Below we take a look at why famed value investor Michael Burry is Betting Heavily on These 3 Stocks. For our methodology and a more comprehensive list, don’t miss why Michael Burry is Betting Everything on These 6 Stocks.
3. CoreCivic, Inc. (NYSE:CXW)
Value of Scion Asset Management‘s 13F Position: $6.41 million
Number of Hedge Fund Shareholders: 16
CoreCivic, Inc. (NYSE:CXW) makes its return to Michael Burry’s 13F portfolio six months after he unloaded his former position in the company. CXW was added to Scion Asset’s portfolio during the fourth quarter of 2020 and become the fund’s largest non-options position in the first quarter of last year, though it nonetheless represented only a small slice of that portfolio’s value. The holding now accounts for 15.5% of Scion’s 13F portfolio value.
CoreCivic, Inc. (NYSE:CXW) is the first of two prison operators that Burry is bullish on, which combined account for more than 50% of the value of his fund’s 13F portfolio. The company’s revenue is on pace to decline for the third straight year, while its gross profit and operating income are likely to decline this year compared to last. The company has seen a significant positive swing in its net income this year however.
In August, CoreCivic was forced to slash its FY22 adjusted EPS guidance, citing a delay in the reversal of Title 42, which was likely to increase the number of asylum seekers being detained by ICE, the company’s largest government customer.
Hedge fund ownership of CoreCivic, Inc. (NYSE:CXW) was as volatile as the company’s share price between 2015 and 2020, but has since stabilized after CXW shares bottomed out during the final quarter of 2020. They’ve gained 84% since, including being one of the rare stocks to post gains in 2022, being up by 8.88%. Ken Griffin’s Citadel Investment more than doubled its stake in CoreCivic during Q3 to 1.56 million shares.
2. Qurate Retail, Inc. (NASDAQ:QRTEA)
Value of Scion Asset Management‘s 13F Position: $10.1 million
Number of Hedge Fund Shareholders: 24
Michael Burry added an even 5 million shares of Qurate Retail, Inc. (NASDAQ:QRTEA) to his fund’s 13F portfolio during Q3, with the position accounting for nearly a quarter of that portfolio’s value as of September 30. This isn’t the first time Qurate has appeared in Burry’s portfolio, though never so prominently. He bought 1.1 million shares of the company in the third quarter of 2020, but unloaded the position over the next two quarters.
Qurate Retail, Inc. (NASDAQ:QRTEA) is another Michael Burry stock pick that’s been heavily beaten down in recent years, as shares of the company have cratered by 93% since March 2018. Qurate manages several brands, including TV and web retailers QVC and HSN, which are jointly dubbed QxH. Those retailers have been faltering heavily over the last 12 months, losing 16.8% of their total customers year-over-year. Bank of America analyst Jason Haas believes it will be hard for the companies to win back those customers, which prompted a downgrade to ‘Underperform’ from ‘Neutral’ and a big price cut to $1.20 from $4.00 earlier this month.
Hedge fund ownership of QRTEA made a small jump in the early days of the pandemic, but has gradually fallen in the quarters since and hit an all-time low during Q3. Many of the stock’s bulls were buying more shares of the company during Q3 however, including several major quant funds like Jim Simons’ Renaissance Technologies and John Overdeck and David Siegel’s Two Sigma Advisors.
Wallace Weitz’s Weitz Investment Partners III Opportunity Fund shared its take on Qurate Retail, Inc. (NASDAQ:QRTEA) in its Q2 2022 investor letter:
“As we describe in our latest “Value Matters,” we believe these are characteristics that allow companies to “make their own breaks,” regardless of the near-term challenges we may face. During the quarter, we sold our remaining shares of Qurate Retail‘s (NASDAQ:QRTEA) common equity but maintain a position in the company’s 8% preferred shares.”
1. The GEO Group, Inc. (NYSE:GEO)
Value of Scion Asset Management‘s 13F Position: $15.5 million
Number of Hedge Fund Shareholders: 19
The GEO Group, Inc. (NYSE:GEO) is the only holdover from Michael Burry’s Q2 13F portfolio and it remains his top stock pick heading into the final quarter of 2022. After building a new 501,360-share position in the company during Q2, Burry quadrupled his stake during Q3, ending the quarter with 2.02 million shares.
If Burry was banking on The GEO Group, Inc. (NYSE:GEO) (and CoreCivic for that matter) benefiting from a potential red wave overtaking the senate and possibly leading to tougher crime legislation being enacted, those hopes have been dashed. Without that potential catalyst, he’s left holding a stock that looks cheap by some metrics (7x forward P/E), but which doesn’t otherwise have much momentum going for it. GEO’s revenue will inch up this year but remain beneath 2019 levels, while the company’s net income is less than half what it was three years ago.
The GEO Group, Inc. (NYSE:GEO) is another Michael Burry stock that’s been crushed in recent years, but which appears to have finally stabilized. Whether it can actually rally to a higher level any time soon remains to be seen. There’s been a slow uptick in hedge fund ownership of the stock in recent quarters, with Cliff Asness’ AQR Capital Management and Paul Tudor Jones’ Tudor Investment Corp among the buyers.
For more of the latest stock picks worth considering for your portfolio, check out 12 Best Depressed Stocks To Buy and 10 Cheap Monthly Dividend Stocks To Buy.
Disclosure: None.
