In this article, we will discuss Michael Burry’s Top 10 Stock Picks Heading into 2025.
Established in May 2013, Scion Asset Management is a renowned and well-regarded California-based hedge fund founded by Michael Burry. The investment management firm focuses on long-term capital appreciation via fundamental research. The company targets undervalued or misunderstood investment opportunities globally. Michael Burry, a renowned figure in the financial world, shot to fame after his accurate predictions during the 2008 financial crisis. The hedge fund manager has a bachelor’s degree in economics from the University of California, Los Angeles. Also, he pursued an M.D. from Vanderbilt University School of Medicine.
After Michael Burry founded Scion Capital and predicted the late 2000s housing bubble burst, he rolled out Scion Asset Management in 2013, rebranding the prior fund.
Michael Burry Goes Long on China
As of now, Michael Burry remains optimistic about the Chinese economy, with Scion Asset Management significantly investing in renowned and well-established Chinese companies. Over the past few weeks, the Chinese stock market has seen a significant rally, with the Hang Seng Index increasing by ~17% and the SSE Composite Index rising by more than ~18% over the past month. Market experts believe that these increases primarily stemmed from the stimulus measures announced by the government.
As per the hedge fund’s 13F filing for the quarter that ended June 30, Michael Burry significantly increased his ownership in the Chinese tech companies, while liquidating his investments in gold and other companies belonging to solar, energy, and other sectors. The renowned investor also entered several new positions in sectors such as financial services, healthcare, beauty, and real estate industries. Over the past few weeks, there has been growing optimism about the Chinese economy.
BBVA Research believes that the Chinese economy has been witnessing structural rebalancing amid adjustments in real estate. Thanks to the large-scale stimulus package, the company expects that the economy will bottom out in the near term. Moving forward, the firm believes that the US and Europe’s rate cut cycle offers policy room for China’s easing measures. As and when the large China-US rate reversion sees normalization, there can be increased capital inflows and stronger RMB.
The prolonged rebound in China after the COVID-19 pandemic, offset by other sectors such as manufacturing and real estate, significantly dragged down China’s stock valuations, making it attractive for investors.
Peeking into Michael Burry’s Concentrated Portfolio
‘Big Short’ investor’s noteworthy move in Q2 2024 was a significant rise in his stake in a Chinese e-commerce giant. This stock is now the largest holding of the portfolio. Even though the Chinese regulatory landscape continues to evolve, it is demonstrating signs of easing. Therefore, market experts opine that this can help create a more favorable environment for Chinese technology companies.
Beyond e-commerce, the hedge fund manager’s Q2 2024 portfolio focuses on strategic allocation throughout varied sectors. Scion Asset Management appears to be going long on the payment processing sector also. Since the investment firm has a diversified portfolio, experts believe that the company is well-placed to navigate any short-term economic headwinds.
Michael Burry of Scion Asset Management
Our Methodology
To list Michael Burry’s Top 10 Stock Picks Heading into 2025, we sifted through Scion Asset Management’s latest 13F Holdings. From the list, we selected the top 10 stock picks, and the same are ranked in ascending order of the fund’s stakes in them.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Michael Burry’s Top 10 Stock Picks Heading into 2025
10) BioAtla, Inc. (NASDAQ:BCAB)
Scion Asset Management’s Stake Value: $868,524
Number of Hedge Fund Holders: 12
BioAtla, Inc. (NASDAQ:BCAB) is a clinical-stage biopharmaceutical company, which is engaged in developing specific and selective antibody-based therapeutics for the treatment of solid tumor cancer.
Wall Street believes that the company’s focus on Conditionally Active Biologics (CABs) and Antibody-Drug Conjugates (ADCs) placed it well in the oncology market. The major focus of investors revolves around the potential for strategic partnerships, which BioAtla, Inc. (NASDAQ:BCAB) is actively pursuing for both Evalstotug and Ozuriftamab. Such partnerships are expected to offer valuable resources for late-stage clinical development and commercialization, and validation of the company’s technology platform.
While the competitive landscape in oncology remains intense, considering the established players and emerging biotechs battling for market share, BioAtla, Inc. (NASDAQ:BCAB)’s CAB technology acts as a potential differentiator. This targets to improve the therapeutic window of cancer treatments by enhancing efficacy while, at the same time, reducing off-target effects. CABs focuses on improving the therapeutic index of cancer treatments by designing antibodies that are preferentially active in the tumor microenvironment. This should result in more effective therapies with fewer side effects, addressing the critical unmet need in oncology.
