In this article, we discuss the 7 new stocks to invest in according to Michael Burry. If you want to skip our detailed analysis of these stocks, go directly to the 2 New Stocks to Invest In According to Michael Burry.
Michael Burry, the legendary investor who was the subject of a Hollywood movie for his investment exploits leading up to and during the financial crisis of 2008, has in recent months outlined his fears around inflation and the “mother of all crashes” amid rampant speculation and soaring valuations in the technology world. Burry manages over $2 billion in assets through his hedge fund, Scion Asset Management, and has made several new purchases between March and June this year that reflect his overall bleak outlook on the economy.
The value of the Scion portfolio climbed $700 million in the second quarter of 2021, according to the latest 13F data. Burry sold off 18 stocks during this period and made additional purchases in 12 stocks he owned previously. However, he also bought nine new stocks, mostly real estate, transportation, and energy firms that are likely to provide the investor some cover in an inflationary scenario. The top ten holdings represent over 92% of the Scion portfolio, including massive bearish options on EV maker Tesla and the ARK Innovation ETF.
Some of the top stocks in the investment portfolio of Scion Asset Management at the end of the second quarter of 2021 were Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), among others. Over the years, the success of Burry – in 2007, at the height of the subprime crisis, his fund gained 85% – has been an exception in the multi-trillion dollar hedge fund business that is reeling from tech-led 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 July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). 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
Our Methodology
With this context in mind, here is our list of the 7 new stocks to invest in according to Michael Burry. These were ranked according to the investment portfolio of Scion Asset Management at the end of the second quarter of 2021.
Only new additions to the portfolio – purchased in whole between March and June this year – compared against the filings for the first quarter of 2021, were selected for the list.
The analyst ratings of each company are also discussed to provide readers with some more context for their investment decisions. The hedge fund sentiment around each stock was gauged using the data of 873 hedge funds tracked by Insider Monkey.
New Stocks to Invest In According to Michael Burry
7. Vy Global Growth (NYSE: VYGG)
Number of Hedge Fund Holders: 35
Vy Global Growth (NYSE: VYGG) is a special purpose acquisition company headquartered in the Cayman Islands. It is ranked seventh on our list of 7 new stocks to invest in according to Michael Burry. According to the latest filings, Scion Asset Management owned 550,000 shares in the firm at the end of June 2021 worth $996,000, representing 0.04% of the portfolio.
Vy Global Growth (NYSE: VYGG) has a market cap of $625 million and a volume of 131,849. The 52-week price range of the stock lies between $9.6 and $12.7. The company focuses on mergers with firms working in the finance and technology sectors of the market.
At the end of the second quarter of 2021, 35 hedge funds in the database of Insider Monkey held stakes worth $281 million in Vy Global Growth (NYSE: VYGG), down from 36 in the previous quarter worth $292 million.
Just like Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), Vy Global Growth (NYSE: VYGG) is one of the stocks to invest in according to Michael Burry.
6. The GEO Group, Inc. (NYSE: GEO)
Number of Hedge Fund Holders: 15
The GEO Group, Inc. (NYSE: GEO) is a Florida-based real estate investment trust. It is placed sixth on our list of 7 new stocks to invest in according to Michael Burry. Regulatory filings show that Scion Asset Management owned 2.5 million shares in the company at the end of the second quarter of 2021 worth $17.8 million, representing 0.85% of the portfolio.
In earnings results for the second quarter, posted on August 4, The GEO Group, Inc. (NYSE: GEO) reported a revenue of more than $565 million, down close to 4% year-on-year but beating market estimates by $4.2 million.
At the end of the second quarter of 2021, 15 hedge funds in the database of Insider Monkey held stakes worth $74 million in The GEO Group, Inc. (NYSE: GEO), up from 13 in the previous quarter worth $72 million.
Along with Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), The GEO Group, Inc. (NYSE: GEO) is one of the stocks to invest in according to Michael Burry.
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. Ovintiv Inc. (NYSE: OVV)
Number of Hedge Fund Holders: 40
Ovintiv Inc. (NYSE: OVV) is ranked fifth on our list of 7 new stocks to invest in according to Michael Burry. The company has interests in the mining business and is headquartered in Colorado. 13F filings reveal that Scion Asset Management owned 600,000 shares in the company at the end of the second quarter of 2021 worth $18.8 million, representing 0.9% of the portfolio.
On August 24, investment advisory Cowen upgraded Ovintiv Inc. (NYSE: OVV) stock to Outperform from Market Perform but lowered the price target to $39 from $40, underlining that the firm was standing out with best-in-class yield.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Ovintiv Inc. (NYSE: OVV) with 3.9 million shares worth more than $123 million.
In addition to Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), Ovintiv Inc. (NYSE: OVV) is one of the stocks to invest in according to Michael Burry.
In its Q4 2020 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Ovintiv Inc. (NYSE: OVV) was one of them. Here is what the fund said:
“Energy holdings in Ovintiv also experienced detracted performance, as oil demand collapsed due to the pandemic. With approximately 70% of oil demand used for transportation, the decline in miles driven (i.e., U.S. miles driven are down 11% in 2020) and the far bigger 60–70% decline in global air passenger traffic led to a dramatic drop in oil prices.
It is our expectation that oil demand will remain weak for the foreseeable future, as flying and driving slowly recover, and that over the long term, electric vehicles and renewable energy will also decrease demand for fossil fuels. As a result, we sold out of our energy positions in 2020. We redeployed the assets in other sectors such as financial services that also saw falling stock prices, but where we had stronger conviction that the long-term health of their business was strong.”
4. Discovery, Inc. (NASDAQ: DISCA)
Number of Hedge Fund Holders: 44
Discovery, Inc. (NASDAQ: DISCA) is placed fourth on our list of 7 new stocks to invest in according to Michael Burry. The company operates as a media firm and is headquartered in New York. According to the latest data, Scion Asset Management owned 855,084 shares in the company at the end of June 2021 worth $24.7 million, representing 1.19% of the portfolio.
On May 18, investment advisory Wells Fargo reiterated an Overweight rating on Discovery, Inc. (NASDAQ: DISCA) stock with a price target of $46, noting that a deal by the firm to merge media business with telecom firm AT&T came with near-term overhangs.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Discovery, Inc. (NASDAQ: DISCA) with 5.6 million shares worth more than $165 million.
Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS) are some of the stocks to invest in according to Michael Burry, just like Discovery, Inc. (NASDAQ: DISCA).
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.”
3. Cardinal Health, Inc. (NYSE: CAH) CALL
Number of Hedge Fund Holders: 40
Cardinal Health, Inc. (NYSE: CAH) is an Ohio-based healthcare services company. It is ranked third on our list of 7 new stocks to invest in according to Michael Burry. Latest filings show that Scion Asset Management owned CALL options on 857,700 shares in the firm at the end of the second quarter of 2021 worth $48.9 million, representing 2.35% of the portfolio.
In earnings results for the fourth fiscal quarter, posted on August 5, Cardinal Health, Inc. (NYSE: CAH) reported a revenue of over $42 billion, up more than 16% compared to the revenue over the same period last year and beating estimates by $2.3 billion.
At the end of the second quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $897 million in Cardinal Health, Inc. (NYSE: CAH), up from 39 in the previous quarter worth $967 million.
Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS) are some of the stocks to invest in according to Michael Burry, in addition to Cardinal Health, Inc. (NYSE: CAH).
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Disclosure. None. 7 New Stocks to Invest In According to Michael Burry is originally published on Insider Monkey.
