This Is What Happened to the GameStop Mania

to stand out because that's where it started. So the two big ones were I think Game Stop and am I mean there were others, but those were like the two big ones. And I have to say, like my heart was always a little bit more with the Game Stop one because really, yeah, absolutely, because I always thought like, well, there was at least like a sort of like there was a thesis that had long preceded the boom, there was a catalyst with the stake held by Ryan Cohen,

the Truy founder AMC. It was just like a little too nihilistic for my take. Well, Now, first of all, Ryan Cohen came in kind of late, I would say to you know, after a lot of this had already happened, but I was always partial to AMC just because I really like going to the movies. I like that people were throwing money at it at a time when it wasn't really clear if it was going to survive. Whereas games Stopped, game Stop just seemed like another brick and

mortar video game retailer. Right, but okay, we're gonna keep

arguing about this. But with game Stop, there was like a crew of people who are the AMC thing sort of came out with nowhere, so all through long before the spike, and like January and February, there was a community of people putting together this idea that there was something that the market misunderstood game stuff, that the market viewed this as a brick and mortar retailer in terminal decline eventual zero, and at least there was some contingent

of people who thought it wasn't going to be that and be the whole sort of like short Squeeze engineered on Wall Street bets was like a game Stop thesis originally, like that that the fame As post was about, there is an opportunity in game Stop. Specifically, I remember having this argument with you last year, which was was it purely a technical squeeze or was there some sort of fundamental bowl story embedded in Game Stop? And I mean,

I gotta say so. Obviously, the share price has come down quite a lot since early However, looking at it now, it's still above a hundred dollars per share. It's almost a hundred thirty dollars per share compared to around like fifteen dollars when we started. So even if it was a technical squeeze, something has changed and someone in the market clearly sees more value there. So in in summer, like a five dollar stock, then it rocketed to like

fifty so seventy bagger in a few months. It has come way down, but it's still at so well ahead of where it was pre squeeze. So the question is like, what's going on? Is there something real did actually happen? And what what all happened at games right? And how did the meme stock frenzy actually feed into that? Did it actually have a fundamental impact on the company the

health of the company itself? All Right? So today we're going to be revisiting Game Stop, and we are going to have a guest back who he had on Early one last time. But also he was one of the true Game Stop long so he didn't just come in at the peak, like you know, he's not just apen to it. He had a thesis, here's a ball. He argued for many months that it was a misunderstood stock, and he made a lot of money. And we're going

to revisit the game Stop story. We're gonna be speaking with Rod Alsman, who is the managing director of Wook Capital and he's the co founder of gm E d D dot com, which sort of has long catalog the long Game Stopped thesis. So Rod, thank you so much for coming back on odd lots. Thanks for having me back. A lot less stressful recording it today than when we

recorded it at the peak of the mania. Those were a while times because I think like we recorded an episode and news broken in the middle, or like you know, we were talking to you, right, we were talking to you and something happened in the middle of the conversation and it was like it moved fifty I don't remember what it was because at that time was so crazy, But those were fun times, doesn't right, I mean, it was stressful, but it was fun, right, Both all of

the above. Maybe maybe just to begin with, you could give us, uh, just remind us, like, what was it about game Stop that you thought was misunderstood before early before all of this happened. Yeah, Tracy all kind of rehash and summarized my experience with the company. So Joe said months it was years for me. I had begune

accumulating a position. In late I received the company is a value play at that point in time, I thought that there was plenty of opportunity for them to generate cash flow both in the near term and through the next video game cycle, which was still a few years out. At that point, I was very early the stock. Uh. A lot happened from an activist perspective in the stock between ten and Tiger management wrote the company a letter

encouraging they do a strategic review. They ended up selling off their cell phone retail business that they had bought, as that was their attempted means to diversify away from physical gaming. It was a poor decision earned some capital that way, but regardless, they almost sold the company to Apollo or Sycamore. Bloomberg and Wall Street Journal reported in late early twenty nineteen that fell through they didn't sell the company. It was sixteen bucks to share at the

beginning of twenty nineteen. UH new management team comes in and they slashed the dividend to zero. Long story shot. By August of nineteen, the stock has fallen down to about three bucks from sixteen. That's the time that I think a lot more people became aware of this idea that it's not just in terminal decline or at least there's enough opportunity at three dollars per share to get

