In this article, we discuss the 10 stocks Michael Burry is selling.
Michael Burry, the chief of California-based Scion Asset Management, has been in the news recently after regulatory filings revealed that he had PUT options on more than 800,000 shares of Tesla, Inc. (NASDAQ: TSLA), the electric vehicle maker owned by billionaire Elon Musk. Burry is one of the most renowned names in the hedge fund industry, managing over $1.3 billion in assets, and has previously voiced skepticism over the market capitalization of the EV maker and warned Musk about increasing competition in the EV space from traditional carmakers.
Burry jumped to prominence during the 2008 financial crisis after he bet $1 billion against the US housing bubble that ultimately crashed and resulted in one of the worst financial meltdowns of the post-war era around the world. Over the past decade, Burry has focused on investments related to water, gold, and farm lands, while also investing periodically in high growth stocks like Alphabet Inc. (NASDAQ: GOOG), the parent company of internet search engine Google, and Facebook, Inc. (NASDAQ: FB), the technology firm that owns some of the largest social media platforms in the world with billions of registered users.
According to the latest filings with the United States Securities and Exchange Commission, Scion Asset Management owns 80,000 shares in Alphabet Inc. (NASDAQ: GOOG) that are worth over $165 million. Compared to filing at the end of the fourth quarter of 2020, Burry has increased stake in the company by more than 12% in the first three months of the year. Similarly, the hedge fund has increased stake in Facebook, Inc. (NASDAQ: FB) by 11.9% over the period, and now owns 550,000 shares in the company worth over $161 million.
Other notable bull positions of Burry include CVS Health Corporation (NYSE: CVS) – Scion owns 400,000 shares in the healthcare company worth more than $30 million – and Occidental Petroleum Corporation (NYSE: OXY), the Texas-based petrochemical manufacturer, in which Burry has increased stake by 0.44% compared to last year and now owns 225,000 shares that are worth close to $6 million. Some of the other firms that the investor, who is also the subject of Hollywood film The Big Short, is bullish on are available here.
But in this article, our focus would be on the stocks that Michael Burry is selling.
Burry is an exception in the big finance world that is reeling from tech-enabled disruption. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Michael Burry of Scion Asset Management
With this context in mind, here is our list of the 10 stocks Michael Burry is selling. These were ranked according to the investment portfolio of Scion Asset Management at the end of the first quarter of 2021. Burry sold his entire stakes in these stocks before entering the second quarter of 2021, with the exception of Tesla, Inc. (NASDAQ: TSLA), on which he has a short position.
Stocks Michael Burry Is Selling
10. The Allstate Corporation (NYSE: ALL)
Number of Hedge Fund Holders: 41
The Allstate Corporation (NYSE: ALL) is placed tenth on our list of 10 stocks Michael Burry is selling. The stock has returned 41% to investors in the past year. The company markets insurance products primarily in the United States and Canada. On July 1, investment advisory JP Morgan picked the stock as one of the top picks in the insurance sector ahead of expected earnings results for the second quarter of 2021.
On June 1, The Allstate Corporation (NYSE: ALL) announced that it would purchase SafeAuto, an auto insurance firm, by the end of the third quarter of 2021 in a deal worth $300 million. The company said the purchase was part of a plan to accelerate offering of affordable protection solutions to customers.
At the end of the first quarter of 2021, 41 hedge funds in the database of Insider Monkey held stakes worth $893 million in The Allstate Corporation (NYSE: ALL), up from 38 the preceding quarter worth $838 million.
Unlike Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), CVS Health Corporation (NYSE: CVS), and Occidental Petroleum Corporation (NYSE: OXY), The Allstate Corporation (NYSE: ALL) and Tesla, Inc. (NASDAQ: TSLA) are stocks that Michael Burry is selling.
