Michael ‘Big Short’ Burry’s Recent Stock Purchases

Published on May 27, 2023 at 11:33 am by Fahad Saleem in Hedge Funds, News

In this article, we will take a look at Michael Big Short Burry’s recent stock purchases. To see more such companies, go directly to Michael Big Short Burry’s Top 5 Recent Stock Purchases.

Initiating contrarian bets is nothing new for Michael Burry, the famous “Big Short” investor who gained fame after successfully foreseeing the 2008 market crash. Burry’s latest 13F disclosure shows that the 51-year old investor, who has a huge following among young investors, loaded up on two areas which everyone was exiting amid a broader market turmoil: banks and Chinese companies.

Let’s start with China. Burry’s top two holdings as of the first quarter of this year are Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD). Burry doubled his stake in the Chinese ecommerce giant Alibaba Group Holding Limited (NYSE:BABA) in the first quarter. Alibaba Group Holding Limited (NYSE:BABA) shares are down about 3% year to date as of May 16. In April, the stock fell after a group of US senators called for sanctions on Chinese Cloud companies. However, the stock recently jumped after the company said it plans to make “huge” and “historic” investments in Taobao shopping platform. Insider Monkey’s database of 943 hedge funds tracked as of the end of last year shows that 113 hedge funds had stakes in Alibaba Group Holding Limited (NYSE:BABA). So, Burry’s bet on Alibaba Group Holding Limited (NYSE:BABA) isn’t that surprising as the stock has strong long-term growth prospects.

But what about JD.Com Inc. (NASDAQ:JD)? The stock has lost about 34% year to date through May 16. The stock recently lost ground after a report showed consumer concerns around rising inflation. But the company’s first quarter results were impressive. Its adjusted EPADS in the period came in at $0.69, beating estimates by $0.19.

Generally speaking, though, Chinese stocks have been losing ground lately.

The optimism that surrounded Chinese stocks earlier this year is also fading. The MSCI China Index is flat so far in 2023 as China is showing signs of a slowing economic momentum. In April, consumer spending and industrial activity in the country grew slower than expected.

From Big Short to Big Long?

It’s hard to tell what goes on in Burry’s mind. The only glimpse of his thought process are visible on his Twitter account, where the investor comes after several weeks, tweets (often one or two words), removes his tweets and disappears, leaving his fan base yearning for more. In January Burry tweeted “Sell” after which his fans thought a horrible doomsday scenario was upon us. But in March, the investor admitted on Twitter that he was “wrong to say sell.”

“Going back to the 1920s, there has been no BTFD generation like you. Congratulations,” Burry said, referring to the success of “buy the dip” strategy that many were propending during the broader market selloff. Perhaps that was the time Burry had a change of mind and he transformed from the Big Short to the Big Long? His Q1 portfolio shows that his hedge fund Scion Asset Management added 17 new stocks in its portfolio during the period. Many of them were bank stocks, which were getting hammered in the quarter after the SVB collapse.

At least one bet Burry was totally wrong at was First Republic Bank (NYSE:FRC). However, the now-collapsed bank made up just 1.96% of his total Q1 portfolio. Some important names in his latest portfolio are Wells Fargo & Company (NYSE:WFC), Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD).

Michael Big Short Burry's Recent Stock Purchases

Michael Burry of Scion Asset Management

Our Methodology

For this article, we scanned Michael Burry’s portfolio for the first quarter of 2023 and picked the companies he initiated fresh stakes in during the quarter. All of these stocks are the new arrivals in Burry’s portfolio as of the end of the first quarter.

Michael Big Short Burry’s Recent Stock Purchases

17. Ovintiv Inc. (NYSE:OVV)

Number of Hedge Fund Holders: 38

Michael Burry’s Stake: $811,800

Oil and natural gas company Ovintiv Inc. (NYSE:OVV) is one of the new additions in Michael Burry’s portfolio as the Big Short bought 22,500 shares of the company which had a total worth of about $811,800 as of the end of March this year.

As of the end of the fourth quarter of 2022, 38 hedge funds tracked by Insider Monkey had stakes in Ovintiv Inc. (NYSE:OVV), compared to 47 hedge funds at the end of the previous quarter.