a reasonable rate of return. Michael Burry wrote the board a letter and they had an authorization effectively that they could repurchase eighty percent of the shares outstanding with their existing cash on hand. So like when people actually look at the balance sheet, it just didn't make any sense the way that the market was pricing it. I think it was um some forced selling from when they slashed

the dividend of zero blah blah blah. Fast for us into twenty we all know that COVID doesn't happened, and and then we get to August of twenty when Ryan Cohen files his first third ten D and that's when things just go into hyper drive and UH, a lot happened between August and January one. But there, you know, there are points at which the company had a net cash position of five bucks to share on its balance sheet and it was trading at three bucks to share.

So it's you know, you had cell side analysts putting a price target of a dollar sixty um like stuff. That just didn't make any sense to me, at least

clearly it made sense to some people. Um. And and then of course you can't talk about it without discussing the fact that you know there was a very large short position in the stock that that was correct for many years, right, Melvin Capital is the most well known who initiated the short and teen Obviously I'd love to talk about disclosure through this conversation a little bit, but we know that they were up plus but for whatever reason, they felt that their risk reward was worthwhile to keep

the shore on even when the stock traded at a meaningful discount connect cash and the rest is history. So you mentioned the analyst price targets there, and I mean, even now a lot of people are quite bearish on the stock. But what was what was the bear case here? What was it that people thought Stop was getting wrong?

I think the simple Bear case was that, by virtue of being primarily a purveyor of physical video game software products and specifically used products to drive the bulk of their gross margin, as those profit streams evaporate, and the Bears would argue more quickly than than I think the bulls uh that as that disappears, there's simply no way to replace that lost profit, and it will be structurally incapable of generating meaningful profits into the future. I do

think that they missed what happened in twenty nineteen. You know, we talked about it last time that Tyke Kim interviewed Mike Burry and nineteen talking about the fact that the Xbox series X the PlayStation five will have disc drives, and inherently, um, I think his perception, my perception was they have at least one more cycle that they'll have meaningful physical video game sales, and even as that pie continues to shrink for the physical portion, there's still an

opportunity for them to generate meaningful free cash into you know, late twenties when the next video game cycle comes around, and who knows, right if the next Xbox or PlayStation will have a disk drive, but in twenty nineteen it was made clear that they would. I think Bears felt like consumer demand for digital would be far larger than physical.

Um though, if you look at the production numbers, and I think everything that I've seen reported is that the mix of physical for example, PlayStation, it's I've seen anywhere from seventy of the actual consoles are the physical console as opposed to the digital only console without a drive. So not that everyone buying those physical consoles only buys physical discs, but that optionality and there is real value there.

You know, if you buy a game for sixty bucks and you decide I don't love it, well, if you paid it for a digital download, you have no residual value, whereas you could otherwise sell it back treated in have some economic value there. That's interesting. I hadn't thought about that. So in theory, like part of the turnaround plan, and we're gonna get to what Ryan Cohen and management have

done over the last year and a half. But you know, in theory, like part of the turnaround plan is okay, they're gonna get into n f T s and digital and be something more than a brick and mortar retailer. But the argument that you're making is that people just mistakenly assumed brick and mortar physical CDs were zero and when you look at the because of you know, that's

just what everyone assumes these days. But when you look at actual gamer behavior, what they're actually spending, how they're spending, where they're buying, that was just a mistaken assumption. Is that a mistaken assumption? Still, like, what is the value of just sort of the good old fashioned game stop, walk into a strip mall location and buy a disk? If you think about on its face, why is there any value to buy it from them, us anyone else?

