Picture a livestream with 96 people watching. That is fewer people than a decent wedding. According to Keith Gill’s own testimony to Congress, it was the biggest crowd his final livestream of 2020 ever drew.

Weeks later the whole world knew his name and the name of the company he was talking about. But this story is not about the frenzy. It is about the quiet part before it, when a man was explaining a disliked company to a small room.

Here is the question I keep coming back to. You have walked past the shop at the mall with the “closing down” signs in the window. Most of those shops close. A few come back. Before anyone knows the ending, how do you tell which kind you are looking at?

Gill’s original case is a good place to start, and so are the problems visible in the company’s own reports. Read together, they tell a story that is more interesting, and less comfortable, than the usual version about a man taking on Wall Street.

This article rebuilds parts of that argument from his public statements and from documents that existed as events unfolded. It is not a full account of his private process, and it is not a recommendation to buy GameStop today.

There are three questions that apply to almost any company people have written off. I will give you all three. But first, the bad news, because the bad news is where his case begins.

The shop nobody wanted to own

Gill said he first bought GameStop call options on June 7, 2019, after deciding the shares were undervalued. In his testimony he named two broad supports for that view. The risk of bankruptcy was being overstated, and the late 2020 console cycle could produce real cash. He also saw room for a bigger transformation of the business. Those were his assessments, not established outcomes.

Before you think about the share price that came later, think about the logic.

If you buy a shop expecting it to become the best retailer in the country, a great deal has to go right. If you buy it at a low enough price because you think it can stay useful and earn some money, far less has to go right.

Neither purchase is automatically wise. The difference is what you need the business to achieve.

With a troubled company, the first job is survival. A recovery three years away does no good if a loan payment forces a crisis next month.

That is why “everyone hates it” is not an investment case. Unpopularity only tells you where an argument might be. The company’s accounts tell you whether the argument has substance.

First, the bad news

GameStop’s December 2019 results gave investors real reasons for worry. Third-quarter sales were down 25.7%, and the company reported an $83.4 million net loss. Even after its own adjustments, it still reported a loss from continuing operations.

These are not the numbers of a healthy business being ignored for no reason.

That matters when you study a famous winning bet. It is tempting to retell the story as if the doubters had nothing to point to. A better habit is to put their strongest evidence on the table first.

Falling sales can mean a weak season. They can also mean customers are leaving for good. A closed store can remove a losing location, or it can signal a business that has lost its place. The same headline can lead to very different conclusions once you find out why.

So write down the question that matters: which of these problems could get better, and which could keep getting worse? Then look for evidence on each. Knowing the product helps you ask good questions. It does not answer them.

And the biggest question of all was this: could GameStop survive long enough for anything to get better?

The answer was not what a quick look at the bank balance suggests.

Subscribe free to keep reading. Next: the cash that looked like a rescue, where it really came from, the three tests you can use on any hated company, and what the SEC later said about the squeeze.

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A week in April

In the second week of April, four people who know Nike better than almost anyone bought its stock with their own money. Director Robert Swan put in about $500,000 on April 7. Director John Rogers followed with about $173,000. Director Tim Cook bought about $1.06 million. And CEO Elliott Hill added about $1.0 million on April 13.

That is $2.7 million in a week. They paid between $42 and $43 a share. Today the stock is $37.53.

Insider buying is one of the first things we look for. Insiders sell for many reasons, but they buy for one: they expect the price to rise. So should you follow them? We went through the numbers to find out, and the answer is not what the headline suggests.

The short version

Nike is still a great brand in a bad stretch. Profit is down, cash is down, the dividend is bigger than the cash that pays for it, and the company has told investors that more weakness is coming. At $37.53 the stock trades at 18 times its trailing earnings. But that is 28 to 33 times what Nike says it will earn this year.

Our base valuation is $21.18 a share, with a range of about $18 to $26. Even our bull case, $35.26, is below today’s price.

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