16. The RealReal, Inc. (NASDAQ:REAL)

Number of Hedge Fund Holders: 14

Michael Burry’s Stake: $862,397

Michael Burry bought 684,442 shares of The RealReal, Inc. (NASDAQ:REAL) in the first quarter of 2023. The RealReal, Inc. (NASDAQ:REAL) runs a members-only consignment marketplace for luxury goods. The total value of the shares owned by Burry at the end of March was $862,397. The bet seems to be going well for Burry as the shares are up about 20% year to date as of May 16.

Like Wells Fargo & Company (NYSE:WFC), Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD), REAL is a stock Burry likes.

15. Huntington Bancshares Incorporated (NASDAQ:HBAN)

Number of Hedge Fund Holders: 32

Michael Burry’s Stake: $2,070,880

Ohio-based Huntington Bancshares Incorporated (NASDAQ:HBAN) is one of the top bank stocks bought by Michael Burry during the first quarter in the midst of the banking turmoil. Huntington Bancshares Incorporated (NASDAQ:HBAN) jumped after the disclosure of Burry’s stock in the company. Adjusted EPS in the period came in at $0.38, beating estimates by $0.01. Revenue in the period jumped 17% year over year to $1.93 billion, beating estimates by $30 million.

14. First Republic Bank (NYSE:FRC)

Number of Hedge Fund Holders: 40

Michael Burry’s Stake: $2,098,500

In a move that appears to show total lack of foresight (unlike Burry?), Michael Burry bought 150,000 shares of First Republic Bank (NYSE:FRC), a now-collapsed bank that was sold to JPMorgan in May. Burry’s stake in First Republic Bank (NYSE:FRC) at the end of March this year was about $2.1 million. FRCB shares fell 97% this before it was acquired by JPMorgan.

Burry isn’t alone in this troubled bet. As of the end of the fourth quarter, 40 hedge funds tracked by Insider Monkey had stakes in First Republic Bank (NYSE:FRC).

Baron Asset Fund made the following comment about First Republic Bank (NYSE:FRC) in its Q1 2023 investor letter:

“First Republic Bank (NYSE:FRC) provides banking and wealth management services primarily to affluent customers in select markets. The company’s share price collapsed in the aftermath of the failures of SVB and Signature Bank. Investors feared that First Republic could face a similar fate because a majority of its funding base is in the form of large, uninsured deposits, primarily from wealthy clients and small- and mid-size businesses. Despite a historically loyal customer base that valued the bank’s industry-leading customer service culture, we believe many of these deposits were likely withdrawn from the bank following the high-profile turmoil at SVB. These deposits would likely have been replaced with higher-cost funding, leading to significant earnings pressure. We concluded that the bank’s competitive position and earnings potential had likely been permanently impaired, so we exited the position.”

13. PacWest Bancorp (NASDAQ:PACW)

Number of Hedge Fund Holders: 26

Michael Burry’s Stake: $2,432,500

Michael Burry opened a whopping $2.4 million position in PacWest Bancorp (NASDAQ:PACW) during the first quarter, in another bet that is bringing nothing but losses for the Big Short as PacWest shares have crashed by about 76% year to date through May 16. Recently, Bloomberg reported that PacWest Bancorp (NASDAQ:PACW) was considering a breakup or a capital raise. PacWest Bancorp (NASDAQ:PACW) also later confirmed that it was approached by “several potential partners and investors.”

As of the end of the fourth quarter of 2022, 26 hedge funds had stakes in PacWest Bancorp (NASDAQ:PACW).

12. Devon Energy Corporation (NYSE:DVN)

Number of Hedge Fund Holders: 55

Michael Burry’s Stake: $2,444,362

Michael Burry bought $2.44 million worth of shares in Devon Energy Corporation (NYSE:DVN) during the first quarter of 2022. Devon Energy Corporation (NYSE:DVN), which is also a solid dividend payer, posted an adjusted EPS of $1.46 for its first quarter, beating estimates by $0.07. Revenue in the quarter inched up 0.3% year over year to reach $3.82 billion, in-line with estimates.

11. NOV Inc. (NYSE:NOV)

Number of Hedge Fund Holders: 29

Michael Burry’s Stake: $2,657,925

Oil and gas drilling equipment company NOV Inc. (NYSE:NOV) ranks 11th in our list of the top stock picks of Michael Burry in 2023. Scion bought a $2.7 million stake in NOV Inc. (NYSE:NOV) during the first quarter. NOV Inc. (NYSE:NOV) shares are trading in the red, just like several other energy stocks, after data from China showed a drop in manufacturing activity, spooking investors that the overall economic growth might be slowing.