BioAtla, Inc. (NASDAQ:BCAB)’s ADCs are garnering interest, which hints at the potential for future partnerships. Its strategic decisions, which include the prioritization of certain trials and the careful management of its cash reserves, demonstrate its commitment to sustainable growth. As per Wall Street, the shares of BioAtla, Inc. (NASDAQ:BCAB) have an average price target of $9.00.
9) Olaplex Holdings, Inc. (NASDAQ:OLPX)
Scion Asset Management’s Stake Value: $1,532,685
Number of Hedge Fund Holders: 18
Olaplex Holdings, Inc. (NASDAQ:OLPX) is engaged in developing, manufacturing, and selling hair care products in the US and internationally.
Olaplex Holdings, Inc. (NASDAQ:OLPX) has built its reputation on providing high-quality hair care solutions, serving both professional stylists and retail consumers. The company plans to unveil a comprehensive long-term roadmap and future vision in early 2025. The strategic plan will address market opportunities and consumer trends, which Olaplex Holdings, Inc. (NASDAQ:OLPX) can capitalize given its brand strength and product innovation. Collectively, these measures are expected to help expand its market share.
Olaplex Holdings, Inc. (NASDAQ:OLPX)’s established presence in both professional and retail channels offers a diverse revenue base, which can be leveraged for expansion into new product categories or geographic markets. Olaplex Holdings, Inc. (NASDAQ:OLPX) rolled out a new patented technology, Olaplex bond shaping technology, targeting the curly hair market. Significant marketing and advertising investments are being made in a bid to generate demand and support growth.
Olaplex Holdings, Inc. (NASDAQ:OLPX) expects an improvement in H2 2024, anticipating benefits from salon palleted kits, new product launches, and seasonal lift in Q4 2024. It focuses on key customers, rationalizing certain distributors, and prioritizing partners which builds brand equity. In the recent earnings call, the company reported stable sell-through throughout all the channels, and better underlying demand is anticipated in the latter half of the year.
Wall Street analysts remain optimistic about the stabilization of demand in the US and international markets, courtesy of the company’s loyal consumer base. Overall, Olaplex Holdings, Inc. (NASDAQ:OLPX)’s focus on innovative product launches, along with targeted marketing efforts to capitalize on the high-potential curly hair market, should act as a tailwind in the near term.
8) American Coastal Insurance Corporation (NASDAQ:ACIC)
Scion Asset Management’s Stake Value: $2,657,461
Number of Hedge Fund Holders: 15
American Coastal Insurance Corporation (NASDAQ:ACIC) operates as an insurance firm. It underwrites condominium and homeowner association properties.
In the recent earnings call, American Coastal Insurance Corporation (NASDAQ:ACIC) mentioned that the core catastrophe reinsurance program was renewed, with the anticipation to fuel revenue and earnings. Wall Street analysts believe that the company remains well-positioned to thrive in the insurance market, considering the forward-looking guidance which suggests positive growth in net income from continuing operations and net premiums earned.
Wall Street expects that the divestiture of Interboro Insurance Company should help in streamlining its operations. This, along with American Coastal Insurance Corporation (NASDAQ:ACIC)’s proactive reinsurance strategy, should enhance the company’s market position. Its focus is mainly on low-rise commercial property insurance in Florida, with the help of its exclusive managing general agency agreement and long-term partnership.
American Coastal Insurance Corporation (NASDAQ:ACIC), the insurance holding company of American Coastal Insurance Company (“AmCoastal”), announced that AmCoastal entered into a 5-year extension of its exclusive Managing Agency Contract with AmRisc, LLC effective June 1, 2024, and expiring January 1, 2029.
American Coastal Insurance Corporation (NASDAQ:ACIC)’s continuous portfolio optimization process aims to balance risk appetite and underwriting profit opportunities with its available capital and reinsurance capacity in a bid to achieve consistent and sustainable underwriting profitability. Notably, deep underwriting expertise and strong reinsurance support are expected to act as tailwinds for the company in the near term.
7) The RealReal, Inc. (NASDAQ:REAL)
Scion Asset Management’s Stake Value: $3,190,000
Number of Hedge Fund Holders: 21
The RealReal, Inc. (NASDAQ:REAL) operates an online marketplace for the resale of luxury goods in the US.
