In this piece, we will take a look at the top ten stocks in Michael Burry’s latest stock portfolio. If you want to skip our introduction to the well known investor and how his biggest recent bearish calls have fared, then take a look at Michael Burry Stock Portfolio: 5 Stocks To Buy Now.
Michael Burry is perhaps one of the most well known financial figures, particularly for retail investors. This is because he was among the few in the finance industry that successfully predicted the 2008 stock market crash and rose to fame after a movie described his thought process and decision making. This cemented his place in popular culture and any statement that Dr. Burry makes is scrutinized and widely reported by the media.
However, while Dr. Burry’s (he’s a medical doctor and not a Ph.D in case you’re wondering) 2007 call proved to be correct, he hasn’t had much luck (thankfully?) since then. For instance, he predicted in 2020 that the shares of Elon Musk’s Tesla, Inc. (NASDAQ:TSLA) would drop. This led Dr. Burry to take a short position in Tesla’s shares, one which didn’t prove to be fruitful back then.
Fast forwarding to 2023, he shook the markets once again earlier this year when his hedge fund Scion Capital’s SEC filings for the second quarter revealed that Dr. Burry was shorting the creme de la creme NASDAQ 100 index and the S&P 500. These are the two most widely followed stock indexes in the U.S., and both posted strong returns for the first half of 2023 on the back of a hype rally fueled by artificial intelligence. Scion Capital’s SEC filings revealed that Michael Burry had bought $1.6 billion of put options that targeted the two indexes. A put option fixes the price at which an investor can sell an underlying security, so if the value of this security drops, then a sale at a higher price can enable the owner to book a profit.
However, it appears that the investor has had a change of heart when we look at his firm’s latest SEC filings for the third quarter of this year. This is because the latest filings show that he has completely exited both of these, suggesting that he is no longer bearish on at least equities that are part of the two indexes. During Q3, the S&P 500 and the NASDAQ 100 fell by 3.6% and 3%, respectively, and given the way that put options are structured, Dr. Burry really didn’t fork out $1.6 billion for his bearish bets. This is because the $1.6 billion figure is the notional value of an options contract, and the value that an investor actually pays for the contracts is the market value which is substantially lower than the notional value. In fact, this difference is so low that it’s possible to have a position with a notional value in the billions by just investing a couple of million dollars. For Dr. Burry’s put options, some estimate that he actually spent $26.5 million to amass a $1.6 billion stake.
The reasons behind his short positions can only be speculated unless Dr. Burry himself explains the rationale. For instance, it could be possible that he downright expected the stock market to fall and was looking to make a profit. Or, he could simply be hedging and protecting his portfolio, and opening shorts to ensure that if his long positions fell then the shorts would allow him to cover the losses.
Whatever the case is, one thing that is clear is that as of Q3 2023, Michael Burry no longer expects major stocks to drop. However, this doesn’t mean that his shorting days are over. This is because the latest Scion Capital investment portfolio shows that put options are still the firm’s biggest stakes. During this year’s September quarter, Dr. Burry’s investment firm held two put options in iShares Semiconductor ETF (NASDAQ:SOXX) and Booking Holdings Inc. (NASDAQ:BKNG). Among these, the position against the ETF is substantially larger since it has a notional value of $47.3 million while the other sits at a respectable $7.7 million.
The semiconductor industry has been one of the most dynamic – and at times, downtrodden – sectors this year. Chip firms were some of the best performing stocks in 2021 as the aftermath of the coronavirus pandemic saw strong demand for personal and enterprise computing products due to lock downs stimulating the demand for technology products. However, in a classic example of the bullwhip effect, chip designers such as Advanced Micro Devices, Inc. (NASDAQ:AMD) and NVIDIA Corporation (NASDAQ:NVDA) used these demand levels to place orders for 2022 from chip makers such as the Taiwan Semiconductor Manufacturing Company (NYSE:TSM). But, in 2022, high inflation sapped buyer purchasing power and the designers were left with excess channel inventory and the manufacturers had to deal with low capacity utilization. This downturn decimated earnings, and the situation has only slightly stabilized as of the third quarter with AMD reporting a jump in PC shipments for the first time.
Looks like Michael Burry believes that the worst of the chip sector might still be ahead of us, despite the fact that artificial intelligence has injected fresh life into semiconductor stocks. While AI is all the buzz these days, NVIDIA, the preeminent AI chip maker is dealing with low capacity for some crucial front end chip manufacturing processes and there are worries that these bottlenecks can take the wind out of the AI hype. Not to mention, chip firms also have to deal with increasing friction between the U.S. and China, with U.S. sanctions limiting their ability to sell products to the Asian economic giant.
