5 Best Cheap Stocks to Buy According to Michael Burry

3. Lumen Technologies Inc. (NYSE: LUMN)

Burry’s Stake Value: $8,678,000
Percentage of Michael Burry’s 13F Portfolio: 0.64%
Number of Hedge Fund Holders: 32

A facilities-based technology and communications company Lumen Technologies Inc. (NYSE: LUMN) is among Michael Burry’s top 10 cheap stock picks. His hedge fund first initiated a position in LUMN during the September quarter of 2020 and sold out 46% of the stake in the first quarter of 2021 to capitalize on the share price rally. Despite that, Scion Asset Management held 650,000 shares of Lumen Technologies at the end of the first quarter. The valuations of the technology and communications company suggest that the stock has further upside potential in the days ahead. Its shares are trading around only 9 times to earnings. 

Longleaf Partners Fund, a Memphis-based fund under Southeastern Asset Management, mentioned a few stocks including Lumen Technologies in the first quarter investor letter. Here is what Longleaf Partners Fund stated: 

“Lumen (40%, 3.33%), the global fiber company, was the top contributor. While COVID fallout still weighed on fourth quarter results, the company benefited from positive business mix improvements. Early in the quarter, Lumen appreciated 38% in a few short days amidst the “GameStop / Reddit” short cover phenomenon. After this short term bounce, Lumen’s stock price appreciated more steadily over the last six weeks of the quarter with improved results. Many of last year’s worst-case fears have not materialized and the outlook is improving for the core business. We continue to believe that the company has multiple ways within its control to both grow and realize value per share, and we have a 13D filed to allow us to discuss these options with the company. Lumen’s board, which includes Southeastern-nominated Chairman Mike Glenn from FedEx and Director Hal Jones from Graham Holdings, is doing good work to realize Lumen’s hidden value and return the business to FCF/share growth. Despite its appreciation, the stock trades at less than half of our appraisal.”