Wall Street analysts opine that The RealReal, Inc. (NASDAQ:REAL)’s focus on expanding its consignment business, which generally provides higher margins than direct sales, should continue to act as a primary growth enabler moving forward. The RealReal, Inc. (NASDAQ:REAL) is optimistic about consumer health and market trends. To enhance client experience and scale profitably, it continues to make investments in automation, AI, and data. Also, new supply channels are being explored, which include drop-ship consignment.
The RealReal, Inc. (NASDAQ:REAL) continues to focus on growth strategies, which consist of targeting the right sellers, optimization of promotional strategies, improving retention, and investing in technology. These initiatives should result in sustained growth and improved margins. In the recent earnings call, The RealReal, Inc. (NASDAQ:REAL) highlighted that sales, marketing, and stores can be the engine for the next chapter of profitable growth.
The company focuses on refining its approach and identifying attractive markets for new stores. Furthermore, it sees opportunities to drive incremental growth from new supply channels. Industry experts believe that The RealReal, Inc. (NASDAQ:REAL)’s consignment model should provide a competitive edge as it shares price fluctuations with sellers and take-rate architecture buffers against price drops.
Analysts at Northland Securities initiated coverage on the shares of The RealReal, Inc. (NASDAQ:REAL) on 16th September. They gave an “Outperform” rating and a $6.00 target price.
6) Hudson Pacific Properties, Inc. (NYSE:HPP)
Scion Asset Management’s Stake Value: $5,504,732
Number of Hedge Fund Holders: 29
Hudson Pacific Properties, Inc. (NYSE:HPP) is a real estate investment trust, that serves dynamic tech and media tenants in global epicenters.
Hudson Pacific Properties, Inc. (NYSE:HPP) remains optimistic about the gradual strengthening of West Coast office markets, mainly in San Francisco. The company continues to explore strategic alternatives, which include asset sales, in a bid to improve its portfolio quality. Also, the focus is on acquisitions of higher-performing assets. Wall Street experts opine that tenant demand for Hudson Pacific Properties, Inc. (NYSE:HPP) should be aided by AI companies and professional services.
Hudson Pacific Properties, Inc. (NYSE:HPP)’s balance sheet emphasizes deleveraging and it anticipates that improved studio cash flow should strengthen leverage metrics. The company continues to attract tenants with prebuilt space and is experiencing growth in the AI-related tech pipeline. It focuses on improving office retention rates and has coverage on lease expirations.
In the recent earnings call, Hudson Pacific Properties, Inc. (NYSE:HPP) highlighted that discussions on asset sales are ongoing and several assets are being identified for potential disposition. Notably, efficiency measures and cost-saving initiatives are being implemented in a bid to improve studio margins.
With more than 500,000 square feet of office leases signed in Q2 2024, the company saw a strong start to the year. It expects that its strong leasing execution will continue for the remainder of the year and its leasing pipeline remains healthy.
As per Wall Street, the shares of Hudson Pacific Properties, Inc. (NYSE:HPP) have an average price target of $5.25.
5) JD.com, Inc. (NASDAQ:JD)
Scion Asset Management’s Stake Value: $6,460,000
Number of Hedge Fund Holders: 59
JD.com, Inc. (NASDAQ:JD) operates as a supply chain-based technology and service provider in the People’s Republic of China.
JD.com, Inc. (NASDAQ:JD) has a significant position in China’s competitive e-commerce landscape. Its Electronics & Appliances and General Merchandise segments should continue to exhibit strong growth, demonstrating resilience in key product categories. The company’s strong market position and effective business strategies are expected to act as principal tailwinds. JD.com, Inc. (NASDAQ:JD) should benefit from trade-in programs for consumer durable goods.
The broader industry outlook for the Chinese technology sector seems to be positive, which should offer strong growth opportunities. JD.com, Inc. (NASDAQ:JD)’s diverse product portfolio, which includes a strong presence in Electronics & Appliances and General Merchandise, offers numerous avenues for growth. The company’s established logistics network and reputation for authentic products have placed it well to expand in new product categories or deepen penetration in existing ones.
JD.com, Inc. (NASDAQ:JD) remains committed to its low-price strategy and further development of its platform ecosystem.
