Michael Burry, renowned investor and head of Scion Asset Management in Saratoga, California, submitted his investment firm’s updated 13F portfolio filing on Aug. 14 for the quarter ended June 30. He’s made some significant changes, and some may say taken big risks, with his trading strategy.
Scion sold out of 11 portfolio holdings, bringing his total stock positions down to 10, with a few new names in the updated filing. Burry has also added to some big-name positions and cut the weighting of a few others.
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All in all, the second quarter of 2024 was a busy one for Burry and Scion. The 13F offers a glimpse into a new mindset for the historically tight-lipped investor who made market history by successfully betting against the U.S. housing market in 2008.
“Dr. Burry’s one of those investors who doesn’t just follow the crowd,” says Edward Corona, a market trader and publisher of The Options Oracle Newsletter. “He’s a true contrarian, digging deep into the numbers and spotting opportunities others might miss.”
Burry, who earned a medical degree from Vanderbilt University but eschewed a career in medicine, might come off as a bit unconventional for someone new to his style; he’s not your typical Wall Street portfolio manager. “But that’s what makes him interesting,” Corona says. “He’s the kind of investor who bets big when he sees the value others overlook, like when he shorted the housing market before the 2008 crash.”
Here’s a look at Scion’s portfolio changes in the second quarter, including a glimpse of what’s happening with the companies Burry is favoring this year:
Burry’s Closed Positions
First, here are the 11 positions Scion exited during Q2, with some big names in the mix, including HCA Healthcare Inc. (ticker: HCA), which represented the third-largest position in Burry’s Q1 holdings:
— Sprott Physical Gold Trust (PHYS)
— Block Inc. (SQ)
— Vital Energy Inc. (VTLE)
— Citigroup Inc. (C)
— Safe Bulkers Inc. (SB)
— Cigna Group (CI)
— First Solar Inc. (FSLR)
— Star Bulk Carriers Corp. (SBLK)
— Advance Auto Parts Inc. (AAP)
— BP PLC (BP)
— HCA Healthcare Inc. (HCA)
Burry’s Updated Positions
Alibaba Group Holding Ltd. (BABA)
Portfolio percentage: 21.3%
Burry’s biggest position is Alibaba, the China-based technology infrastructure and marketing firm. Scion bought into BABA at about $72 per share in Q2, and the stock had risen to $82.96 per share as of Aug. 22. During the trading day on Aug. 23, BABA shares were climbing on news that it is upgrading its secondary listing on the Hong Kong Stock Exchange to a primary listing, giving it access to billions more capital in mainland China.
According to Scion’s 13F, Burry snapped up 30,000 additional shares of BABA in Q2, bringing the position’s total value to $11.2 million. BABA shares have been rising over the past month after an early summer slide due to a slumping Chinese economy and lower revenues.
Still, analysts see an upside to Alibaba. JPMorgan’s Alex Yao reiterated a “hold” position on BABA in early August, with a $108 price target. Barclays and Benchmark also recently weighed in as “buys” on BABA, with the latter issuing a $118 price target. That represents a 42.2% upside from its current pricing.
Shift4 Payments Inc. (FOUR)
Portfolio percentage: 14%
With a purchase of 100,000 shares of stock at $73 per share, this new buy shows Burry may have an interest in payment processing, specifically in the hospital and entertainment sectors.
Based in Center Valley, Pennsylvania, Shift4 has seen its share price rise to $79.13 per share as of Aug. 22, already earning Scion a decent profit. The company’s stock price is up 18.8% over the past three months and up 44.2% year to date.
Burry may be on to something with Shift4. Payment volumes have risen from $26.8 billion in Q2 2023 to $40.1 billion in the same period of 2024. Only four years ago, the company was processing $4.2 billion in payments, a level of growth that has caught the attention of investors.
Revenue has also increased 30% in the past year to $827 million, as the company has added big brand names like Nobu Hotel, Pacers Sports and Entertainment, and the NFL’s Chicago Bears to its client list. It’s a pure fintech play for Scion, and so far, it’s paying off.
Molina Healthcare Inc. (MOH)
Portfolio percentage: 13.9%
Molina Healthcare’s inclusion as a new position suggests that Burry sees potential in the health care sector, focusing on well-positioned companies to benefit from ongoing health care policy and service changes.
