In this article, we discuss top 5 stock picks of Michael Burry’s 2022 portfolio. If you wish to read our detailed analysis of Burry’s hedge fund performance, stock selection and future market predictions, go directly to Michael Burry’s 2022 Portfolio: Top 10 Stock Picks.
5. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 53
Scion Asset Management’s Stake Value: $17.97 million
Scion Asset Management’s 13F Portfolio: 8.92%
Cigna Corporation (NYSE:CI) is an insurance and healthcare services provider based in Connecticut. As of May 19, the firm’s shares have recorded an uptick of 9.91% in the year to date. Scion Asset Management, according to its Q1 2022 portfolio, owned a $17.97 million stake in the company consisting of 75,000 shares, which represented 8.92% of its total holdings.
JPMorgan analyst Lisa Gill on May 16 upgraded Cigna Corporation (NYSE:CI) to ‘Overweight’ from ‘Neutral’ with a price target of $304, up from $248. The analyst appreciated the firm’s Q1 results, and noted further possible upside to its already updated 2022 guidance. She views the shares as trading at an attractive valuation. Raymond James analyst John Ransom on May 10 gave Cigna Corporation (NYSE:CI) a ‘Strong Buy’ rating and a price target of $300, up from $275.
In the first quarter of 2022, Cigna Corporation (NYSE:CI) reported EPS of $6.01, above estimates by $0.83. Quarterly revenue stood at $44.1 billion, outperforming consensus figures by $629.9 million.
53 hedge funds held positions worth $1.92 billion in Cigna Corporation (NYSE:CI) at the end of December, as compared to 58 hedge funds with $2.3 billion worth of stakes in the firm at the end of September.
Davis Funds, an investment firm, talked about multiple stocks in its Q4 2021 investor letter, and Cigna Corporation (NYSE:CI) was one of them. The fund said:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna, United Health Group, Viatris and Quest Diagnostics.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
Scion Asset Management’s Stake Value: $18.07 million
Scion Asset Management’s 13F Portfolio: 8.97%
Michael Burry’s Q1 2022 portfolio included 6,500 shares of Google parent company Alphabet Inc. (NASDAQ:GOOG), with a price tag of $18.07 million and representing a 8.97% slice of his total portfolio.
For the first quarter of 2022, Alphabet Inc. (NASDAQ:GOOG) reported an EPS of $24.62, missing consensus estimates by $0.93. Quarterly revenue of $68 billion saw a growth of 22.95% year-on-year, and also beat consensus estimates by $124.6 million.
Jefferies analyst Brent Thill in late April maintained a ‘Buy’ rating on Alphabet Inc. (NASDAQ:GOOG) shares and lowered the price target to $3,400 from $3,600. The firm saw healthy growth in its Search and Cloud business, but its advertising revenue from Youtube missed estimate figures for the third quarter in a row. The analyst decreased his FY2022 estimates for gross and net revenue, operating margin and EPS.
158 hedge funds reported owning stakes in Alphabet Inc. (NASDAQ:GOOG) at the end of Q4 2021, as compared to 156 hedge funds in the preceding quarter.
Investment firm Baron Funds mentioned Alphabet Inc. (NASDAQ:GOOG) in its Q1 2022 investor letter. The fund stated:
“We have modestly reduced the size of our position in Alphabet Inc. (NASDAQ:GOOG) (from 6.5% at the end of the fourth quarter of 2021 to 5.3% as of the end of the first quarter of 2022), after the stock rallied 64% in 2021 and continued outperforming during the first quarter, declining just 3%.”
3. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 76
Scion Asset Management’s Stake Value: $18.72 million
Scion Asset Management’s 13F Portfolio: 9.29%
Warner Bros. Discovery, Inc. (NASDAQ:WBD) shares represented 9.29% of Michael Burry’s portfolio for the first quarter of 2022, with a stake worth $18.7 million. The firm was formed after AT&T Inc. (NYSE:T) spun off its Warner Bros segment and merged it with Discovery (DISCA) in April 2022.
Cowen analyst Doug Creutz on May 12 gave Warner Bros. Discovery, Inc. (NASDAQ:WBD) an upgraded rating of ‘Outperform’ from ‘Market Perform’, and revised the price target to $24 from $31. He is cautious on the highly competitive streaming space, and sees the firm’s decision not to spend big amid the ongoing consumer wars as a more sustainable strategy than its peers.
76 hedge funds were bullish on Warner Bros. Discovery, Inc. (NASDAQ:WBD) shares at the end of Q4 2021. The largest shareholder of the firm during the first quarter was Laurion Capital Management, which held a stake consisting of 13.58 million shares valued at $338.4 million.