And and there isn't. Uh That said, my experience, and from my research, the experience of most consumers who engage with them, is that, look, why is there any specialty retail right? Why doesn't Amazon and Walmart and targets split

the entire market? Well? In Game Stops case, the finding, or at least what the company reported, I think it was in twenty nineteen one of the calls, they disclosed that uh, physical game products or gaming products they sold at a two x attached rate to the big box retailers, the generalists and accessories they sold at a three x

attach rate. So on this era of direct to consumer, right, if you're a if you're a Sony or Microsoft, sure you'd prefer to own the direct consumer relationship and sell without even giving any cut of the margin to the retailer. But in the case of game Stop, from that uh, you know, from that distribution angle, they're they're the best

distributor that the supplier could have to ask for. And I think that part of that was evidenced by the Microsoft strategic agreement that happened in October of wherein basically they they uh indicated that there would be game Stop taking a cut of all incremental sales that occur on hardware sold from game Stop. So if game Stop sells you the Xbox Series X and you go and download games on it, game Stop is gonna get some undisclosed

small portion of those incremental sales. So that was a big thing to me is and I think a lot of other investors because it implied, well, these distributors and suppliers see value and game Stop obviously for the customer to see value, it needs to be a differentiated experience, whether that's um the customer service angle, you know, if you walk into most game stops, most of the employees

and those stores are pretty pretty hardcore video gamers. They may have a different niche, you know, employee by employee, but you get insight into different games that you might not have otherwise been familiar with. Whereas you go to a Walmart and you know it's behind lock and key, you need to grab some random employee if you want to get the game. They don't know anything about gaming.

So so that specialty experience I think is the differentiator, and it was evidenced by their ability to drive incremental attachment. So why don't we fast forward a little bit and talk about what's happened since then? And you know, we talked about Ryan Cohen. He became chairman. I think it was late last year, was that right, something like that, um or maybe it was the summer, Okay, So he becomes chairman and he starts putting in place all these

different ways to increase game stops business. And some of the stuff he's been doing, you know, things like starting an n f T marketplace, stuff like that. It seems a little bit different to the original game stop mission

or bread and butter business. And I'm curious what you actually think of that, Like, you had a bowl case based on GameStop being a video game retailer and thinking that it could grab a decent slice of the digital market, or at least more of it, and that there would still be demand for physical games and people would want to go into a store where the customer sales people actually know video gaming and stuff like that. What do you think about these diversification efforts and does that change

the nature of the business in your view? So we put out in January UM the accumulated sum total of all myself and and a cohort of other investors who were maniacally focused on this company from host of especially after Cohen became involved. You know, we we put out a report with a you know, a hundred sixty nine and forty two cent bull case price target, which obviously was was half meme, but what was underpinned by real analysis.

One of the pieces of analysis we got wrong was we perceived there was value for an advertising technology oriented business. They have tens of millions of customers, they have access to reams of consumer data on gaming preferences, and our view at the time was um I had begun seeing them into great targeted advertisements on their web platform. I thought that was the angle they were going, and maybe

it was the angle to prior management team was going. UM, they haven't gone that angle, but I think at its core, the value is tapping into the fact that I'm looking at the proxy statement and what they say is that we have a unique opportunity to be a conduit between developers, publishers, and consumers as gaming shifts from consoles to the metaverse

and other frontiers. And that was really the core of my view was that Game Stop was that physical nexus of gaming, and that they can play into digital and play into this shift, and that they're not necessarily d o a. UM the direction Cohen went, you know, Tracy, he he had the settlement in early January one where UM, it had looked like it was going to become a proxy fight. There had been previous proxy fights with the company over the preceding year, UM successful proxy campaign, so

it looked like Cohen was going that route. There was instead of settlement, I think because you know, look, I collected four percent of shares outstanding and sent him a letter on behalf of those retail shareholders who those four percent shares reflected and said, you have our support if it comes to this year's proxy fight. So I'm sure

he had accumulated shares from others. Um. You know in the intro, Joe you mentioned I now am I am at Wook Capital and whoop Capital was specifically formed as a byproduct of really the core work that went into this crowdsourcing of the investment thesis UM and John Kim, John's the c i O at what the founder. John had owned one percent of of game Stop and been the largest contributor to that four percent. John had the opportunity to meet with Ryan in December and here his vision.

So I think that the people who really did the legwork understood there wasn't This wasn't just some scheme that the guy cooked up out of the blue. He had a vision. You know clearly that I knew nothing about blockchain and crypto other than just what I read UM. I was not an active participant in the blockchain or crypto ecosystems. I had never bought any crypto until very recently, I've begun dabbling in n f T. But that does seem logical, right if if it's creators gamers are consuming this.

