In this article, we discuss five prominent stocks that Michael Burry is dumping ahead of the economic crisis he foresees. If you want to read our analysis of Michael Burry’s latest warnings about the economic outlook and more stocks that he is selling, click “Winter Coming”: Michael Burry Sells These 11 Stocks to Brace for Impact.
5. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) is a Georgia-based company that offers payments technology and software solutions. The company operates through three segments – Merchant Solutions, Issuer Solutions, and Business and Consumer Solutions. Michael Burry acquired a stake in Global Payments Inc. (NYSE:GPN) in Q1 2022, comprising 66,700 shares worth $9.12 million, representing 4.53% of the total portfolio. He dumped his stake in the following quarter.
Mizuho analyst Dan Dolev on August 3 lowered the price target on Global Payments Inc. (NYSE:GPN) to $132 from $148 and kept a Neutral rating on the shares. The company’s updated 2022 guidance “likely has several odd inconsistencies,” the analyst told investors. Of these, the most notable was the NetSpend consumer business, which seems to be excluded from the revenue guide given the sale proceedings, yet appears to be included in the reported earnings outlook, said the analyst. He is monitoring Global Payments Inc. (NYSE:GPN)’s fundamentals cautiously.
Among the hedge funds tracked by Insider Monkey, 64 funds were bullish on Global Payments Inc. (NYSE:GPN) at the end of March 2022, compared to 67 funds in the prior quarter. William B. Gray’s Orbis Investment Management is the leading position holder in the company, with 5.5 million shares worth about $763 million.
Here is what Oakmark Fund has to say about Global Payments Inc. (NYSE:GPN) in its Q1 2022 investor letter:
“Global Payments (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.
4. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 70
Bristol-Myers Squibb Company (NYSE:BMY) is an American biopharmaceutical firm. Michael Burry added Bristol-Myers Squibb Company (NYSE:BMY) to his portfolio in Q4 2021. He exited his $22 million stake in the company in the second quarter of 2022.
On the other hand, JPMorgan analyst Chris Schott raised the price target on Bristol-Myers Squibb Company (NYSE:BMY) to $85 from $80 and kept an Overweight rating on the shares after the Q2 results.
According to Insider Monkey’s data, Bristol-Myers Squibb Company (NYSE:BMY) was part of 70 hedge fund portfolios at the end of Q1 2022, compared to 66 funds in the earlier quarter. John Overdeck and David Siegel’s Two Sigma Advisors held the largest position in the company, with 4.3 million shares worth $318.4 million.
Here is what Carillon Clarivest Capital Appreciation Fund has to say about Bristol-Myers Squibb Company (NYSE:BMY) in its Q1 2022 investor letter:
“Stock selection contributed the most while sector allocation was also positive. An underweight to communication services and an overweight to energy helped performance, while an underweight to consumer staples and an overweight to materials detracted. Stock selection was strong within healthcare and materials but was weak within information technology and industrials. Bristol-Myers Squibb (NYSE:BMY), the biopharmaceutical company, entered into accelerated share repurchase agreements.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 99
Booking Holdings Inc. (NASDAQ:BKNG) is an American travel technology firm. Michael Burry of Scion Capital Management acquired a stake in Booking Holdings Inc. (NASDAQ:BKNG) in the first quarter of 2022, buying 8,000 shares worth $18.7 million, representing 9.32% of the total holdings. He dumped his position in the next quarter.
On August 5, Susquehanna analyst Shyam Patil lowered the price target on Booking Holdings Inc. (NASDAQ:BKNG) to $2800 from $2900 and maintained a Positive rating on the shares. The analyst observed that travel demand was robust in Q2, with room nights outpacing 2019 levels for the first time. He said trends have softened slightly into July, but some modest volatility in the travel recovery is not surprising, especially considering the macro backdrop.
According to Insider Monkey’s data, 99 hedge funds were bullish on Booking Holdings Inc. (NASDAQ:BKNG) at the conclusion of the March quarter, up from 92 funds a quarter earlier. Harris Associates owned a significant stake in the company in Q1 2022, comprising 665,415 shares worth $1.5 billion.
