In this article, we discuss the 7 stocks that Michael Burry was wrong about. If you want to read about some more stocks that Michael Burry was wrong about, check out Michael Burry Was Wrong About These 3 Stocks.
Michael Burry was one of the first hedge fund managers to warn of a possible market crash last year, sending clear warnings about rising market speculation and rampant inflation in early 2021, when the economic recovery had barely taken hold and the stock market was buzzing with post-pandemic investment. Burry, who leads Scion Asset Management, is one of the most famous recession investors in the finance world, having made hundreds of millions of dollars for his clients during the dotcom crash of 2000 and the housing crash of 2007.
The investors who had ridiculed Burry for his doomsday predictions last year have been forced to alter their market strategies as rising interest rates pummel the stock market and result in a mass exodus away from growth offerings towards value plays. These investors are now paying growing attention to the latest moves of Burry to get a sense of his overall economic outlook. 13 filings show that the portfolio value of Scion increased by about $130 million in the first three months of 2022 compared to late 2021 data.
Burry bought new stakes in 11 stocks, including famous names like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG), during this period. He also sold out of five stocks. The top ten holdings of his fund comprise almost 94% of the overall portfolio. In a recent tweet, that has since been deleted, Burry compared the present market situation to “watching a plane crash” and said he was seeing the panic unfold and “it hurts, it is not fun, and I’m not smiling”.
Our Methodology
The stocks were picked from the first quarter regulatory filings of Scion Asset Management. The stocks that are a new addition to the portfolio, compared to filings for the fourth quarter of 2021, and are down at least 4% year-to-date, as of June 3, were selected. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Michael Burry of Scion Asset Management
Michael Burry Was Wrong About These 7 Stocks
7. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 64
Percentage Decline in Share Price (YTD): 8.48%
Global Payments Inc. (NYSE:GPN) is a Georgia-based payments technology and software solutions provider. According to the latest data, Scion Asset Management owned 66,700 shares in Global Payments Inc. (NYSE:GPN) at the end of March 2022 worth $9.1 million, representing 4.53% of the portfolio.
On May 3, Mizuho analyst Dan Dolev maintained a Neutral rating on Global Payments Inc. (NYSE:GPN) stock and lowered the price target to $148 from $155, noting that there were concerns around the worsening Q1 growth lag around the firm relative to Visa and MasterCard.
Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in Global Payments Inc. (NYSE:GPN), with 5.5 million shares worth more than $762 million.
Just like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG), Global Payments Inc. (NYSE:GPN) is one of the growth stocks in the limelight as interest rates rise.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Global Payments Inc. (NYSE:GPN) was one of them. Here is what the fund said:
“Global Payments Inc. (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 Inc. (NYSE:GPN) 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.”
6. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH)
Number of Hedge Fund Holders: 19
Percentage Decline in Share Price (YTD): 26.09%
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) is a sporting goods retailer. Latest data shows that Scion Asset Management owned 250,000 shares of Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) at the end of the first quarter of 2022 worth over $2.6 million, representing 1.32% of the portfolio. Burry had first purchased a stake in the company back in late 2018. That position, consisting of around 1.6 million shares at one point, was sold off in late 2019.
On June 1, Baird analyst David Tarantino maintained a Neutral rating on Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) stock and lowered the price target to $11 from $14, noting that there was longer-term value in the stock despite near-term headwinds.
Among the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Cannell Capital is a leading shareholder in Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH), with 2.5 million shares worth more than $27 million.
In its Q1 2022 investor letter, Merion Road Capital Management, an asset management firm, highlighted a few stocks and Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) was one of them. Here is what the fund said:
“During the quarter I added to Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH). SPWH is an outdoor sporting goods retailer with about half of their revenue coming from hunting & shooting products (guns, ammo). I initiated our position back in December following their failed merger with Great Outdoors on the grounds of anti‐trust concerns. It appeared that the stock was being sold off indiscriminately by merger arbitrageurs and valuation seemed attractive, particularly after adjusting for the receipt of a $55mm termination payment and unwind of excess inventory.