It's a forty one billion dollar addressable market, and we can argue how sustainable that is. It's very logical to me that they've gone that route. Is their digital growth strategy, and that's underpinned by them really doubling down on making their existing business better. They hadn't done any investment really into like digital systems, their website, their mobile app, e fulfillment. UM. They've made multiple fulfillment network investments over the last year. UM,

they've improved their service. If you think about Chewy, people know them for you know Chew, we will send pet owners a happy birthday when it's the pet owners birthday. UM. I'm seeing now Game Stop doing a lot more of that customer engagement during interactions UM. In the g M E d D discord server, I see a lot of people sharing different examples of their own experience. So there's definitely been a change in the customer experience with that

top down view from Cohen. UM. He became chairman in March. I believe it was so they The first porting of anything n f T related was from g M E D D and it was in April of one. So this is not stuff that they've just pulled out of the blue. They've been working on it for quite some time now. Um they've committed to bring in the marketplace to bear by the end of the fiscal second quarters,

so the end of July. So you know, a lot's happening behind the scenes, and I think that people are so focused on just staring at the current financial statements, which you know, the companies shifted its strategy. They're forsaking margin at the expense of regaining customers back into their ecosystem for long term growth. And uh, I think COVID happened,

so our initial estimates were certainly impacted there. Um digital is being adopted more quickly, it seems it'll it'll remain to be seen if what that what happens is two keeps rolling along and normalization keeps occurring. But there's a lot to unpack there, and uh, you know, we've done our best to try and be objective with it. Um. Most of the people in g M, E. D D don't have a meaningful ownership stake in game stuff. We it's just a passion project and we just feel like

it's been so misrerepresented in media. It was so misrepresented in from the analyst angle for so long that we were just doing our best to present what we thought was mostly unbiased you. So, I just want to like pivot just a little bit because you mentioned that some of the money that was in the original game Stop trade has become part of what capital your current project

you talked about. You know, they're still the g M, E. D D dot com discord and of course these are some of the topics recently talked about them without Lily Frankis and Kyla Scanlon. But it's like this cohort of game Stop traders, Like where are they now? I mean, uh, you know what's wearing kiddy? Where is everyone? And not just the big names like yourself and Keith Gil, but so many of the people who got excited about the trade, Like what's the distribution? How many of them are still trading?

How many of them lost interests in the market, how many of them? What? What? Where's that crew now? I know you'd love to get a really clean answer, but it really is all over the spectrum. Um. In terms of you know, Keith Gil, I haven't had an opportunity to speak with him since January. Um. You know, regrettably, I'm certain he's been facing his own share of of legal reasons for for which he hasn't and look, I'll say it allowed, and I'm I'm I know I would

be advised not to. But it was just about a year ago I was subpoena from SEC pertaining to my involvement. Um. It was this massively broad based subpoena asking for everything I've ever said to anyone about Game Stop for you know, more than twelve months of history. And when you think about I literally my life my second job was research and Game Stop. Yeah, it was a massive cost just

to try and accumulate all of the documents. UH ended up having to say, look, I it would it would cost me hundreds of thousands of dollars to do what you're asking. You can go to the sources themselves if you would like it. I did incur meaningful expense that that breached six figures, which was more than my net worth before I entered the trade. Thank goodness, I made money.

And I think that is a good example of where you see these politically motivated investigations that have, you know, I think, and misdirected towards small passionate investors who, in my opinion didn't do anything wrong. I know that there are some people who had malintent, right. You can obviously point to the Wall Street bets folks saying things like, yeah, squeeze the shorts. Well, obviously that's not an investment thesis.

Um So, So with regard to Keith, I haven't spoken to him to Roaring Kitty to d f V, and I'm sure he's incurred expense comparable slash in excess of mine. But I know, you know, Michael Burry disclosed he was subpoened as well, um, which is like why the guy got out of the trade in the fourth quarter. He wasn't involved. So that's where what is sec for focusing on there? But let me let me sorry, I mean

just interrupt you. So, first of all, I hate paperwork, and you know, something like that is my biggest nightmare, and so you have my utmost sympathy because I can only imagine what that's like. But secondly, you know this is sort of tangentially related. But this week we saw Bill Wong, the the Archagos founder, charged with market manipulation, and there's a lot of talking there about purposefully squeezing the stock higher, and some people saw parallels between that

and Game Stops. So I guess my I'm just curious what you thought about that. It doesn't seem like the SEC is cracking down on basically gamma squeezes. I'm not sure about that. Like, here's how I would characterize the things that are wrong with with what happened with Archaicos and with say Melvin Capital. You have a lack of

transparency in the market. It is unacceptable to me that Arcagos was able to accumulate ownership or at least economic ownership stakes of more than fifty percent of discovery of I qually of GSX, whatever their rename now. But the fact that he was able to accumulate those with with swaps, now, that is clearly a failing on the side of the disclosure rules for longs. But I would counter that the fact that Melvin Capital had more than a third of

