Nearly five years to the day of GameStop's January 2021 peak, an old friend of the stock has re-entered the fray.

Michael Burry, the investor whose bet against the housing market ahead of the subprime mortgage crisis was chronicled in The Big Short book and film, said in a post on Substack that he has recently been purchasing GameStop shares.

GameStop stock rallied as much as 8% Monday in the wake of Burry's post. Burry's thesis rests on CEO Ryan Cohen and his ability to deploy the company's cash that it amassed by selling stock in the wake of its meme-stock rally.

Burry first purchased GameStop shares in 2019. Though it was a successful call, he sold his stake in the fourth quarter of 2020 and missed the subsequent meme stock rally that sent the shares soaring.

"I believe in Ryan," Burry adds. "I like the setup, the governance, the strategy as I see it. I am willing to hold long-term, and I am excited to see where this goes. I am 15 years his senior, but not too old to be patient."

In his post, Burry compares Cohen to billionaire Warren Buffett, who famously made big moves buying quality companies and stepping in during market downturns by providing financing. Buffett stepped down as Berkshire Hathaway's CEO at the start of the year. He famously transformed Berkshire Hathaway from a dying textile firm into a conglomerate by using cash to invest in other businesses.

GameStop has been closing a significant number of stores. It had 3,203 stores as of Feb. 1, 2025, down from 4,816 stores in January 2021.

Sales fell 4.6% to $821 million in the latest quarter ending Nov. 1, while net income was up 343%, to $77.1 million. After struggling to earn money for numerous years, GameStop has been profitable on a GAAP basis for six-consecutive quarters.

Barron's spoke with Cohen in late December, ahead of the five-year anniversary of the January 2021 meme-stock revolt.

Cohen says that the Berkshire comparison is a high bar and says Buffett himself likely wouldn't have expected Berkshire to evolve into a successful conglomerate. But in terms of taking a business without the best growth prospects and navigating it to other investments? "That's GameStop," Cohen says. "That's definitely GameStop."

GameStop has $4.7 billion in net cash on its balance sheet. Cohen says the company is open to deploying the cash in ways unrelated to its core retail business. In recent years, the company has expanded further into collectibles after having minimal success with NFTs, or nonfungible tokens.

"In this case, it's really driven by maximizing return, and frankly, not losing money," Cohen said. "That's step number one: Not losing money and then figuring out where we can make a healthy return."

Cohen became chairman of GameStop's board in June 2021 and was named CEO in 2023. In 2021, the company hired a wave of executives from Amazon.com that have since departed. He concedes some of the firm's "expensive hires" were mistakes.

Cohen says he's now focused on hiring "underdogs" and people like him who are "poor, hungry, and determined."

"GameStop should be bankrupt right now like 10 times over," Cohen says. "But if you look at where the business is today, it's very different from where it was five years ago."

Until recently, Cohen wasn't taking a salary in role as CEO. But shareholders will vote in March or April on a plan to award him performance-based stock option awards reminiscent of Tesla CEO Elon Musk's ambitious package.

If approved, Cohen would receive options to purchase as many as 171.5 million shares at $20.66 each if GameStop hits some ambitious goals, including expanding its market value nearly 10 times to $100 billion and reaching $10 billion in "cumulative performance earnings before interest, taxes, depreciation, and amortization."

The awards are dividend into nine tranches, so Cohen can get partial payouts along the way.

"Under the award, Mr. Cohen receives no guaranteed pay -- no salary, no cash bonuses, and no stock that vests simply over time," the company said in a press release. "This structure ensures that Mr. Cohen's incentives are directly aligned with creating long-term value for GameStop's stockholders. Instead, his compensation is entirely 'at-risk, ' meaning he will only be paid if the Company achieves significant market and operational goals."

Cohen told Barron's before the announcement, that management, directors, and money managers "should have skin in the game."

"I bought ordinary common stock with my own money," he said. "I'm not managing anyone else's money. I don't have any perverse financial incentives, unlike most board of directors, professional money managers, or management teams. However I do is tied to performance."

Cohen has recently been purchasing GameStop shares on the open market. Last week, he bought one million shares for roughly $21.4 million.