In its Q2 2020 investor letter, Generation PMCA, an asset management firm, highlighted a few stocks and The Allstate Corporation (NYSE: ALL) was one of them. Here is what the fund said:
“Allstate, the second largest personal auto and home insurance writer in the U.S., should see earnings expand this year, during a challenging period when most companies aren’t expected to deliver year-over-year earnings growth. Higher mortality rates from coronavirus are being offset by lower mortality outside of virus-related deaths and expense control. In auto, the benefits of lower miles driven due to the pandemic offset auto rebates. Historically, Allstate’s scale and conservative underwriting have translated to superior profitability metrics. The company is on pace to achieve a mid-teen return on equity for ’21, well above peers. However, with shares currently at 1.3x book value, Allstate trades at a discount to competitors. We believe skepticism around recent acquisitions to diversify away from life and auto insurance (e.g., identify theft and warranties) is the reason for its discounted valuation. We expect the company to continue to cast its net further afield given the long-term threat of autonomous vehicles to its automobile franchise. We are comfortable with the strategy, especially since these acquisitions are immaterial. Meanwhile, the company should continue to post peer-beating results. Our FMV estimate is $120.”
9. Ares Capital Corporation (NASDAQ: ARCC)
Number of Hedge Fund Holders: 15
Ares Capital Corporation (NASDAQ: ARCC) is a business development company based in New York. It is ranked ninth on our list of 10 stocks Michael Burry is selling. The company’s shares have returned 37% to investors in the past year. On June 3, the firm priced an underwritten public offering worth $850 million unsecured notes. The notes will mature in 2028 and the net proceeds from the offering would be used to repay outstanding debt.
Ares Capital Corporation (NASDAQ: ARCC) is one of the best options in the market when it comes to dividend payouts. On April 28, the company declared a quarterly dividend of $0.40 per share, in line with previous. The forward yield was 8.16%.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Ares Capital Corporation (NASDAQ: ARCC) with 1.4 million shares worth more than $26 million.
Unlike Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), CVS Health Corporation (NYSE: CVS), and Occidental Petroleum Corporation (NYSE: OXY), Ares Capital Corporation (NASDAQ: ARCC) and Tesla, Inc. (NASDAQ: TSLA) are stocks that Michael Burry is selling.
8. Designer Brands Inc. (NYSE: DBI)
Number of Hedge Fund Holders: 18
Designer Brands Inc. (NYSE: DBI) stock has returned 143% to investors in the past year. The company makes and sells footwear and other accessories mostly in North America. It is placed eighth on our list of 10 stocks Michael Burry is selling. On April 15, the firm disclosed an agreement with sports retailer Lid that would bring licensed sports products to stores for the first time in Canada.
In earnings results for the first quarter of 2021, posted on May 26, Designer Brands Inc. (NYSE: DBI) reported earnings per share of $0.12, beating market estimates by $0.20. The revenue over the period was more than $700 million, up 45% year-on-year.
At the end of the first quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $110 million in Designer Brands Inc. (NYSE: DBI), up from 17 in the previous quarter worth $52.4 million.
Unlike Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), CVS Health Corporation (NYSE: CVS), and Occidental Petroleum Corporation (NYSE: OXY), Designer Brands Inc. (NYSE: DBI) and Tesla, Inc. (NASDAQ: TSLA) are stocks that Michael Burry is selling.
7. Discovery, Inc. (NASDAQ: DISCA)
Number of Hedge Fund Holders: 48
Discovery, Inc. (NASDAQ: DISCA) is ranked seventh on our list of 10 stocks Michael Burry is selling. The company’s shares have offered investors returns exceeding 49% over the course of the past twelve months. The firm is a media platform that provides different kinds of entertainment and educational content in more than 50 languages. On June 11, the firm setup a revolving credit facility worth $2.5 billion. The facility has a five-year term and replaces a similar entity setup in 2016.
On May 17, Discovery, Inc. (NASDAQ: DISCA) announced a merger with WarnerMedia in a deal worth $43 billion. The shares of the nonfiction and international entertainment company jumped more than 16% after the deal was made public.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Discovery, Inc. (NASDAQ: DISCA) with 3.8 million shares worth more than $167 million.