Game Stops shares short and had no disclosure obligation. Obviously people passed together with their puts that they disclosed um would show up in their thirteen f you know, the short shares were not showing up, which I've I don't know for certain, I've come to the conclusion it was somewhere around twenty to million shares plus the puts, which would be if you add those together, it's you know, you're getting close to half the shares outstanding that Melvin

Capital themselves were short. So on both ends of the spectrum, it's unacceptable that disclosure would be so limited that people in the market don't understand that these massive, multibillion dollar forces are pushing prices and impacting stocks. So I I think that there's issues with that. And then there is an issue, it's it's unacceptable if there's a discord chat, a well Street bets chat somewhere, that's that's your your thesis is that I can push a price as opposed

to I see a fundamental reason for this business. And obviously the world of crypto is completely wild West, where it's mostly just pump and dumps and rub pulls and and scams like that. And I think that the conversation you all had with Mad and SPF the other day talking about the box, um, you know, highlights that. But

there's a lot that's wrong. Um. Obviously I feel aggrieved about how I was um part of you know what SEC opted to investigate, and as far as I know, they've still not put any sort of report out or gone after anyone. I'm sure there could be something to come on that. Um, hopefully they don't come back after me for saying this, But yes, it's unacceptable that people would try and manufacture price distortions on both the long and the short side, and I think that is market manipulation.

It feels though, like, um, you know, it's one thing, okay, if you're a hedge fund, you have certain rules in place in theory about things, you know, requirements, and maybe there should be more requirements about what you have to disclose if you're short. But here's a regulated entity, a group of people just to play I don't know, Devil's

advocate or something like. I don't even know how you would conceptualize an equivalent for people meeting on a message board or people meeting on a discord or in the comments of a Wall Street beds post. Just sort of like organically becoming part of like a stock market flash mob that aims to implicitly push the stock in a dramatic direction just because everyone's sort of doing it all

the same time. And I don't know, you know, maybe we'll never get back to quite the fever pitch of early But my assumption would be that these sort of like organic squeezes that just emerge because that's how the Internet is are going to be with us for here to stay and a very difficult time to ever like come up with rules around it. Yeah. Look, the reality is that the flows of of money or what's going

to drive the price in the short term. And if there's massive flows of highly leveraged capital through short dated calls, um, that's gonna have them outsize effect. And you're right, you know, one person on their own isn't going to move the price, but when it's dozens, hundreds, thousands, tens of thousands UM,

that cumulative effect is clearly impactful. It. I saw a report discussing the January events and the timing of stimulus checks and the timing of all the new accounts being opened, and it does seem that what happened in January one is is kind of the most extreme example of what you're getting at. It's likely, in fact, one would expected, and we keep observing it in various UM tickers. You know since then that this type of stuff is going

to happen. But I think it's worth repeating that people should understand that, you know, if you're going on a message board and you're saying, you know, let's squeeze these guys, let's pump this price. Like if you're if you're intend is to manipulate the market, just because you're a small fry, you you shouldn't get a pass. And I don't think

that's acceptable. But I do understand thinking back to what Lily and Kyle we're talking about, like there's this perception of a lot of those small fries that the game is so rigged against them that they almost have to, you know, break the rules themselves or go down that path. So there's definitely a lot of that distrust to me that it was a lot of taking all the occupy Wall Street, but now Occupy Wall Street has a smartphone app and they can try and occupy Wall Street effectively.

