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 deposit for the first quarter of 2022 shows a wide range of new investments and some interesting strategic moves with options. This is a significant change from the previous quarter, when Burry was selling most of his portfolio and calling for the “mother of all crashes.”
It is not exactly bullish on the overall market, recently issuing a serious inflation warning.
“Transient, no. Top, no. On the moon? If you mean a cold, dark place,” Barry wrote in a tweet that had since been deleted.
But the man who made a short cut in the US housing market – and won – clearly sees pockets of opportunity.
Meta Platforms (META) and Alphabet (GOOG)
Burry’s bet on high technology is clearly remarkable.
Technology and growth stocks have not been favored for almost half a year. Adding these two shares to the portfolio for the first time is an opposite move. Burry’s portfolio now includes 6,500 shares of Google Alphabet Inc. parent company. and 80,000 shares in Meta Platforms Inc., the parent company of Facebook. It is his fourth and sixth largest participation, respectively.
The move could be seen as a vote of confidence in digital advertising. It could also be a sign of devaluation. Both stocks are trading at around 13 and 20 times futures, respectively.
Booking.com is now the second largest contributor to Burry’s Scion Asset Management portfolio. It bought 8,000 shares of the company in the first quarter.
The holding of shares is traded at a ratio of price to free cash flow 17. This means that the cash flow return is as high as 5.9%. As international borders reopen and lockdowns loosen, booking could be an ideal bet for the recovery of world travel.
Burry bought a lot of tech stocks this quarter, but that should not mean he’s optimistic about the industry as a whole. The 13F deposit contained a huge short bet against Apple.
It reported 206,000 sell-offs in Apple shares at the end of the first quarter. The fictitious value of this bet is about $ 28 million. However, the actual cost could be much lower given the way in which option premiums are priced.
However, it is strange that one of the most famous short-sellers in the world is targeting one of the most valuable companies in the world. Apple has lost about 18% of its value to date. Supply chain breaks in China combined with weakening consumer purchasing power could affect Apple in the short term.
The stock is also trading at a relatively high valuation. Apple shares traded at a price-to-earnings ratio of 22 – well above the all-time high of 15.
Warner Brothers Discovery (WBD)
Media giant Warner Brothers Discovery is now the third largest shareholder in Burry’s portfolio. Added 750,000 shares in the first quarter.
The merger of Discovery and Warner Media has created a global network of content. This heterogeneous group owns rights to iconic characters such as Batman, sports channels in Europe, HBO and CNN.
The stock is down about 44% due to debt concerns and the competitive landscape landscape. However, the company expects to generate $ 3.65 in free cash flow per share by next year, which would mean a FCF return of 26% at current market value.
That could be why Burry made such a big bet on it.
This article provides information only and should not be construed as advice. It is provided without any guarantee.