Unlike Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), CVS Health Corporation (NYSE: CVS), and Occidental Petroleum Corporation (NYSE: OXY), Discovery, Inc. (NASDAQ: DISCA) and Tesla, Inc. (NASDAQ: TSLA) are stocks that Michael Burry is selling.
In its Q1 2021 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Discovery, Inc. (NASDAQ: DISCA) was one of them. Here is what the fund said:
“We also sold most of our holdings in Discovery as the stock price continued to increase to new highs. However, in late March the stock declined considerably when brokers liquidated holdings by Archegos Capital (see above in General Commentary) to satisfy margin calls. That brought the stock price down to levels that we found attractive, and we bought back a significant amount of the shares that we had sold earlier that month.”
6. The GEO Group, Inc. (NYSE: GEO)
Number of Hedge Fund Holders: 13
The GEO Group, Inc. (NYSE: GEO) stock has offered investors returns exceeding 19% over the course of the past four weeks. It is placed sixth on our list of 10 stocks Michael Burry is selling. The firm is a real estate investment trust focusing on investments related to secure facilities, processing centers, and community reentry centers globally. The firm recently announced splitting the role of the CEO and the chairman in a move aimed at improving corporate governance.
On June 17, the share price of The GEO Group, Inc. (NYSE: GEO) jumped close to 6% as the CEO of the company bought 166,644 shares of the firm. The purchase increased the stake of the CEO in the firm to 3 million shares.
At the end of the first quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $725 million in The GEO Group, Inc. (NYSE: GEO), down from 18 in the previous quarter worth $610 million.
Unlike Alphabet Inc. (NASDAQ: GOOG), Facebook, Inc. (NASDAQ: FB), CVS Health Corporation (NYSE: CVS), and Occidental Petroleum Corporation (NYSE: OXY), The GEO Group, Inc. (NYSE: GEO) and Tesla, Inc. (NASDAQ: TSLA) are stocks that Michael Burry is selling.
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.”
5. HollyFrontier Corporation (NYSE: HFC)
Number of Hedge Fund Holders: 20
HollyFrontier Corporation (NYSE: HFC) is a Texas-based petroleum refining company. The company’s shares have returned over 19% to investors in the past twelve months. It ranked fifth on our list of 10 stocks Michael Burry is selling. Burry sold his entire stake in the company at the beginning of this year. However, the firm posted mixed earnings results for the first quarter of 2021 on May 5, reporting earnings per share of -$0.53, missing market estimates by $0.07. The revenue for the first three months of 2021 was $3.5 billion, up close to 3% year-on-year and beating market predictions by $680 million.
On May 20, investment advisory Goldman Sachs downgraded HollyFrontier Corporation (NYSE: HFC) stock to Sell from Neutral with a price target of $34 after on the back of uncertainty around capital allocation and the suspension of dividend payouts as part of a funding strategy.
Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in HollyFrontier Corporation (NYSE: HFC) with 1.6 million shares worth more than $57 million.
4. Kimball International, Inc. (NASDAQ: KBAL)
Number of Hedge Fund Holders: 16
Kimball International, Inc. (NASDAQ: KBAL) is placed fourth on our list of 10 stocks Michael Burry is selling. The stock has returned 15% to investors in the past twelve months. The company makes and sells furniture products around the world. On May 4, the firm posted quarterly earnings results for the third quarter, reporting earnings per share of -$0.03, missing market predictions by $0.07. The revenue for the period was $138 million, down 22% year-on-year and missing market estimates by more than $3.5 million. Burry, perhaps sensing the disappointing earnings, sold his entire stake in the company during the first three months of 2021.
Kimball International, Inc. (NASDAQ: KBAL) is also a solid option for investors who want to retire early as the firm pays a regular and healthy dividend. On April 26, the firm declared a quarterly dividend of $0.09 per share, in line with previous. The forward yield was 2.5%.
At the end of the first quarter of 2021, 16 hedge funds in the database of Insider Monkey held stakes worth $478 million in Kimball International, Inc. (NASDAQ: KBAL), down from 18 in the preceding quarter worth $627 million.