Ariel Investments, an investment management company, released its first-quarter 2024 investor letter. Here is what the fund said:
“We initiated a position in China-based technology-driven E-commerce company, JD.com, Inc. (NASDAQ:JD). The brand has long been known across the region as a superior online shopping channel due to its unique first-party model and unparalleled fulfillment service underpinned by JD Logistics. Yet, a challenging macro environment drove shares lower as shoppers began seeking bargains. In response, the company made significant investments in elevating its third-party merchant platform to enhance its variety of product offerings and price competitiveness for consumers. We believe these actions will yield an improved product mix, stronger top-line growth and margin expansion on a go-forward basis.”
4) Baidu, Inc. (NASDAQ:BIDU)
Scion Asset Management’s Stake Value: $6,486,000
Number of Hedge Fund Holders: 42
Baidu, Inc. (NASDAQ:BIDU) is engaged in the provision of internet search services in China.
Market experts are optimistic about Baidu, Inc. (NASDAQ:BIDU)’s scaling and affordability of its AI offerings, such as ERNIE models and the Apollo Go autonomous ride-hailing service. The company continues to focus on improving margins and enhancing its market share in the GenAI and LLMs market. Its AI Cloud business is seeing accelerated growth due to strong demand for AI infrastructure and models. Baidu, Inc. (NASDAQ:BIDU)’s autonomous driving innovation, primarily Apollo Go, has been making significant strides toward commercial viability. It has been exploring numerous business models and partnerships to scale up robotaxi services.
Baidu, Inc. (NASDAQ:BIDU) focuses on making the ERNIE family of models affordable and efficient, enabling margin improvement and stable profitability. Moving forward, the primary tailwinds for growth include leadership positions in search engines, the addition of AI to it, and diversification in autonomous vehicles. Baidu, Inc. (NASDAQ:BIDU) aims to deploy 1,000 RT6 robotaxis in Wuhan by 2024 end. The company’s decade-long investment in AI seems to be paying off and should translate into long-term sustainable growth.
The transformative impact of Gen-AI and foundation models has been becoming more tangible. Across all the layers of its AI technology stack, and with the rapid adoption of applications built on top of ERNIE, Baidu, Inc. (NASDAQ:BIDU) has been scaling AI to address real-world problems.
Ariel Investments, an investment management company, released its first-quarter 2024 investor letter. Here is what the fund said:
“Alternatively, several positions weighed on performance. China’s internet search and online community leader, Baidu, Inc. traded lower alongside Chinese equities as intensifying problems in China weighed on investor sentiment during the period. The company continues to invest heavily in Artificial Intelligence (AI) and recently launched its generative AI, Ernie Bot, aimed at rivaling Open AI’s ChatGPT. While monetization of the new technology is largely dependent on regulatory review, we think Baidu should continue to experience margin improvement with the ongoing implementation of efficiency and profitability initiatives. While some investors remain on the sidelines due to uncertainty surrounding China’s economic growth, government regulations, and the political rhetoric towards Taiwan, we remain enthusiastic about Baidu’s longer-term opportunity for revenue growth and margin expansion across internet search, cloud, autonomous driving, artificial intelligence and online video.”
3) Molina Healthcare, Inc. (NYSE:MOH)
Scion Asset Management’s Stake Value: $7,292,769
Number of Hedge Fund Holders: 45
Molina Healthcare, Inc. (NYSE:MOH) operates as a managed care organization. It arranges for the delivery of healthcare services to persons who are eligible for healthcare programs for low-income families and individuals.
Molina Healthcare, Inc. (NYSE:MOH)’s strategic focus on Medicaid, along with its active mergers and acquisitions (M&A) strategy, places it well in the healthcare market. Wall Street remains optimistic about the company’s acquisition of ConnectiCare. The acquisition reflects a strong strategic fit for the company, adding an established government business, a recognized brand, and a statewide provider network. This move is expected to add $1.00 per share to the new store-embedded earnings. It should also enhance the company’s financial performance and exhibit its commitment to growth through targeted acquisitions.
Molina Healthcare, Inc. (NYSE:MOH) has successfully extended its Medicaid contracts in critical states like Virginia and Florida. This ensures continued revenue streams. The success in contract renewals demonstrates robust operational capabilities and a healthy competitive position in these markets. Molina Healthcare, Inc. (NYSE:MOH)’s effective medical management practices, primarily in managing re-joiners, and favorable geographic diversification should act as critical tailwinds.