Well also, I mean to me, it's a disconnect between the existing rules and technology as it stands. Right, so you are not allowed, say you're a hedge fund, you cannot send out a bunch of emails to your closest hedge fund client uh contacts and say like, hey, let's all conspire to push up the stock of Game Stop, and yet because these message boards exist, everyone seems to think that that somehow makes it different if you do

it at scale and you do it publicly. But I guess we'll find out, you know, from the sec or whoever, whether or not that's the case. But I wanted to ask you another sort of I guess, depressing question or like a darker question. But you're right there. There was this sort of sense about the game being rigged, and part of the Game Stop appeal to some people seem to be this idea of getting back at the big institutions, whether it's Wall Street banks and hedge funds or something else.

And it almost felt like people went, you know, really went over to the dark side. There are some people who seem to think that all of Wall Street revolved around the shares of you know, a video game retailer, and then if they could just like if they could just squeeze it higher than the whole edifice would come crashing down. But why do you think it was such a lightning rod for those types of people? And has that that sense persisted? So so it gets back to

Joe's question about where is everybody? And then it is a wide spectrum answer. I I it's irrefutable. UM I heard. I think it was literally referred to kind of some of these cult like mentality like social platform and some of them are quite like that. UM. I'm not going to use the name of the one that comes to my mind most clearly, but there's tens of thousands of people that on a daily basis or in this platform, and and it's very much a view that these people

are deeply convicted. They believe that the short sellers never closed in January one, there was some nefarious scheme between no no, because I mean I thought you were because I'm not talking about with other of the I feel like the people who are really into the other stock or like like you guys, except turn to a level no. But but there are people into game Stop who are just as bad and in so far that they are purely believing that by throwing their their hard earned dollars

into this equity, which you know, for for them it's more like a trading token. They don't know they look at price. Most many of these investors, speculators, traders, or whatever you wanna call them. Apes. These these people buy and large are very new to the market. They don't have a deep understanding of how things work. They often just look at price, they look at a stock chart.

It's very much um limited amount of analysis. It's hearing and seeing what the people with the largest social media followings are talking about UM and then saying, well, they must be right, and let me get on this. And I see so many people talking about this and saying there's this this evil scheme by these these people on the short side of the trade, that it must be true. So so you've got like that end of the spectrum. But then the spectrum you have a lot of people

who experienced this game stop investment. UM. I think about my my partner with G M. E. D. D Joe. He he was a young guy in his early twenties who who made me, you know, low six figures some he but he he sold out of the position. As I mentioned, he's continued to maintain the analysis of game stuff. He and many others like him are continuing to learn

about markets, learn about how you actually analyze investments. So like you have the bad of the cultists and you have the good of new market participants who are learning, and like that's one of the things we're really looking

to foster with what capital is. We believe that social research, crowdsourcing of research, like the fact that you can have millions of eyeballs looking at different pieces of information and bringing unique expertise to bear, you can uncover nuanced and differentiated perspectives and theses in that manner as opposed to just we're gonna we're gonna mess with the shorts. So there's there's this wide spectrum. There's clearly a ton of

new partici suppense. I think, like Lily and Kyla were saying, it's it's it's come down of course from January, but I do think it is durable, and I think it is different from like the you know, the two thousand year message boards. It's it's even more so than than that was, and I think it will remain durable. Can you just describe what is it? Look? Capital? Is it? A hedge fund? Is it? And what is you have

several stocks? Just describe a little bit more of what this vehicle is and yeah, we we we just started up. So so John had mentioned John and I had worked um John have been one of the investors where we had this this cohort of game Stop investors, you know, lawyers, oil and gas people, just other random retail investors, like across the entire spectrum of people who people who were tuning into the Roaring Kitty chats, you know, from August

of twenty onward. Um, we we we kind of formed a group and read it where we were just talking about trying to analyze all the things coming out. We eventually made a discord. We called ourselves the Hedgehog Fund, you know, jokingly. But all of these like the fact that we experienced and lived this where we were able to develop a much more robust and informed and detailed thesis through all of these various differentiated perspectives like that's informed the view that John had, which is that you

can repeat this at scale over time. And by this I mean identifying miss christ misunderstood market opportunities and equity markets. So our view with what what is a private investment fund, we have you know, nine figures of investable assets that we are not looking for anybody's money. We're not selling