Here is what LRT Capital Management has to say about Booking Holdings Inc. (NASDAQ:BKNG) in its Q2 2022 investor letter:
“Booking Holdings was formerly Priceline.com but has changed its name to reflect that source of most of its revenue: Booking.com. Booking.com is the largest online travel agency (OTA) in the world, connecting travelers and hotels. The company has over 2.3 million properties in 220 countries on its site, along with photos, reviews and details about the amenities offered by each property. The accommodations offered range from hotels, motels, homes & apartments, hostels, and bed & breakfasts. The company occupies a dominant position in the travel booking funnel and collects revenue from hotel reservations booked through its site. Booking.com is particularly strong in Europe, where chain hotels are less dominant and smaller independent hotel rely on it to fill their rooms.
In addition to Booking.com, the company owns agoda.com, priceline.com, rentalcars.com, OpenTable and the KAYAK flight search engine. Hotel bookings account for most of the revenue, but the company also offers car rental reservations, flights, vacation packages, cruises, tours, airport taxis, etc.
The company benefits from economies of scale in its investments in technology, national advertising, and customer loyalty programs. The business also has enormous network effects, as consumers are most likely to use a booking platform with the most properties, broadest availability of reviews and strong customer service. This in turn drives hotels to make their room inventory available on booking.com, which drives most of the reservation traffic for many boutique hotels, thus reinforcing the network effect. Of note, Booking.com operates two models: the agency model, where the company simply acts as an agent for a hotel and collects a fee, and the merchant model, under which Booking.com buys the room-night from the hotel, but then retains the ability to optimize the pricing on the room.
Also of note is the fact that the acquisition of Booking.com by Priceline.com is amongst the most successful and value creating M&A transactions of all time.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology conglomerate. Michael Burry initially invested in Alphabet Inc. (NASDAQ:GOOG) in Q4 2018 and sold off his position in Q2 2019. He again bought 130,000 shares of the firm in Q1 2022, worth $18 million, only to dispose of his stake in Q2 2022.
On August 3, Tigress Financial analyst Ivan Feinseth raised the price target on Alphabet Inc. (NASDAQ:GOOG) to $186 from $183 and reaffirmed a Strong Buy rating on the shares, citing resilient Q2 results that display the robustness of its primary business in Cloud and Search. Investment in Artificial Intelligence continues to support “increasingly focused and helpful experiences for users and businesses,” the analyst added.
According to Insider Monkey’s Q1 data, 160 hedge funds reported owning stakes in Alphabet Inc. (NASDAQ:GOOG), up from 158 funds in the prior quarter. Chris Hohn’s TCI Fund Management is the leading position holder in the company, with 2.3 million shares worth $6.6 billion.
Here is what Wedgewood Partners has to say about Alphabet Inc. (NASDAQ:GOOG) in its Q2 2022 investor letter:
“Alphabet grew its core search revenues +24% on a +30% year-ago comparison. Despite this stellar top-line performance, shares sold off as the market began to discount fears of a recession. However, the stock has outperformed relative to other holdings as core Google Search has been less affected by disruptions related to Apple’s privacy initiatives. Alphabet’s Cloud segment is generating revenue at a $24 billion run rate but is still running at a loss. We think this business can generate much better margins at some point. In the meantime, the Company has 4% to 5% of shares authorized for repurchase which is an attractive use of capital as the stock trades for about just 18X 2023 consensus estimates.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 200
Meta Platforms, Inc. (NASDAQ:META) is a California-based social media and metaverse firm. Michael Burry has held the stock sporadically over the years. He initially invested in Meta Platforms, Inc. (NASDAQ:META) during the last quarter of 2018. In Q1 2022, he owned 80,000 shares of the company worth $17.7 million, representing 8.83% of the total portfolio. Burry discarded his stake entirely in Q2 2022.
On August 5, Needham analyst Laura Martin kept an Underperform rating on Meta Platforms, Inc. (NASDAQ:META), observing that the firm’s outlook has deteriorated. Similarly, on July 29, DZ Bank analyst Ingo Wermann downgraded Meta Platforms, Inc. (NASDAQ:META) to Sell from Hold with a $140 price target.
Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management featured as a significant position holder in the company, with 11.19 million shares worth about $2.5 billion. Overall, 200 hedge funds were bullish on the stock at the end of Q1 2022, down from 224 funds in the prior quarter.
Here is what Boyar Value Group has to say about Meta Platforms, Inc. (NASDAQ:META) in its Q4 2021 investor letter:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms Inc. (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
You can also take a look at 10 Technology Stocks Hedge Funds Are Talking About and 10 Undervalued Dividend Kings To Buy In 2022.