As of the end of the last quarter of 2022, 29 hedge funds had stakes in NOV Inc. (NYSE:NOV).

10. Coterra Energy Inc. (NYSE:CTRA)

Number of Hedge Fund Holders: 33

Michael Burry’s Stake: $3,681,000

Texas-based energy company Coterra Energy Inc. (NYSE:CTRA) is another important energy stock bought by Michael Burry earlier this year. His hedge fund had a $3.7 million stake in the company as of the end of the first quarter of 2023. Earlier this month, Coterra Energy Inc. (NYSE:CTRA) posted an adjusted EPS of $0.87, beating estimates by $0.17. Revenue in the quarter came in at $1.78 billion, beating estimates by $210 million.

Diamond Hill Mid Cap Strategy made the following comment about Coterra Energy Inc. (NYSE:CTRA) in its Q4 2022 investor letter:

“Other bottom contributors included energy exploration and production company Coterra Energy Inc. (NYSE:CTRA) and West Coast-focused office and apartment REIT Douglas Emmett (DEI). Investors became concerned about CTRA’s outlook following the company’s 32% – 36% downward revision to its reserve numbers — purportedly in line with SEC proved reserve reporting rules. With shares trading below our estimate of intrinsic value, we are closely monitoring the situation and are prepared to pivot accordingly as more data become available.”

9. Western Alliance Bancorporation (NYSE:WAL)

Number of Hedge Fund Holders: 26

Michael Burry’s Stake: $4,442,500

Phoenix, Arizona-based Western Alliance Bancorporation (NYSE:WAL) was one of the top bank stocks bought by Michael Burry’s Scion Capital in 2023. The hedge fund piled into Western Alliance Bancorporation (NYSE:WAL) with a $4.44 million stake. Western Alliance Bancorporation (NYSE:WAL) was soaring as of May 16 amid a broader relief for regional banking stocks on the back of analysts’ opinion that the worst might be over for the sector.

On May 11, Western Alliance Bancorporation (NYSE:WAL) said that its deposits increased by $1.8 billion since the end of Q1.

Like Wells Fargo & Company (NYSE:WFC), Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD), WAL is a notable name in Burry’s latest portfolio.

ClearBridge SMID Cap Growth Strategy made the following comment about Western Alliance Bancorporation (NYSE:WAL) in its Q1 2023 investor letter:

“We sold our investment in Western Alliance Bancorporation (NYSE:WAL), in the financials sector, after considerable debate. The company provides various banking products and related services primarily in Arizona, California, and Nevada. We underappreciated the risk of rapid depositor exodus at other financial companies in the wake of the collapse of SIVB, which became engulfed by depositor outflows. Although we believe that policy response was solid, with depositor protection and liquidity programs for similarly pressured institutions, our investment in Western Alliance Bancorp became substantially higher risk and more volatile than we had imagined.”

8. Wells Fargo & Company (NYSE:WFC)

Number of Hedge Fund Holders: 87

Michael Burry’s Stake: $4,672,500

While the Oracle of Omaha Warren Buffett sold his stake in Wells Fargo & Company (NYSE:WFC) last year, Burry piled into the banking giant earlier this year with a stake worth about $4.7 million. Major banks like Wells Fargo & Company (NYSE:WFC) are set to benefit from rising interest rates and investor exodus from small banks. During its first quarter, the bank’s GAAP EPS came in at $1.23, beating estimates by $0.11. Revenue in the quarter increased by about 17.9% year over year to $20.73 billion, beating estimates by $670 million.

Davis New York Venture Fund made the following comment about Wells Fargo & Company (NYSE:WFC) in its 2022 annual investor letter:

“Our investment thesis for our next largest bank investment, Wells Fargo, is totally different. As is well known, Wells Fargo & Company (NYSE:WFC) is the country’s third-largest bank, serving one in three U.S. households. Years of regulatory missteps under prior managements resulted in reputational damage, higher-than-average expenses, numerous consent orders, caps on asset growth, all added to the negative impact of low rates on their interest income. However, where others see bad news, we see resiliency and gradual improvement. Wells Fargo’s resiliency is reflected in the fact that despite years of terrible headlines and congressional hearings, Wells Fargo’s core customers stayed put and customer attrition remains extraordinarily low.

