To The Moon

Michael Burry and his claim to fame?

• He is an American investor and hedge fund manager.

• His claim to fame happened by predicting and profiting from the subprime mortgage crisis of 2007-2008.

• He was one of the few investors who saw the coming crisis and took steps to position himself to benefit from it.

• His story was popularized in the book and movie "The Big Short".

• In 2008, after the crisis, Burry closed his investment firm Scion Capital.

• In 2013, he started a new hedge fund, named Scion Asset Management and is still managing it.

• Since then, his focus remains, managing his own investments.

• He has remained a vocal critic of the financial system and has spoken out against what he sees as excessive risk-taking and speculation.

• He continues to make headlines with his investment bets and market commentary.

In this context, Finbold delves into the performance of Burry’s extensive stock portfolio, unveiling the standout winners and the underperforming losers in his latest investment saga.

As the Chinese saying goes - 先苦後甜, let’s start on the “low” and ends on the “high” ok.

Burry’s 2023 losers.

(1) $Invesco QQQ Trust-ETF(QQQ)$ & $SPDR S&P 500 ETF Trust(SPY)$

• One of the poorest stock market moves Burry and Scion made in 2023 is the bearish bet against SPY and QQQ equity exchange-traded funds (ETFs).

• This was revealed in Q2 2023.

• According to analysts’ calculations, the investment giant closed his position against those funds at an approximate -40% loss.

(2) $iShares Semiconductor ETF(SOXX)$.

• Shortly after exiting QQQ & SPY, Burry redirected his bearish sentiment toward the semiconductor sector.

• Scion bought “Put” options tied to ETF SOXX, one of the biggest semiconductor ETFs. (see below)

• According to HedgeFollow, the average buy price of the options was $490.46.

• Compared to that price, SOXX’s value surged >16%.

• Unfortunately, it was not favourable for Burry and Scion because the buying the “put” options involves betting on the potential profitability of a decline in the underlying asset’s price.

• He lost money betting against the semiconductor ETF.

(3) JD.com & Alibaba

• While above 2 “disinvestments” were ETFs and Options trading, the 3rd disinvestment held by Scion were the ill-performing Chinese internet stocks — JD.com (ticker: JD) and Alibaba (ticker: BABA).

• As per the latest data retrieved, the value of these investments fell -12.8% and -11.5% respectively based on Scion’s average buy prices. 

(4) Nexstar Media Group (Ticker: NXST).

• Burry foray into media company stock also delivered a negative performance, although it is down just -1.6% from the average buy price. 

• Nonetheless, a loss is still a loss.

Burry’s 2023 winners.

Now that the negative bits are out of the way, we could focus on the “good” stuff. Ready?

Preface:

Since his market crash prediction 15 years ago, many of Burry’s subsequent forecasts either did not come to fruition or, in some cases, took a turn for the worse.

Yet, at the same time, his capability to identify winners and make timely trades is very much present.

When looking at his 2023 moves and performance of specific stocks, one of the names that stands out.

(1) $Hudson Pacific Properties(HPP)$.

• This is a real estate investment trust (REIT) with a market cap of > $1.2 Billion.

• Burry’s Scion Asset Management first invested in HPP in Q2 2023.

• Scion bought 250,000 shares.

• A few months later, Q3 2023 securities filings revealed that the legendary investor boosted this position by an additional +60%. 

• According to HedgeFollow, value of this investment soared > +61% from the average buy price.

• It turned HPP into one of Burry’s best-performing stocks in 2023. (see below)

(2) $The RealReal(REAL)$ & Signet Jewelers Limited (Ticker: SIG).

• It is “strange” to invest in luxury goods marketplace stocks.

• Regardless, Burry’s investment in REAL and SIG gained > +44% and +42%, respectively.

(3) $Stellantis NV(STLA)$ .

• Stellantis NV is Burry’s largest individual stock holding.

• It is 17.4% of Scion Asset’s portfolio.

• In terms of profits, it has soared around +30% from the average buy price.

My viewpoints:

• When I decided to share this post, I was curious to see what an “acclaimed” investor’s portfolio would look like.

• Was I shock with Burry’s holdings? Yes, definitely.

• Firstly, there isn’t a specific direction in his holdings, its diverse - ranging from ETFs to options trading to Chinese shares to REITs to luxury goods and finally automaker.

• It is really a complete gamut of diverse sectors.

• The Magnificent 7 is nowhere to be sighted.

• Stock prices do not seem to mean much to him. He is comfortable with both a $2 stock (eg. Realreal) and a $3,566.65 stock (eg. Booking.com).

• I am “glad” to learn of his REIT pick - Hudson Pacific Properties because going into 2024 with interest cut in the horizon, it maybe time to look at property related stock or REIT in this case.

• And both BMO Capital and Piper Sandler have rated HPP as “Overweight”.

• One other thing to note about HPP is — though its 6-months YTD performance is reported +94.61% gain, its 12-months YTD performance is -4.55% loss surprisingly.

• My added research on Burry also revealed that Scion Asset Management actually has a small but tight portfolio of stocks.

• In total there are only 11 stocks in the holdings. (see below)

• At first glance, it seems to me (and I maybe mistaken) that they are not mainstream stocks except for a few.

• If you look closer, you will realize that only 2 of 11 stocks are negative (Chinese stocks - Alibaba & Jd.com), 9 of 11 stocks are positive.

When it comes to investment, is staying “green” the most important rule of all rules?

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• Do you think you will be interested in any of Burry’s stock picks?

• Do you think you will ever have an eclectic portfolio of stocks like Burry?

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