Are these factors making Michael Burry short the chip market? We can only guess, and only time can tell whether he’ll be proven right. In the meantime, let’s take a look at Michael Burry and Scion Capital’s top stock picks for the third quarter. Some notable stocks are Nexstar Media Group, Inc. (NASDAQ:NXST), Stellantis N.V. (NYSE:STLA), and Star Bulk Carriers Corp. (NASDAQ:SBLK).
Michael Burry of Scion Asset Management
Our Methodology
To compile our list of Michael Burry’s latest stock picks, we selected the top stocks in Scion Capital’s Q3 2023 investment portfolio.
Michael Burry Stock Portfolio: 10 Stocks To Buy Now
10. The RealReal, Inc. (NASDAQ:REAL)
Scion Capital’s Q3 2023 Investment: $1.5 million
The RealReal, Inc. (NASDAQ:REAL) is an American company that operates an electronic commerce platform that allows users to resell jewelry, watches, and other related products. High inflation has proven to be a boon for the company as the firm has beaten analyst EPS estimates in all four of its latest quarters.
During Q2 2023, 24 out of the 910 hedge funds part of Insider Monkey’s database had invested in The RealReal, Inc. (NASDAQ:REAL). James Woodson Davis’s Woodson Capital Management owned the biggest stake among these, which was worth $10.8 million and came via 4.9 million shares.
Along with Stellantis N.V. (NYSE:STLA), Nexstar Media Group, Inc. (NASDAQ:NXST), and Star Bulk Carriers Corp. (NASDAQ:SBLK), The RealReal, Inc. (NASDAQ:REAL) is a top Michael Burry stock to buy.
9. Crescent Energy Company (NYSE:CRGY)
Scion Capital’s Q3 2023 Investment: $2.5 million
Crescent Energy Company (NYSE:CRGY) is an American energy company with oil and gas reserves. The firm’s third quarter results saw it post a 13% sequential production growth to set a new record. Its revenues dropped though on the back of lower average realized prices.
Insider Monkey dug through 910 hedge fund portfolios for 2023’s second quarter and found that ten had held a stake in the company. Crescent Energy Company (NYSE:CRGY)’s largest hedge fund investor was Sameer Sethna’s Aventail Capital Group due to its $4.8 million investment.
8. Hudson Pacific Properties, Inc. (NYSE:HPP)
Scion Capital’s Q3 2023 Investment: $2.6 million
Hudson Pacific Properties, Inc. (NYSE:HPP) is a real estate investment trust headquartered in Los Angeles, California. A turbulent office real estate sector due to work at home trends and high interest rates led Bank of America to downgrade its shares to Neutral from Buy in November 2023.
By the end of this year’s second quarter, 20 among the 910 hedge funds polled by Insider Monkey had invested in Hudson Pacific Properties, Inc. (NYSE:HPP). Dmitry Balyasny’s Balyasny Asset Management owned the biggest stake among these which was worth $29 million and came via 6.8 million shares.
7. JD.com, Inc. (NASDAQ:JD)
Scion Capital’s Q3 2023 Investment: $3.6 million
JD.com, Inc. (NASDAQ:JD) is a Chinese electronic commerce company with close to half a million employees. The firm is due to post its third quarter earnings soon, and analysts are on the watchout for sales figures from the Chinese holiday season to see where the Chinese economy is heading.
During this year’s June quarter, out of the 910 hedge funds profiled by Insider Monkey, 64 were the firm’s shareholders. JD.com, Inc. (NASDAQ:JD)’s largest hedge fund investor in our database was Chase Coleman and Feroze Dewan’s Tiger Global Management LLC due to its $719 million investment.
6. Euronav NV (NYSE:EURN)
Scion Capital’s Q3 2023 Investment: $4.1 million
Euronav NV (NYSE:EURN) is a Belgian crude oil transportation firm. The firm’s shares have seen multiple downgrades lately, with the latest one coming from JPMorgan who downgraded the stock to Neutral from Overweight in October 2023 and reduced the share price target to $18.43 from $21 as it shared that the stock now appears to be fairly valued.
26 out of the 910 hedge funds part of Insider Monkey’s Q2 2023 database had bought and owned Euronav NV (NYSE:EURN)’s shares. Israel Englander’s Millennium Management owned the biggest stake among these which was worth $34.1 million.
Nexstar Media Group, Inc. (NASDAQ:NXST), Euronav NV (NYSE:EURN), Stellantis N.V. (NYSE:STLA), and Star Bulk Carriers Corp. (NASDAQ:SBLK) are some of Michael Burry’s top stock picks.
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Disclosure: None. Michael Burry Stock Portfolio: 10 Stocks To Buy Now is originally published on Insider Monkey.