anybody a product or service. The the what we're selling is we are going to build a community to really look to scale what we experienced with the whole second half of game Stop where you can bring in investors, retail investors from across the spectrum, people who have passion, who have creativity, who have this enthusiastic transparency and willingness to share their information with others, like much like what we did right we we had I had nothing to

gain from talking and sharing that. You know, I had to cru crud all these order numbers, and I was crowdsourcing these order numbers and had located you know that you can understand what the company's e commerce results were going to look like, etcetera, etcetera. So it's it's taking that and taking that novel idea that you can crowdsource research and realize alpha as as kind of a community aspect. Now it's not like we're saying that you know, you need to pay us to be part of this, but

we're still nascent and thinking it out more. But but that in essence is what we're looking to build and replicate. So can I just ask, so you went long game Stop because you had a very specific interest in the company from what I remember um and now based on that experience, you're doing due diligence on other stocks and sort of I guess exercising what you've learned from the Game Stop experience in a broader way. What sort of

stocks are you looking at? And what's the difference between you know, coming up with a investment thesis for game Stop a business that you know intimately you're a video game or you understand that whole thing, versus looking at something else. Well, I think that's that's it. You should

have a more informed view than the market. I'll and this is not a position that what has but I'll talk about it aus and I have personally Allison Transmission, right, I worked in the industry at Writer Transportation Logistics company for five years and this you know, we've obviously observed this e V bubble that I think we're still living in where everyone expects that EV from both personal vehicles, commercial vehicles, all sorts of transportation equipment will rapidly electrify

and the legacy O e ms or suppliers are all out to pasture. But in the case of say, Alison Transmission, they make automatic transmissions for commercial vehicles. And I've done extensive research and lived extensively in my prior role at the company of talking to O e M s understanding their build plans, understanding what the opportunity is for them to shift to e v UM, understanding that fleets aren't

likely going to be buying from no name startups. They're much more likely to go with the trusted freight liners Internationals, Mac Peter, Bilt, Kenworth, et ceteras of the world. To me, I think Allison is a good example where when you look at it, it's it's trading at its lowest multiple in its history. The company was part of General Motors in two thousand seven, it was sold to private equity.

It became public in twenty twelve. And since the company on a forward or rings basis, you know, Eavy to Ebit, Eavy to EBITDA has never been cheaper because you have this massive storm cloud of oh no, e v is coming. But then when you actually look at and you talk to the experts in the in the space, you know, yes, there's some government regulation in like not to go too detailed, but I guess it's unique. Like Howard Marks has said in the past, you need to have a different view.

If you want to outperform the index or the market, you need to have a different view and you need to be more right and I think Allison is an example where I have a different view toward electrification adoption, and hopefully I'll be right. Just on Allison, I'm curious that you have personal expertise in a company like that, But then the platform itself is like a crowdsourced research platform. So do you would you go out and solicit other information from people on that company or is it more

that you share your own insights with others. It's absolutely more so the former, because I may know a few things about a few things, but I might no means an expert and everything. I'm very very little of an expert in anything. But it's it's it's trying to make it such that people see value and participating in this community, bringing their own expertise to bear. Um. We have kicked off earlier this month, we kicked off a series. You know,

it was ironic. We've recorded it the friday before the news came out of Elon Musk getting involved with Twitter. We had I had a friend of mine who's an a g C at a public company who had spent time on both the activist side and also on the corporate side defending activists, and we had a robust discussion on shareholder activism, and our hope is to have you know, different programming where Look again, we're not trying to sell

you anything. Our view is if you see value and participating in this community, you will be willing to share your own insights knowledge base. No one is going to be an expert on everything. Some people who have differentiated views from their lived experiences, UM such that. Yeah, hopefully we can cover a wide ectream of industries, of sectors of companies and uncover some of these misunderstood and mispriced investments, and it would mostly be driven by the expertise of

the of the crowd and the insights of the many. Um. Some of some people are going to have more insights than others, of course, but it's not going to be like, uh, you know, Rod knows all this stuff about everything, because that's not the case. I think it sounds really cool and your description obviously of Ellis and specifically again taking an assumption that everyone has these businesses or zeros and questioning that obviously the parallels to game stop are clear.

We us have a couple more minutes. I just want to ask you real quickly game Stop, like, what's the next thing to watch like when do we see what should people look for to say, Okay, the strategic efforts that are being made are turning this into a better business.