Scion picked up 24,530 shares of Molina, a Long Beach, California-based managed-care services provider. The company saw revenues rise from $8.3 billion in the second quarter of 2023 to $9.4 billion in Q2 2024. The stock has shot up 18.7% over the past month, largely due to the company’s glowing Q2 numbers.
JPMorgan’s Lisa Gill recently gave the stock a “buy” rating with a target price of $378. MOH closed at $343.88 per share on Aug. 22, while Scion’s reported buy price was about $297 per share. The market value of Scion’s shares was about $7.3 million at the time of purchase.
Baidu Inc. (BIDU)
Portfolio percentage: 12.4%
Burry is betting big on Baidu, the China-based internet search and digital marketing giant, adding 35,000 shares for a total market value of $6.5 million. The reported buy-in price was about $86, and the stock currently trades around that level.
Burry is buying BIDU on the dip, as the stock is down 33% for the year and 16% over the past three months. Yet Baidu is well entrenched, with the “Google of China” commanding 52% of China’s internet search market and its new artificial intelligence-powered Ernie Bot 4.0 rivaling OpenAI’s ChatGPT 4.0.
Burry’s 87.5% higher BIDU position signals his confidence that business will only get bigger and better.
JD.com Inc. (JD)
Portfolio percentage: 12.3%
Scion sold 30.5% of its JD shares in Q2, leaving 250,000 shares in the portfolio with a 12.3% portfolio allocation. This is another China technology play that should also pay dividends for Burry, as the company’s profits nearly doubled in the most recent quarter, clocking in at $1.8 billion in Q2, representing a 92% profit boost from the same period in 2023.
While Burry doesn’t publicly opine on the reasons for his market picks, the 30% sell-off could be simply a rebalancing strategy — since a decline in the Chinese tech market clearly isn’t cramping JD’s style.
“What’s interesting here is that Burry’s betting big on Chinese tech, even though these stocks haven’t exactly been lighting it up this year,” Corona notes.
Hudson Pacific Properties Inc. (HPP)
Portfolio percentage: 10.5%
Hudson Pacific represents another new portfolio purchase for Scion. It owns 1.1 million shares at a purchase price of $4.81. The stock currently trades above $5 per share, and on Aug. 23 soared 8% in midday trading two weeks after reporting a revenue surprise for the recent quarter.
The Los Angeles-based real estate company specializes in acquiring and developing media and entertainment studios primarily on the U.S. West Coast, Canada and the U.K. The purchase gives Burry a foot in the door in a rising real estate niche as HPP expands into new markets.
Investors who don’t have Burry’s deep pockets and time commitment to this real estate play should note that analysts aren’t bullish on the stock right now. Piper Sandler has downgraded HPP to a “hold” with a $6 target price.
The RealReal Inc. (REAL)
Portfolio percentage: 6.1%
Scion slashed 29.2% of its REAL holdings in Q2. The portfolio now holds 1 million shares of REAL, with a market value of $3.2 million. As of Aug. 22, the stock was trading at $2.57 per share, down 37% over the past three months.
The share-price decline is largely due to a lower financial outlook for 2024, as REAL revenues are expected to wane in the second half of the year. The San Francisco-based consigned luxury goods marketplace operator sees lower consumer demand for upscale products, and there are nagging bankruptcy rumors percolating on Wall Street.
The company estimated third-quarter revenue of $135 million to $142 million, lower than consensus analyst estimates of $144 million.
A Big Burry Lesson? Do Your Homework
Should Main Street investors emulate Burry’s portfolio decisions in their own portfolios? Maybe not, market experts say.
“As much as Burry’s moves are intriguing, I’d say they’re not necessarily for everyone,” Corona says. “He’s got a high tolerance for risk and a knack for seeing value where others might not. For example, his big bets on Chinese internet stocks might not be something every investor is comfortable with, especially given the volatility and recent performance of these stocks.”
If you consider following his lead, ensure it aligns with your risk tolerance and financial goals. “Burry plays a different game than most Main Street investors, so it’s important to do your own homework,” Corona adds.
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7 Michael Burry Stocks to Watch in 2024 originally appeared on usnews.com
Update 08/23/24: This story was previously published at an earlier date and has been updated with new information.
