In this article, we discuss the top 6 stock picks of Michael Burry. If you want to skip our detailed analysis of these stocks, go directly to the Top 3 Stock Picks of Michael Burry.
The stock market has been in a constant state of flux this year, registering record highs following a better-than-expected economic recovery and concerning lows amid inflation fears. Wall Street has largely dealt with the volatility using a deft touch, not letting things spiral out of control. The same, however, cannot be said of Michael Burry, the chief of Scion Asset Management, who, in his typical fashion, has stoked fears of a looming market crash repeatedly and made multi-million dollar bearish bets against high-growth stocks like Tesla, Inc. (NASDAQ:TSLA) and ARK Innovation ETF (NYSE: ARKK).
In October, a week after revealing that he had sold most of the stocks in the Scion Asset Management portfolio during the third quarter, including the bets against Tesla, Inc. (NASDAQ:TSLA) and ARK, Burry asked his followers on Twitter about shorting cryptocurrencies. He asked several questions, including whether he would have to secure a borrow and could the short position be squeezed and called in. Burry had previously compared Bitcoin, the most popular cryptocurrency, to the housing bubble of 2007, a crisis during which the investor made hundreds of millions of dollars by predicting a crash.
A few hours after the tweet, which has now been deleted along with Burry’s Twitter account, Bitcoin climbed to a six-month high of $60,000. This is not the first time that Burry’s moves have baffled Wall Street.
Latest filings show that between June and September, Burry sold out of 19 stocks, including big names like Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Discovery, Inc. (NASDAQ:DISCA), to reduce his portfolio value to just $41 million from around $2 billion. During this time, he made new purchases in three stocks and reduced holdings in two equities.
In 2008, merely months after becoming a global celebrity following his legendary prediction about the housing bubble, Burry had closed his hedge fund, Scion Capital, to focus on personal investments. In 2013, he returned to the market with Scion Asset Management. The fund has provided investors with steady returns in the years since, with Burry actively pursuing a “proper goal” of averaging 20% in returns for a consistent period of time. However, he has struggled to do so given the incredible growth of tech firms, which Burry has warned is a “massive bubble” that may burst soon. The “soon” seems to be eluding the investor.
Our Methodology
The stocks were picked from the third quarter regulatory filings of Scion Asset Management. In order to provide readers with some context for their investment choices, the business fundamentals and analyst ratings for the stocks are also mentioned.
The hedge fund sentiment around each stock was calculated using the data of 867 hedge funds tracked by Insider Monkey.
Michael Burry of Scion Asset Management
Top Stock Picks of Michael Burry
6. CVS Health Corporation (NYSE:CVS)
Number of Hedge Fund Holders: 61
CVS Health Corporation (NYSE:CVS) provides healthcare services. Goldman Sachs analyst Nathan Rich recently initiated coverage of the stock with a Buy rating and a price target of $121, highlighting the “strong” underlying fundamentals of the firm as a growth driver.
The hedge fund of Michael Burry entered the fourth quarter of 2021 with 200,000 shares of CVS Health Corporation (NYSE:CVS) in the portfolio worth around $16.9 million.
Among the hedge funds being tracked by Insider Monkey, Chicago-based firm Harris Associates is a leading shareholder in CVS Health Corporation (NYSE:CVS) with 8 million shares worth more than $685 million.
At the end of the third quarter of 2021, 61 hedge funds in the database of Insider Monkey held stakes worth $1 billion in CVS Health Corporation (NYSE:CVS), compared to 67 in the previous quarter worth $1.3 billion.
Just like Tesla, Inc. (NASDAQ:TSLA), ARK Innovation ETF (NYSE: ARKK), Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Discovery, Inc. (NASDAQ:DISCA), CVS Health Corporation (NYSE:CVS) is one of the stocks attracting the attention of elite investors.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE:CVS) was one of them. Here is what the fund said:
“We sold our position in CVS Health Corp. to allocate capital to companies with larger margins of safety. During the five years that we owned CVS Health Corp., the company acquired Aetna. At the time, we also owned Aetna, and we believed the combination of the two companies would create additional value. After the acquisition, its business performance has been disappointing. We reevaluated our assumptions and determined its value has not grown.”