While the dust has largely settled from an investor base perspective, Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) remains attractively priced with a few upcoming catalysts. Fundamentally the company is well positioned. Following the tragic Parkland school shooting two large competitors to Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH), Dicks Sporting Goods and Walmart, made the decision to exit the category; their absence makes the competitive landscape for Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) a lot more favorable than in prior years. Furthermore, it is no surprise that gun and ammo sales during covid experienced tremendous growth. Unlike prior cycles, however, this wave saw an increase in new gun buyers rather than purchases by existing owners. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) estimates that over the past 18 months the industry created 12mm new firearm owners; using a prior base of 100mm, this implies an increase to their addressable market of 12%. The company is executing on many other internal initiatives including store expansion, omni‐channel growth (e‐comm up to 15% of revenues), loyalty programs (at 3mm members) and new co‐branded credit cards…” (Click here to see the full text)
5. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 29
Percentage Decline in Share Price (YTD): 24.31%
Stellantis N.V. (NYSE:STLA) is a Netherlands-based automobile manufacturer. Regulatory filings show that Scion Asset Management owned 600,000 shares of Stellantis N.V. (NYSE:STLA) at the end of March 2022 worth $9.7 million, representing 4.84% of the portfolio.
On May 17, Bernstein analyst Daniel Roeska initiated coverage of Stellantis N.V. (NYSE:STLA) stock with a Market Perform rating and a price target of EUR 15.50, noting that higher inflation was set to pressure margins for the company.
At the end of the first quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Stellantis N.V. (NYSE:STLA), compared to 22 in the previous quarter worth $1.2 billion.
4. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 200
Percentage Decline in Share Price (YTD): 43.65%
Meta Platforms, Inc. (NASDAQ:FB) is a diversified technology company. Securities filings reveal that Scion Asset Management owned 80,000 shares of Meta Platforms, Inc. (NASDAQ:FB) at the end of March 2022 worth $17.7 million, representing 8.83% of the portfolio. Burry first purchased a stake in the company in the fourth quarter of 2018. The stake comprised over 64,000 shares bought at an average price of over $144 per share. This holding was sold off a couple of quarters later.
On June 2, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. (NASDAQ:FB) stock and lowered the price target to $220 from $230, underlining that “digital advertising spend looks to be normalizing”.
At the end of the first quarter of 2022, 200 hedge funds in the database of Insider Monkey held stakes worth $19.3 billion in Meta Platforms, Inc. (NASDAQ:FB), compared to 224 in the preceding quarter worth $31.8 billion.
In addition to Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG), Meta Platforms, Inc. (NASDAQ:FB) is one of the stocks feeling the heat of an economic slowdown.
In its Q1 2022 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:FB) was one of them. Here is what the fund said:
“Meta Platforms, Inc. (NASDAQ:FB), the parent company of Facebook, reported excellent operating results in 2021. Its revenue increased 37%, operating earnings increased 40%, and the company generated $40 billion of free cash flow. Despite these excellent results, Meta experienced extreme volatility in its stock price during the first quarter. We believe that two factors are responsible for this volatility. First, the company quantified the headwind to revenue from Apple’s recent privacy changes in the amount of approximately $10 billion for 2022. Meta is rebuilding its advertising technology, and we believe the long-term headwinds from Apple’s privacy changes will be limited because Meta will create a suitable solution. Second, Meta Platforms, Inc. (NASDAQ:FB) continues to invest heavily into its Reality Labs segment, also known as the metaverse. While we believe the metaverse presents great opportunity for Meta, we are not assigning any value to it in our valuation work. While 2022 may be challenging for Meta, the company’s competitive advantages are still intact, and the company trades at a significant discount to our estimate of its intrinsic value. Despite our concerns about a possible recession, we expect Meta to return to double-digit bottom line growth next year.”
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Disclosure. None. Michael Burry Was Wrong About These 7 Stocks is originally published on Insider Monkey.
