[단독]Domestic management company that made 34 times the profit of GameStop… “Duck of persistent research”

[이데일리 이슬기 기자] Investor interest in Gamestop, an American video game retailer, has recently been hot. In the midst of this, there is a domestic asset management company that has made big returns from bold investments in GameStop. Must Asset Management is the main character. Must Management, which stands for value investment, replied that persistent research on GameStop made this achievement.

Must Management, 34 times profit from GameStop?

Must Management was established as Must Investment Advisory in 2006 and then converted to a professional private equity management company in 2016. Assets under management (sourced from AUM and Financial Investment Association) are small at 64.5 billion won, but they are also called’hidden masters’ in the market. It is characterized by making profits by investing in places where cotyledons are visible among undervalued companies through persistent research.

Such must management has a history of investing 3.3 million shares in GameStop in March last year, attracting attention. At that time, it had to acquire more than 5% of the stake and disclose it to the Securities and Exchange Commission (SEC). These bets are hard to understand at first glance. Some local institutions believe that GameStop is soaring due to the buying trend of individuals regardless of fundamentals, and has even launched a large-scale short sale. However, the atmosphere was reversed as individual US investors gathered through social media recently bought GameStop without losing, and short-selling investors were forced to buy and reap stock again to prevent further losses (short squeeze). Gamestop soared a whopping 685% this month alone.

Must Management’s gamestop purchase price is $4.3. According to US disclosure regulations, if there is a change in equity, it is only necessary to disclose it within 45 trading days after the beginning of the year based on the year-end basis. It is not known if there is any change in the stake since the public announcement has not yet been made and the regulation cannot comment on the stake. However, if the stake remains the same, it is estimated that it has generated about 34 times the profit to date. This means that it invested 15.7 billion won ($14.19 million) to reach 539.3 billion won ($488.33 million). In an interview with E-Daily on the 27th, CEO Doo-yong Kim emphasized that he invested in GameStop based on thorough research. CEO Kim said, “GameStop is the largest game retailer in North America, but it has been known as a company that is lagging behind in the expansion of e-commerce and the digitalization of games,” he said. “We have been researching since 2017. “We decided that intangible assets would have great value, and investing in such a judgment seems to have led to good results.”

“I also had a short squeeze in mind… Betting on a rebound in corporate value”

The question is, what kind of possibilities Must Management saw in GameStop? CEO Kim said, “GameStop has a very loyal customer base (5.6 million members paying dues), and it has remodeled its store into a social-hub, where you can play games like a Korean PC room using existing stores. We also implemented an interesting strategy to go out.” “More than anything else, we decided that the return of the new console cycle with the release of the PlayStation 5 and Xbox Series X would be a big business momentum, and the management also positively implemented the e-commerce strategy. It was” he emphasized. Because of this conviction, Must Management bought GameStop’s corporate bonds at a low price, and made a huge profit here.

However, it wasn’t just fundamentals that raised GameStop’s share price. A major factor is that short-selling investors are driven to short squeezes due to the massive purchase of individual investors. Must Management also took the short squeeze in mind, but looked at the short squeeze and emphasized that it was not an investment.

CEO Kim said, “While investing, many people neglected to research the company and bet on a stock price decline, seeing only that the business model was old and short-term earnings were deteriorating, which led to an excessive short selling rate. Since then, GameStop’s short selling ratio has exceeded 100% of the stocks in circulation and has exceeded the excessive level, and we had in mind that this condition could one day lead to a short squeeze, but we considered it as the main investment idea. I didn’t do it.”

Meanwhile, Must Management is currently investing in several foreign companies in addition to GameStop. Currently, more than 5% of the shares are disclosed in W-SCOPE of Japan and Kaleyra of the United States.

CEO Kim said, “In Korea, the valuation and evaluation of related companies are good, such as SK IE Technology (SKIET) is about to be listed, whereas Japan is still undervalued because its understanding of the material business such as separator is lower than that of Korea. “In the case of Kalayra, although it is a latecomer to Twilio, it has been growing through mergers and acquisitions, and we have invested in it because it is showing excellent results in emerging markets such as India.”