Michael Burry – the hedge fund manager portrayed by Christian Bale in The Big Short – has invested aggressively during this market downturn.
Burry’s latest 13F application for the first quarter of 2022 shows a wide range of new investments and some interesting strategic initiatives with opportunities. It’s a marked shift from the previous quarter, when Burry sold most of its stock portfolio and called for “the mother of all crashes.”
He is not exactly optimistic about the overall market, and recently issued a serious warning about inflation.
“Transient, no. Peak, no. To the moon? If you mean a cold dark place,” Burry wrote in a page-deleted tweet.
But the man who shorted the U.S. housing market – and won – clearly sees pockets of opportunity.
Do not miss
Metaplatforms (META) and Alphabet (GOOG)
Burry’s commitment to big technology is clearly remarkable.
Technology and growth stocks have been at a disadvantage for almost half a year. Adding these two stocks to the portfolio for the first time is an opposite move. Burry’s portfolio now includes 6,500 shares in Google’s parent company Alphabet Inc. and 80,000 shares in Meta Platforms Inc., Facebook’s parent company. They are his fourth and sixth largest companies, respectively.
The initiative could be seen as a declaration of confidence in digital advertising. It can also be a signal of underestimation. Both shares are traded at around 13 and 20 times futures earnings, respectively.
The travel website Booking.com is now the second largest portfolio in Burry’s Scion Asset Management portfolio. He bought 8,000 shares in the company in the first quarter.
Booking shares are traded at a price-to-free cash flow ratio of 17. This means that the cash flow dividend is as high as 5.9%. As international borders reopen and closures ease, booking can be an ideal bid for the recovery of global travel.
Burry bought lots of technology stocks this quarter, but that should not indicate that he is optimistic about the entire sector. Filed in the 13F archive was a hugely short bet against Apple.
He reported 206,000 put options on Apple shares at the end of 1. quarter. The face value of this bet is around $ 28 million. However, the actual cost can be much lower considering how option premiums are priced.
Nevertheless, it is surprising that one of the world’s most famous short sellers is targeting one of the world’s most valuable companies. Apple has lost about 18% of its value year to date. Disruptions in the supply chain in China combined with a weakening of consumer purchasing power could affect Apple in the short term.
The stock is also trading at a relatively high valuation. Apple shares are trading at a price-to-earnings ratio of 22 – significantly higher than the historical average of 15.
Warner Brothers Discovery (WBD)
Media giant Warner Brothers Discovery is now the third largest holding in Burry’s portfolio. He added 750,000 shares in the first quarter.
The merger of Discovery and Warner Media has created a global flood of content. This conglomerate has rights to iconic characters, including Batman, European sports channels, HBO and CNN.
The stock is down about 44% due to concerns about debt and the competitive landscape of online streaming. However, the company expects to generate $ 3.65 in free cash flow per year. share for next year, which would mean a FCF dividend of 26% at current market value.
That could be why Burry bet so much on it.
This article is for information only and should not be construed as advice. It is delivered without any kind of warranty.