Michael Burry’s 5 New Stock Picks

1. NOW Inc. (NYSE: DNOW)

Value: $10,770,000
Percent of Michael Burry’s 13F Portfolio: 4.79%
Number of Hedge Fund Holders: 22

Now Inc. ranks 1st on the list of Michael Burry’s new stock picks. The oil drilling services company operates under DistributionNOW and Wilson Export brand names. Its products are used in upstream drilling, oil exploration, midstream infrastructure, power generation and other industrial segments.  Now Inc. shares recently rallied after the company announced its plans to acquire Flex Flow business from GR Energy Services. The stock is up 75% over the last 12 months.

There were 22 hedge funds that hold a position in NOW Inc.  in the fourth quarter of 2020. The biggest stakeholder of the company is Jim Simons’ Renaissance Technologies, with 6.48 million shares, worth $46.5 million.

In their Q4 2020 investor letter, Palm Valley Capital highlighted a few stocks and Now Inc. (NYSE:DNOW) is one of them. Here is what Palm Valley Capital said:

“NOW is a 2014 spinoff from National Oilwell Varco and has a 150-year legacy as a distributor to the oil and gas and industrial markets. Through a vast network of 245 locations, NOW’s 300,000 SKU product offering addresses all segments of the energy value chain, from upstream E&Ps to midstream infrastructure to downstream refining, in addition to industrial end markets including chemicals, mining, utilities, and manufacturing. When energy companies reduce activity, NOW suffers. However, it has streamlined its business since the last oil and gas downturn and expects reduced operating losses this round. As of June 30th, NOW had $269 million of cash and no debt ($497 million market cap), although if demand recovers as we expect, some cash will be reinvested in working capital. The stock is currently selling for 66% of tangible book value.

Pason and NOW represent our fourth and fifth investments in the energy sector. The active rig count in the U.S. is at all-time lows. When considering our timing, we concluded, if not now, when? Our largest energy holding is Helmerich & Payne, the nation’s largest drilling contractor. It’s selling for half of book value. We believe the financial strength of our holdings is far above the typical energy company. Even so, we have kept our exposure to the energy sector in check given our concerns about the overall economy.”

You can also take a peek at Billionaire Jim Simons’ Top 10 Stock Picks and Billionaire Steve Cohen’s Top 10 Stock Picks.

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