3. Urstadt Biddle Properties Inc. (NYSE: UBP)
Number of Hedge Fund Holders: 10
Urstadt Biddle Properties Inc. (NYSE: UBP) is a real estate investment trust based in Connecticut. It is ranked third on our list of 10 stocks Michael Burry is selling. The company’s shares have returned 62% to investors in the past year. The company is one of the best investment options for steady income on the side. On June 7, it declared a quarterly dividend of $0.207 per share, an increase of more than 65% from the previous dividend. The forward yield was over 5.3%. However, Burry has sold his entire stake in firm.
On June 28, Urstadt Biddle Properties Inc. (NYSE: UBP) announced that it was selling the Newington Park Shopping Center for more than $13 million. CEO Willing Biddle said that the property was being sold because it no longer met ideal investment parameters.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Urstadt Biddle Properties Inc. (NYSE: UBP) with 336,817 shares worth more than $5.6 million.
2. Molson Coors Beverage Company (NYSE: TAP)
Number of Hedge Fund Holders: 34
Molson Coors Beverage Company (NYSE: TAP) stock has offered investors returns exceeding 52% over the course of the past year. The company makes and sells beers and other beverages. It is placed second on our list of 10 stocks Michael Burry is selling. Burry has sold his entire stake in the firm, but on May 25, investment advisory Bernstein initiated coverage on the stock with an Outperform rating and a price target of $74, implying an upside potential of 28%. Trevor Stirling, an analyst at the firm, said that strong growth was expected for beer brands in super-premium domestic beer.
The Molson Coors Beverage Company (NYSE: TAP) posted earnings for the first quarter of 2021 on April 29, reporting earnings per share of $0.01, beating market predictions by $0.11. The revenue over the period was close to $2 billion, beating market predictions by $30 million.
At the end of the first quarter of 2021, 34 hedge funds in the database of Insider Monkey held stakes worth $341 million in Molson Coors Beverage Company (NYSE: TAP), down from 39 in the preceding quarter worth $386 million.
1. Tesla, Inc. (NASDAQ: TSLA)
Number of Hedge Fund Holders: 62
Tesla, Inc. (NASDAQ: TSLA) is ranked first on our list of 10 stocks Michael Burry is selling. The company’s shares have offered investors returns exceeding 180% over the course of the past twelve months. The company makes and sells electric vehicles and clean energy products. Burry has a short position on the stock, believing it is overvalued and facing increased competition. However, on July 2, the company announced that it had produced more than 206,000 vehicles in the second quarter of 2021, delivering more than 201,000 of them that included 1,890 Model S/X vehicles and 199,360 Model 3/Y vehicles, largely meeting market expectations in this regard.
On July 2, investment advisory Wedbush maintained an Outperform rating on Tesla, Inc. (NASDAQ: TSLA) stock with a 12-month price target of $1,000, backing the electric vehicle maker to deliver close to 900,000 vehicles this fiscal year with a strong second half. The company, despite being one of the most shorted stocks in the world – high profile investors like David Einhorn and Jim Chanos have also previously revealed big shorts on the firm – has a track record of beating bear predictions and trumping big finance.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Tesla, Inc. (NASDAQ: TSLA) with 24.4 million shares worth more than $16 billion.
Here is what Baron Partners Fund has to say about Tesla, Inc. (NASDAQ: TSLA) in its Q1 2021 investor letter:
“Tesla, Inc. designs, manufactures, and sells fully electric vehicles, solar products, energy storage solutions, and battery cells. The stock fell during the quarter as a result of general market dynamics and a potential production slowdown due to parts shortages. A refreshed S/X and China Model Y ramp could also have a negative impact on margins in early 2021. We anticipate strong growth and improved margins driven by new production capacity, manufacturing efficiencies, localization of its manufacturing and supply chain, and maturation of Tesla’s full self-driving technology.”
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Disclose. None. 10 Stocks Michael Burry is Selling is originally published on Insider Monkey.
