Declaring victory is an art.
Neither Gabe Plotkin nor Keith Gill understands victory.
Neither understood humility for that matter.
The stock market, at times, is nothing but a weighing machine, not of the long-term worth of the company - sorry Mr. Buffett - but of the short-term casualty of hubris and greed.
Bears make money, Mr. Plotkin, Bulls make money Mr. Gill, but hogs get slaughtered.
I was fascinated by the Congressional hearings as so many of you were. I do get tired of hearing how everyone grew up poor. Give me someone who descended from the Speedwell for heaven's sakes.
But what I found most salient wasn't whether Robinhood sided with anyone - they colluded with their app from what I can tell, not with Citadel - but the piggish nature of the antagonists.
There's Gabe Plotkin from Melvin Capital proudly boasting about being short GameStop (GME) since 2014. There's the Kitten talking about how he still believes in the story.
Oh my.
Plotkin had one of the greatest homeruns of all time when he nailed that GameStop's model was about to be upended by direct to consumer.
But he turned it into a triple play - almost unassisted because of events, but egged on by Wall Street Bets people -and he didn't seem contrite about one of the biggest mistakes in investing history: too greedy to take the win.
Gill? He's long and he's not going away even as he had $300 to $400 in his grasp. IN HIS GRASP! There might never be a bigger win. More power to him that he figured out that you could break the shorts simply because of the inability to find a "borrow" of stock at any price that was cheap enough to maintain the shorts.
Let's deal with the matter at hand. GameStop is like a handful of retailers still in the mall: specialty companies like Williams-Sonoma (WSM) or Tumi or maybe even Foot Locker (FL) . In each case they sell something that can be bought there or bought on-line. In each case they are going to be survivors but they are challenged in their own way. Tumi, a small specialty store, needs to become bigger than it is but for that it must come public and buy someone else to become the mall based tourist store which is actually needed.
Williams-Sonoma is disrupting itself with its different divisions now largely being driven by on-line. It is the best transformation I have seen of its sort and would be a terrific template for GameStop. Foot Locker is being exposed as a company that, like GameStop, is not a channel that the merchants like. But there is no hardware component here.
GameStop could transform itself by abandoning the small store format and move into the myriad vacancies in the same mall. They would have to negotiate many leases and get generous buildouts. In the end, though, they have to figure out what merchandise to sell once the gaming pipe is filled. Plus, they have to be careful not to follow in the trap of the end of the pandemic, as Take-Two (TTWO) is now after a fantastic quarter.
So the question is, did Melvin walk the mall. Did he not see how it could be done and realize there was a path -William-Sonoma or a bigger Tumi - and that path could be taken if the people from GameStop hadn't gotten such bad legal advice that it was okay for insiders to sell but not the company itself?
Did Gill not see that any plan that the now invincible, magical Ryan Cohen could come up with would never get the stock to $300 and that shorts to go bust alleviating the pressure upward? Did he really think that GameStop had the money on hand to expand to adjacencies? Did he honestly know retail at all? Or was it all from the percentage short which meant there was a price to declare victory at?
We can rail all day against Vlad Tenev or decide that stocks are stonks, and YOLO is an investment advice and rocket ships signify the distance stocks can travel.
Or we can just say, guys, declare victory and go home. Oops, too late. Hogs got slaughtered and one of them still doesn't even know it yet.
(Take-Two Interactive is a holding in Jim Cramer's Action Alerts PLUS member club. Want to be alerted before Jim Cramer buys or sells TTWO? Learn more now.)