As to gradual improvement, new management has made steady headway in closing consent orders, settling regulatory matters and upgrading systems. Thus, rather than increasing profits from growth, Wells Fargo’s earnings growth for the next three-to-five years should come from the combined tailwinds of rising interest income, partially offset by normalizing credit costs, reduced expenses as systems improve and the scandals of the last decade are gradually put behind them, and the return of excess capital through share repurchases and rising dividends. The hypothetical earnings bridge displayed in Figure 6 gives some sense of the earnings power we see unfolding in the years ahead for this durable financial franchise.

While our grounded optimism carries the day, we are mindful of the risk that Wells Fargo’s historically excellent credit culture may have deteriorated, or that exasperated regulators may choose to extract even more major penalties for past infractions.”

7. Cigna Corporation (NYSE:CI)

Number of Hedge Fund Holders: 76

Michael Burry’s Stake: $6,388,250

Insurance giant Cigna Corporation (NYSE:CI) was another important new arrival in Burry’s portfolio during the first quarter as Scion bought a $6.4 million stake in the company during the period. In May, Cigna Corporation (NYSE:CI) posted its first quarter results. EPS in the quarter came in at $5.41 beating estimates by $0.17. Revenue in the period jumped 5.7% year over year to $46.5 billion, beating estimates by $1.07 billion.

Baron Funds made the following comment about Cigna Corporation (NYSE:CI) in its Q4 2022 investor letter:

“We initiated a position in Cigna Corporation (NYSE:CI), a health services organization with two primary segments, Cigna Healthcare and Evernorth. Cigna Healthcare provides health insurance products, including a business in which Cigna provides administrative services only to plan sponsors (employers, unions, and other groups). Evernorth provides a portfolio of health care services, including pharmacy benefit management (PBM) services, care delivery services, data and analytics solutions, and distribution of specialty drugs. Each segment has a portion of business that provides steady, predictable growth. These foundational businesses, which account for roughly 60% of total revenue, include the U.S. commercial business, the PBM business, and international. The other 40% of revenue comes from higher-growth businesses, including the specialty pharmacy business, care delivery services, and Medicare Advantage. Management targets 10% to 13% annual EPS growth over the long term. The stock trades at a significant discount to industry peers because of the company’s commercial health insurance and PBM business mix. We think the PBM business will benefit from the biosimilar wave in the next few years, and as Cigna’s higher growth businesses become a bigger percentage of the overall mix, we think the stock can appreciate at least in line with its annual EPS growth with potential for valuation expansion.”

6. Liberty Latin America Ltd. (NASDAQ:LILAK)

Number of Hedge Fund Holders: 28

Michael Burry’s Stake: $6,608,000

Headquartered in Denver, Colorado, Liberty Latin America Ltd. (NASDAQ:LILAK) is a telecom company with operations mostly in Latin America and the Caribbean. Liberty Latin America Ltd. (NASDAQ:LILAK) is up about 5% year to date through May 16. Burry bought a whopping $6.61 million stake in Liberty Latin America Ltd. (NASDAQ:LILAK) during the first quarter of 2023.

In May, Liberty Latin America Ltd. (NASDAQ:LILAK)’s revenue fell 9.8% year over year to $1.1 billion, missing estimates by $40 million.

Like Wells Fargo & Company (NYSE:WFC), Alibaba Group Holding Limited (NYSE:BABA) and JD.Com Inc. (NASDAQ:JD), LILAK is a notable name in Burry’s latest portfolio.

Steel City Capital made the following comment about Liberty Latin America Ltd. (NASDAQ:LILA) in its Q3 2022 investor letter:

“Liberty Latin America Ltd. (NASDAQ:LILA) has been a dog this year, declining nearly 45% through the end of the third quarter. The business is highly predictable so there haven’t been any surprises on the operational front, and virtually of its floating-rate debt has been swapped, thereby protecting it from this year’s rapid rise in interest rates. So I’m not quite sure why it has underperformed the broader market so significantly. This year’s free cash flow guide is for $120 million (ex. SBC) and there’s a line-of-sight to $300+ million (ex. SBC) by 2024, meaning shares have been trading in a range of 4-6x price to free cash flow. The Partnership has been a buyer at these levels.”

Click to continue reading and see Michael Big Short Burry’s 5 Recent Stock Purchases.