - Get Apple Inc. Report.

He is now that company's largest individual shareholder, with 6.2 million shares — comprising about $1.6 billion in net worth.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not influence editorial content. Thanks for supporting Wall Street Memes)