5. Lockheed Martin Corporation (NYSE:LMT)
Number of Hedge Fund Holders: 51
Lockheed Martin Corporation (NYSE:LMT) operates as an aerospace and defense firm. Scion Asset Management, as of the end of September, had 30,000 shares of the company worth $10.3 million in the portfolio.
Lockheed Martin Corporation (NYSE:LMT) recently announced that it had won a modification contract worth $286 million for ground production, training, field surveillance, and contractor logistics support under a Foreign Military Sales case.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Millennium Management is a leading shareholder in Lockheed Martin Corporation (NYSE:LMT) with 561,512 shares worth more than $193 million.
At the end of the third quarter of 2021, 51 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Lockheed Martin Corporation (NYSE:LMT), compared to 58 in the previous quarter worth $1.5 billion.
In its Q4 2020 investor letter, RiverPark Advisors, LLC, an asset management firm, highlighted a few stocks and Lockheed Martin Corporation (NYSE:LMT) was one of them. Here is what the fund said:
“Despite better-than-expected third quarter results, LMT shares were weak for the quarter as defense spending is expected to be flat for the coming year. With a record $150 billion backlog and almost 30% of its revenue coming from building F-35 aircraft with deliveries forecast to reach 180 per year in 4-5 years (3Q’s revenue upside was from the F-35), we believe LMT should grow at a higher rate than overall defense budget growth and Street expectations over the next several years. Further, strategic acquisitions (LMT acquired AJRD for $4 billion in late December), debt pay down, a 3% dividend yield, and continued share buybacks from $6 billion per year of free cash flow should lead to even greater shareholder returns.”
4. The GEO Group, Inc. (NYSE:GEO)
Number of Hedge Fund Holders: 16
In the filings for the third quarter, the fund of Burry detailed that it owned over 1.1 million shares of The GEO Group, Inc. (NYSE:GEO) worth $8.6 million, representing 20.74% of the portfolio. The GEO Group, Inc. (NYSE:GEO) is a real estate investment trust that acquires and manages secure facilities.
The GEO Group, Inc. (NYSE:GEO) posted earnings for the third quarter in early November, reporting a revenue of $557 million, beating analyst estimates by $5.5 million. The firm received positive analyst coverage after the earnings beat.
At the end of the third quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $72 million in The GEO Group, Inc. (NYSE:GEO), up from 15 in the previous quarter worth $74 million.
New York-based investment firm Mason Capital Management is a leading shareholder in The GEO Group, Inc. (NYSE:GEO) with 2.5 million shares worth more than $19 million.
Alongside Tesla, Inc. (NASDAQ:TSLA), ARK Innovation ETF (NYSE: ARKK), Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Discovery, Inc. (NASDAQ:DISCA), The GEO Group, Inc. (NYSE:GEO) is one of the stocks on the radar of institutional investors.
In its Q1 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and The GEO Group, Inc. (NYSE:GEO) was one of them. Here is what the fund said:
“GEO Group (GEO) declined 9.8% during the period as President Biden’s Executive Order directing the Department of Justice not to renew contracts with private prisons at the Federal level offset solid Q4 results. GEO reported Q4 revenue of $578.1M, in-line with consensus while EBITDA of $107.9M topped estimates of $87.7M by 23%. Adjusted Funds from Operations (AFFO) of $0.62/share fell 6% Y/Y and provided coverage of 2.5x on the quarterly dividend of $0.25/share (13.5% annualized yield). The company exited the quarter with ample liquidity of $420M and remains committed to paying down $75M-$100M of debt annually. Management introduced 2021 guidance with revenue of $2.24Bn-$2.27Bn, EBITDA of $386M-$400M, and AFFO of $1.98-$2.08, all of which assumes Bureau of Prison contracts with optional expiration periods in 2021 will not be renewed. Additionally, GEO announced a $200M convertible notes offering due 2026 with net proceeds funding the redemption of the 5.875% unsecured notes due 2022.”
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Disclosure. None. Top Stock Picks of Michael Burry is originally published on Insider Monkey.
