In this article, we discuss the 10 stocks that Michael Burry is dumping. If you want to skip our detailed analysis of these stocks, go directly to Michael Burry Is Dumping These 5 Stocks.
Michael Burry, the chief of Scion Asset Management, had surprised the finance world with a $731 bearish bet against electric vehicle maker Tesla, Inc. (NASDAQ:TSLA) earlier this year. Latest filings show that the investor, who rose to fame in the finance world by predicting the financial crisis of 2008, has sold all the PUT options he owned against the stock. The share price of the EV maker has jumped 67% in the past three months on the back of better-than-expected performance amid a global chip shortage.
Scion Asset Management had a portfolio value of more than $41 million at the end of the third quarter of 2021, down from $2 billion at the end of the second, according to the latest 13f filings. It would appear that Burry has been forced to cover his bearish position on Tesla by selling stakes in other equities. Overall, between June and September, the fund made new purchases in 3 stocks, additional purchases in none, sold out of 19, and reduced holdings in 2 stocks. It presently has stakes in just 6 companies.
Some of the top stocks in the investment portfolio of Scion Asset Management at the end of the third quarter of 2021 included CVS Health Corporation (NYSE:CVS), Lockheed Martin Corporation (NYSE:LMT), and CoreCivic, Inc. (NYSE:CXW), among others discussed in detail below.
Our Methodology
The stocks were picked from the third quarter regulatory filings of Scion Asset Management. Companies in which the fund trimmed a previously-held stake, or sold it off completely, feature on the list.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Michael Burry of Scion Asset Management
Michael Burry Is Dumping These Stocks
10. The GEO Group, Inc. (NYSE:GEO)
Number of Hedge Fund Holders: 15
The GEO Group, Inc. (NYSE:GEO) is a Florida-based real estate investment trust. It recently posted earnings for the third quarter, reporting a revenue of $557 million, down 3% year-on-year but smashing analyst expectations by $5.7 million.
According to the latest data, Scion Asset Management owned 1.1 million shares in The GEO Group, Inc. (NYSE:GEO) at the end of September 2021 worth $8.6 million, representing 20% of the portfolio. The fund has trimmed stake in the firm by 54% compared to the second quarter.
At the end of the second quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $74 million in The GEO Group, Inc. (NYSE:GEO), up from 13 in the previous quarter worth $72 million.
Just like CVS Health Corporation (NYSE:CVS), Lockheed Martin Corporation (NYSE:LMT), and CoreCivic, Inc. (NYSE:CXW), The GEO Group, Inc. (NYSE:GEO) is one of the stocks on the radar of institutional investors.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The GEO Group, Inc. (NYSE:GEO) was one of them. Here is what the fund said:
“GEO Group (GEO) declined 9.8% during the period as President Biden’s Executive Order directing the Department of Justice not to renew contracts with private prisons at the Federal level offset solid Q4 results. GEO reported Q4 revenue of $578.1M, in-line with consensus while EBITDA of $107.9M topped estimates of $87.7M by 23%. Adjusted Funds from Operations (AFFO) of $0.62/share fell 6% Y/Y and provided coverage of 2.5x on the quarterly dividend of $0.25/share (13.5% annualized yield). The company exited the quarter with ample liquidity of $420M and remains committed to paying down $75M-$100M of debt annually. Management introduced 2021 guidance with revenue of $2.24Bn-$2.27Bn, EBITDA of $386M-$400M, and AFFO of $1.98-$2.08, all of which assumes Bureau of Prison contracts with optional expiration periods in 2021 will not be renewed. Additionally, GEO announced a $200M convertible notes offering due 2026 with net proceeds funding the redemption of the 5.875% unsecured notes due 2022.”
9. Tesla, Inc. (NASDAQ:TSLA)
Number of Hedge Fund Holders: 60
Burry had owned PUT options against Tesla, Inc. (NASDAQ:TSLA) shares worth $731 million at the end of June. The investor has sold off all the options, latest filings show. The stock of the EV maker has soared in the past few months amid increasing demand for EVs and strong earnings and delivery numbers.
Wedbush analyst Daniel Ives recently kept an Outperform rating on Tesla, Inc. (NASDAQ:TSLA) stock and raised the price target to $1,400 from $1,100. The analyst says the company is a leader in the EV market that could be worth $5 trillion in the coming years.
At the end of the second quarter of 2021, 60 hedge funds in the database of Insider Monkey held stakes worth $9 billion in Tesla, Inc. (NASDAQ:TSLA), down from 62 in the preceding quarter worth $10 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ:TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
8. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 155
Burry had held CALL options against Alphabet Inc. (NASDAQ:GOOG) shares worth $230 million at the end of June this year. During the third quarter, the investor exercised all these CALL options, latest filings show.
Morgan Stanley analyst Brian Nowak recently raised the price target on Alphabet Inc. (NASDAQ:GOOG) stock to $3,200 from $3,000 and kept an Overweight rating on the shares, appreciating the quarterly earnings report of the firm.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) 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.”
7. The Kraft Heinz Company (NASDAQ:KHC)
Number of Hedge Fund Holders: 33
Burry has sold off his entire stake in The Kraft Heinz Company (NASDAQ:KHC), securities filings reveal. In the second quarter of 2021, he had held CALL options against $58 million worth of shares of the company.
The Kraft Heinz Company (NASDAQ:KHC) has an impressive dividend history and the company recently declared a quarterly dividend of $0.40 per share, in line with previous. The forward yield was 4.39%.
Among 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.”
6. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 266
Meta Platforms, Inc. (NASDAQ:FB) is another high-profile stock that Burry has sold off entirely during the third quarter. At the end of June, he had held CALL options against $327 million worth of Meta stock, representing 15% of his portfolio.
On October 28, investment advisory Piper Sandler maintained a Neutral rating on Meta Platforms, Inc. (NASDAQ:FB) stock with a price target of $385. Analyst Thomas Champion issued the ratings update.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Meta Platforms, Inc. (NASDAQ:FB), up from 257 in the preceding quarter worth $40 billion.
In addition to CVS Health Corporation (NYSE:CVS), Lockheed Martin Corporation (NYSE:LMT), and CoreCivic, Inc. (NYSE:CXW), Meta Platforms, Inc. (NASDAQ:FB) is one of the stocks that hedge funds are buying.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Meta Platforms, 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.”
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Disclosure. None. Michael Burry Is Dumping These 10 Stocks is originally published on Insider Monkey.
