In this article, we discuss the 5 best stocks to buy according to Michael Burry. If you want to read our detailed analysis of these stocks, go directly to the 10 Best Stocks to Buy According to Michael Burry.
5. Walmart Inc. (NYSE: WMT) CALL
Number of Hedge Fund Holders: 71
Walmart Inc. (NYSE: WMT) is ranked fifth on our list of 10 best stocks to buy according to Michael Burry. The company operates in the retail business and is headquartered in Arkansas. At the end of June 2021, Burry, through Scion Asset Management, owned CALL options on 378,600 shares in the retailer that are worth $53.3 million. This represents 2.56% of the portfolio. Regulatory filings reveal that Walmart is a new addition to the Scion portfolio compared to the first quarter of 2021.
On August 18, investment advisory Cowen reiterated an Outperform rating on Walmart Inc. (NYSE: WMT) stock and raised the price target to $175 from $170, noting that the momentum in food and other categories was supporting traffic growth for the firm.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in the firm with 12.6 million shares worth more than $1.7 billion.
4. The Kraft Heinz Company (NASDAQ: KHC) CALL
Number of Hedge Fund Holders: 33
The Kraft Heinz Company (NASDAQ: KHC) is a food and beverage maker based in Pennsylvania. It is placed fourth on our list of 10 best stocks to buy according to Michael Burry. Latest data reveals that Scion Asset Management owned CALL options on more than 1.4 million shares in the food and beverage maker at the end of June 2021 that are worth over $58 million and represent 2.79% of the portfolio. The investment firm has increased stake in the firm by 22% when compared to the first quarter of 2021.
On August 4, The Kraft Heinz Company (NASDAQ: KHC) reported for the second quarter, posting earnings per share of $0.78, beating market estimates by $0.06. The revenue over the three months was $6.6 billion, beating predictions by $70 million.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in The Kraft Heinz Company (NASDAQ: KHC) with 325 million shares worth more than $13 billion.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ: KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
3. McKesson Corporation (NYSE: MCK) CALL
Number of Hedge Fund Holders: 51
McKesson Corporation (NYSE: MCK) is a Texas-based healthcare and pharmaceutical company. It is ranked third on our list of 10 best stocks to buy according to Michael Burry. Regulatory filings by Scion Asset Management reveal that Burry owned CALL contracts on 682,400 shares in the healthcare company at the end of the second quarter of 2021. This represents 6.26% of the portfolio and is worth $130 million. The stake is a new addition to the portfolio compared to the first quarter of 2021.
On August 5, investment advisory Deutsche Bank kept a Buy rating on McKesson Corporation (NYSE: MCK) stock and raised the price target to $261 from $237, highlighting that the company raised guidance and saw strength in every business segment in the first fiscal quarter.
Out of the hedge funds being tracked by Insider Monkey, New York-based firm Pzena Investment Management is a leading shareholder in McKesson Corporation (NYSE: MCK) with 3.1 million shares worth more than $609 million.
2. Alphabet Inc. (NASDAQ: GOOG) CALL
Number of Hedge Fund Holders: 155
Alphabet Inc. (NASDAQ: GOOG) is placed second on our list of 10 best stocks to buy according to Michael Burry. The company operates in the internet and technology business. It is headquartered in California. Scion Asset Management owned CALL options on 91,900 shares in the technology company at the end of the second quarter of 2021. This stake is worth more than $230 million and represents over 11% of the portfolio. At the end of June 2021, Burry had increased stake in the firm by 15% compared to the first quarter of 2021.
On July 28, investment advisory Wedbush reiterated an Outperform rating on Alphabet Inc. (NASDAQ: GOOG) stock and raised the price target to $3,424 from $3,127, underlining that the advertisement and cloud market were accelerating and expected to benefit the company.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in the firm with 2.9 million shares worth more than $7.3 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ: GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
1. Facebook, Inc. (NASDAQ: FB) CALL
Number of Hedge Fund Holders: 266
Facebook, Inc. (NASDAQ: FB) is ranked first on our list of 10 best stocks to buy according to Michael Burry. The firm owns and runs social media platforms and operates from California. Latest filings show that Scion Asset Management owned CALL options on 941,200 shares in the social media firm at the end of the second quarter of 2021, representing 15.7% of the portfolio. The shares are worth more than $327 million. Burry has increased stake in the firm by 72% compared to the first quarter of 2021.
On July 29, investment advisory Evercore maintained an Outperform rating on Facebook, Inc. (NASDAQ: FB) stock and raised the price target to $450 from $400, noting that the long-term view on the stock was bullish.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc. (NASDAQ: FB), up from 257 in the preceding quarter worth $40 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ: FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
You can also take a peek at 10 Best Dividend Stocks to Buy According to Michael Burry and 10 Best Cheap Stocks to Buy According to Michael Burry.