The company’s aggressive growth strategy might enable Molina Healthcare, Inc. (NYSE:MOH) to expand its market presence, diversify revenue streams, and achieve economies of scale. Analysts at Wells Fargo & Company upped their price objective on the company’s shares from $315.00 to $360.00, giving an “Equal-weight” rating on 5″ August.
Fidelity Investments, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“On a stock-specific basis, a larger-than-benchmark stake in Molina Healthcare, Inc. (NYSE:MOH) (-28%), a California-headquartered managed care firm, was the biggest relative detractor. The past year has been a difficult one for the managed care industry, due to rising medical costs and government reimbursements that have not kept pace. The past three months, Molina’s stock was dragged down by negative sentiment for the segment, even though its latest earnings report, in April, was better than expected.”
2) Shift4 Payments, Inc. (NYSE:FOUR)
Scion Asset Management’s Stake Value: $7,335,000
Number of Hedge Fund Holders: 33
Shift4 Payments, Inc. (NYSE:FOUR) offers software and payment processing solutions in the United States and internationally.
Shift4 Payments, Inc. (NYSE:FOUR)’s business model stands apart for its ability to fuel growth via multiple channels. These include adding new logos, geographical expansion, entering new verticals, and converting gateway and backlog opportunities. This diversified approach provides the company with a competitive edge. Shift4 Payments, Inc. (NYSE:FOUR)’s growth strategy remains multifaceted and it is not overly reliant on same-store sales, which should fuel its revenue growth.
Wall Street remains optimistic about the company’s acquisition of Revel Systems. This strategic acquisition should offer multiple levers for growth. The acquisition aligns with Shift4 Payments, Inc. (NYSE:FOUR)’s strategy of expanding its technological capabilities and market reach. This can further strengthen its competitive position and open up new avenues for growth.
The multifaceted growth strategy enables Shift4 Payments, Inc. (NYSE:FOUR) to capitalize on numerous market opportunities simultaneously. For example, while expanding in new geographic markets, it can deepen its penetration in the current verticals or explore emerging payment technologies. Analysts at Barclays initiated the coverage on the shares of Shift4 Payments, Inc. (NYSE:FOUR) on 9th October. They gave an “Overweight” rating and a $120.00 price target.
ClearBridge Investments, an investment management company, released its second quarter 2024 investor letter. Here is what the fund said:
“Stock selection in the financials sector provided a positive offset. Shift4 Payments, Inc. (NYSE:FOUR), a software and payment processing solutions company, also saw positive returns during the period, with management increasing the top end of their full-year guidance for end-to-end payments volume.”
1) Alibaba Group Holding Limited (NYSE:BABA)
Scion Asset Management’s Stake Value: $11,160,000
Number of Hedge Fund Holders: 91
Alibaba Group Holding Limited (NYSE:BABA)’s core e-commerce business is the bright spot, which should continue to strengthen its competitive positioning. Moving forward, the company’s strong brand recognition, ecosystem diversity, and market reach should continue to act as primary tailwinds. The investments in international commerce demonstrate Alibaba Group Holding Limited (NYSE:BABA)’s ambition to improve its global footprint. Its strategy targets to replicate domestic success in overseas markets.
Alibaba Group Holding Limited (NYSE:BABA) has been positioning itself for future growth with the help of new initiatives in advertising and technology services. Its new advertising platform continues to gain traction, with Wall Street anticipating it to contribute significantly to revenue growth. Furthermore, the platform demonstrates a strategic move to diversify revenue streams and capitalize on Alibaba Group Holding Limited (NYSE:BABA)’s vast user base.
The introduction of new technology service fees should fuel the company’s financial performance. These fees, together with the advertising platform, can result in re-acceleration in Customer Management Revenue (CMR) growth.
Analysts at Bank of America upped their price target on the shares of Alibaba Group Holding Limited (NYSE:BABA) from $106.00 to $124.00, giving a “Buy” rating on 9th October. Oakmark Funds, advised by Harris Associates, released its third-quarter 2024 investor letter. Here is what the fund said:
“Alibaba Group Holding Limited (NYSE:BABA) was the top contributor during the quarter. The China-headquartered consumer discretionary company’s stock price rallied following the announcement of a multipronged stimulus package by the Chinese government. Despite the stock’s strong performance for the quarter, we continue to believe there is upside in the name and that the market is not fully pricing in the turnaround potential for the e-commerce business or other optionality the company possesses.”
While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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