So the company has told us, and i'll i'll rely on the company's direction that we should be looking more at the top line, which when you look at their last quarterly result, they really force you know, they forsook more RGIN gross margin meaningfully it was it was in the high teams. So what I believe they are doing, and they've said this since Cohen became chairman, is that they are long term focused and what that means is in the short term, they need to bring customers back

into the ecosystem. They need to regain customer trust, and I believe their goal, like with Chewy, will be that whereas the desire with Chewy is that that's the ultimate destination for pets, game Stop will be the ultimate destination for gamers. They've expanded product categories across accessories, PC, hardware, and component try um, these these are you know, any

of themselves not going to be a game changer. I do think the big question mark and the big perspective upside scenario is what happens with this UH and a tea marketplace their forays into blockchain as I. As I noted, we've fund been following them from for a long time and they've been working on this for more than a year. The marketplace will be launching within the next UH it's gonna be May soon, so before the end of July. So I would look closely at what the receptivity is

to this marketplace. We've all seen I'm sure negative commentary from you know, Ubisoft launched U n f T S and gamers hated it. Blizzard has been talking about it and gamers hate it. But I think it's because gamers perceive n f T as as loot box two point oh, where you're gonna pay for something and it's just the

company milking you out of things. I do think that it's more oriented on there are creators, like we've seen some of the stills where it's some of the artists who worked on some of the most well known games of our time putting out different um digital artwork that could be digital collectibles. Company does have a thriving collectibles business, so it does make sense that digital collectibles will dovetail

with physical collectibles and physical gaming. I think there's an obviously a lot of question marks around the durability of crypto gaming and blockchain gaming right actual infinity. It's like, is it just a big ponzi? So I I think it's fair to be uncertain about what that looks like, but it's irrefutable that it's a rapidly growing market, there's a ton of capital going into the space, and that it is a real opportunity that though to me, is

the bowl case from here. Right, we're a ten billion dollars market cap, so your your core business isn't going to be enough to justify that. In my view, you need there to be you know, free cash flow dollars flowing in from this high margin digital business that they're building. And it remains to be seen, but going to be watching that closely over the next few months as they launched the n f T platform. All right, well, Rod, we gotta leave it there. But it was so great,

uh to catch up with you. Always really interesting and appreciate you coming back on oddlock. Thank you for having me. Absolutely, Rod is so great. I really I really enjoy me. It seems like a genuinely I think it's a good person messed up that he had to spend six figures to click paperwork when I don't know, unless we're missing something, it's like, yeah, it doesn't seem like the guy who came up with like a fundamentals based bike he was on Game Stop was like the one. He's the one

who has to anyway. Setting that aside, and it absolutely sounds like a nightmare. It does feel like and this is something that came up with Kyla and Lily as well. It does feel like something's changing here, like some sort of disruption in the way research and I guess investment

communication actually works, if that makes sense. Oh yeah, for sure, Like this is in the idea of like crowdsourcing or distributed research to find like genuine, genuinely novel ideas like I love Twitter, I love finance Twitter, but you know, it can get trapped at times into these sort of like group think where it's like everyone's all into like cloud and text docs and then they had turns and everyone hates cloud and text docs and all that stuff,

and so actually likes amining individual companies and saying, you know, here's the thing that a lot of people believe in. It may be wrong. Is like it seems like a high potential for the Internet to come together on or just being able to stress test a thesis, which is something that sell side analysts at large banks. I don't think they really get a chance to do it. They can do it internally, but it's not like they can publish a no externally and then ask everyone like, well

what do you think about it? Well, you know they have those ideas dinners, right, and so it's like people throw out stuff. They probably argue, but why can't public right? Anyway, it was great, Yeah, it's fun shot, all right, should we leave it there? Let's leave it there. This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me on Twitter at Tracy Alloway and I'm Joe wi Isn't Though. You can follow me on

Twitter at The Stalwart. Follow our guest Rod Alsman, He's at rod Alsman. Follow our producer Kermen Rodriguez at Carmen Arman. Follow the Bloomberg head of podcast, Francesca Levi at Francesca Today, and check out all of our podcasts at Bloomberg Onto the handle at podcasts. Thanks for listening.