GameStop Allows CEO to Invest in Other Companies with Its Cash

According to Yahoo News, GameStop Corp. has revealed an unconventional plan for its approximately $900 million in cash and equivalents, allowing its billionaire CEO, Ryan Cohen, to purchase stocks of other companies. The new policy, which was buried in the earnings filing, enables Cohen to invest in equities instead of short-term loans, catching some Wall Street analysts by surprise. Wedbush's Michael Pachter, a vocal skeptic of GameStop, called the move "one of the most inane moves we have ever seen," while Vital Knowledge's Adam Crisafulli noted that the update was "receiving a lot of attention." This shift to investing in other industries and companies is unusual, as most of Corporate America places its excess cash in safe short-term government bonds, which currently yield more than 5%. This move raises the bar for Cohen to outperform the market amid economic uncertainty and following a 19% rally for the benchmark S&P 500 so far in 2023. The new investment policy allows Cohen to deploy capital to both public and private markets, potentially mirroring his personal holdings, according to the filing. The mandate extends beyond just stocks, with the board permitting investments in "equity securities, among other investments." GameStop is not concerned about potentially backing the same companies Cohen holds, as it "places the personal resources of Mr. Cohen at risk in substantially the same manner." However, Pachter believes this is a sign that investors should continue to avoid GameStop, rating the stock as underperform and expecting shares to lose more than half their value in the next year.