Silver Ring Value Partners, an investment firm, talked about Warner Bros. Discovery, Inc. (NASDAQ:WBD) in its Q1 2022 investor letter, stating:
“Discovery completed the acquisition of the Warner Media business from AT&T in April, and the combined business is now named Warner Brothers Discovery. We are currently in the middle of an interesting technical event, following the spin-off special situation playbook.
The acquisition was structured as a spin-off of Warner Media, with AT&T shareholders receiving ~ 70% of the shares in the combined entity, or ~ 1.7B shares. Many of these shareholders owned AT&T for its phone business and its dividend. It appears that there has been elevated noneconomic selling as these shareholders exit regardless of price. On the other side, few if any investors want to buy the WBD shares prior to this forced selling being over.
This has caused the stock to decline substantially despite being already priced at a low valuation and reporting good recent results. The people selling aren’t likely considering either of those factors, which is what creates the opportunity. One wrinkle as compared to the usual spin-off special situation setup is that the non-economic selling is likely to last for some time given the retail nature of the shareholder base. This is different from the typical pattern where there is a quick sharp sell-off as institutional investors dump their shares quickly following the spin.
In anticipation of this situation, I had sold our equity prior to the major declines, and replaced it with January 2024 call options. I have since been using a portion of the cash generated from the equity sale to add to the option position as the stock price declines. While this does give up some time horizon, which I am usually loathe to do, both the technical selling and the question of the success of the merger integration are likely to be resolved well before then.
If I am correct and this is a much more valuable business than the market is giving it credit for, we will make a hefty profit. If I am wrong, and the combination of financial leverage, merger integration problems and secular risks are more serious than I foresee, we will have a moderate loss. I like our odds and the asymmetry of risk vs. reward.”
2. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 92
Scion Asset Management’s Stake Value: $18.78 million
Scion Asset Management’s 13F Portfolio: 9.32%
Scion Asset Management initiated its position in Booking Holdings Inc. (NASDAQ:BKNG) during the first quarter with 8,000 shares worth $18.78 million. This represented 9.32% of its total portfolio. Out of all the hedge funds tracked by Insider Monkey at the close of Q4 2021, 92 reported ownership of stakes in Booking Holdings Inc. (NASDAQ:BKNG) with a combined value of $7.7 billion.
Booking Holdings Inc. (NASDAQ:BKNG) is a travel and tourism company which operates Booking.com and Rentalcars.com. On May 5, Citi analyst Ronald Josey kept a ‘Buy’ rating on Booking Holdings Inc. (NASDAQ:BKNG) shares and increased the price target to $2,800 from $2,600. He sees the company gaining further share of the recovering global travel market, with gross travel bookings reaching record levels in April.
Booking Holdings Inc. (NASDAQ:BKNG) disclosed its first quarter earnings on May 4, and posted an EPS of $3.90, outperforming estimates by $2.56. The company raked in $2.7 billion in revenue for the quarter which exceeded analysts’ forecasts by $167.2 million and showed a jump of 136.2% in comparison to the year-ago quarter.
1. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Scion Asset Management’s Stake Value: $21.90 million
Scion Asset Management’s 13F Portfolio: 10.87%
According to regulatory filings for the first quarter of 2022, Bristol-Myers Squibb Company (NYSE:BMY) is Michael Burry’s largest holding, with 300,000 shares priced at $21.9 million. The New York-based biopharmaceutical firm develops, manufactures and sells a range of medicinal therapies around the globe. As of May 19, the company’s shares have gained 13.37% in the last year, and 22.75% in the year to date.
On May 17, Wells Fargo analyst Mohit Bansal raised the firm’s price target on Bristol-Myers Squibb Company (NYSE:BMY) to $70 from $65 and maintained an ‘Equal Weight’ rating on the company shares. The analyst thinks the stock has outperformed in the year to date thanks to the market favoring value stocks, and continues to see long-term challenges for the firm. He feels that the its new product portfolio could fall below its mark of $10-$13 billion by 2025.
Bristol-Myers Squibb Company (NYSE:BMY) posted EPS of $1.96 for the first quarter, exceeding analysts’ expectations by $0.07. The revenue posted during the first quarter was $11.65 billion, outperforming estimates by $308.4 million.
Out of all the hedge funds tracked by Insider Monkey, 66 reported bullish bets on Bristol-Myers Squibb Company (NYSE:BMY) at the end of Q4 2021, with a collective worth of $3,31 billion. This is down from 74 hedge funds a quarter ago. Two Sigma Advisors was the most prominent shareholder of Bristol-Myers Squibb Company (NYSE:BMY) during the first quarter, with a $318.4 million stake.
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