Below is the list of the 5 best cheap stocks to buy according to Michael Burry. If you want to skip our detailed analysis of Burry’s history and hedge fund performance, go directly to 10 Best Cheap Stocks to Buy According to Michael Burry.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind, let’s take a look at the best cheap stocks to invest in right now:
5. RPT Realty (NYSE: RPT)
Burry’s Stake Value: $6,846,000
Percentage of Michael Burry’s 13F Portfolio: 0.5%
Number of Hedge Fund Holders: 8
The shares of the real estate investment trust RPT Realty (NYSE: RPT) saw a whopping price rally of 58% since the beginning of this year. Michael Burry first initiated a position in the real estate investment trust during the September quarter when its shares were under pressure. However, economic reopening and vaccine rollout provided significant support to RPT Realty’s stock price in the past two quarters.
RPT Realty saw a decrease in hedge fund sentiment recently. The number of long hedge fund positions declined to 8 at the end of the first quarter compared to 9 positions in the previous quarter.
4. CVS Health Corporation (NYSE: CVS)
Burry’s Stake Value: $8,275,000
Percentage of Michael Burry’s 13F Portfolio: 0.61%
Number of Hedge Fund Holders: 62
The health care services company CVS Health Corporation (NYSE: CVS) is the newcomer in the Scion Asset Management portfolio. With a price-to-earnings ratio of 15, CVS is among Michael Burry’s top 10 cheap stock picks. During the first quarter, Scion bought 110,000 shares of CVS valued at around 8.27 million. The Big Short’s bet moved in the right direction in the case of CVS. The company’s stock price is up 23% year to date and shares grew 14% in the last three months.
ClearBridge Investments, an investment management firm, highlighted a few stocks including CVS Health Corporation in the first quarter investor letter. Here is what ClearBridge Investments stated:
“Our underweights in health care and staples contributed to relative performance during the period. As we continue to focus the portfolio on high-conviction ideas, we sold CVS in the first quarter, in the health care sector.”
3. Lumen Technologies Inc. (NYSE: LUMN)
Burry’s Stake Value: $8,678,000
Percentage of Michael Burry’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders: 32
A facilities-based technology and communications company Lumen Technologies Inc. (NYSE: LUMN) is among Michael Burry’s top 10 cheap stock picks. His hedge fund first initiated a position in LUMN during the September quarter of 2020 and sold out 46% of the stake in the first quarter of 2021 to capitalize on the share price rally. Despite that, Scion Asset Management held 650,000 shares of Lumen Technologies at the end of the first quarter. The valuations of the technology and communications company suggest that the stock has further upside potential in the days ahead. Its shares are trading around only 9 times to earnings.
Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, mentioned a few stocks including Lumen Technologies in the first quarter investor letter. Here is what Longleaf Partners Fund stated:
“Lumen (40%, 3.33%), the global fiber company, was the top contributor. While COVID fallout still weighed on fourth quarter results, the company benefited from positive business mix improvements. Early in the quarter, Lumen appreciated 38% in a few short days amidst the “GameStop / Reddit” short cover phenomenon. After this short term bounce, Lumen’s stock price appreciated more steadily over the last six weeks of the quarter with improved results. Many of last year’s worst-case fears have not materialized and the outlook is improving for the core business. We continue to believe that the company has multiple ways within its control to both grow and realize value per share, and we have a 13D filed to allow us to discuss these options with the company. Lumen’s board, which includes Southeastern-nominated Chairman Mike Glenn from FedEx and Director Hal Jones from Graham Holdings, is doing good work to realize Lumen’s hidden value and return the business to FCF/share growth. Despite its appreciation, the stock trades at less than half of our appraisal.”
2. Ingles Markets, Incorporated (NASDAQ: IMKTA)
Burry’s Stake Value: $9,248,000
Percentage of Michael Burry’s 13F Portfolio: 0.68%
Number of Hedge Fund Holders: 16
Scion Asset Management chief Michael Burry added significantly to his Ingles Markets, Incorporated (NASDAQ: IMKTA) position during the first quarter of 2021. The firm first initiated a position in consumer staples company in the December quarter last year. Although stock price soared almost 45% since the beginning of this year, low valuations hint further upside is ahead. Ingles Markets stock is trading around 5.6 times to earnings in the trailing twelve months while its price to book ratio is hovering just over 1.40. In addition to the share price upside potential, the company also offers a dividend yield of 1.06%.
Ingles Markets, Incorporated shares have seen a lot of action during the first quarter. Overall, hedge fund sentiment declined. The number of long hedge fund positions declined to 16 at the end of the first quarter compared to 20 positions in the prior quarter.
1. CoreCivic, Inc. (NYSE: CXW)
Burry’s Stake Value: $9,955,000
Percentage of Michael Burry’s 13F Portfolio: 0.73%
Number of Hedge Fund Holders: 18
The real estate investment trust CoreCivic, Inc. (NYSE: CXW) continues gaining Michael Burry’s confidence. After initiating a position in the fourth quarter of 2020, Scion Asset Management raised its stake in the real estate investment trust by 10% to 1.1 million shares, accounting for 0.74% of the entire portfolio. Shares of CoreCivic rallied almost 73% since the beginning of this year. Despite that, its shares are still looking cheap based on a price-to-earnings ratio of 18.
Corecivic was in 18 hedge funds’ portfolios at the end of the March quarter, flat compared to the previous quarter. The all-time high for this statistic is 27.
