In this article, we discuss the 10 stocks that Michael Burry is buying as recession fears mount. If you want to read about some more stocks that Michael Burry is buying, go directly to Michael Burry is Buying These 5 Stocks As Recession Fears Mount.
Michael Burry of Scion Asset Management has recently grabbed headlines on Wall Street after he predicted that the Federal Reserve may pause or reverse a plan for interest-rate hikes. The prediction, made through a series of tweets that he has since deleted, is not unique, as prominent investors like Jim Cramer have already made similar comments, but is noteworthy since Burry is famous for his expertise in economic crisis, having made a name for himself by shorting the subprime mortgage market that led to a global financial meltdown in 2009.
Burry claims that retailers will be lumped with excess inventory during the Christmas period, suggesting that as they reduced prices to sell these excess goods, inflation might cool down to an extent that the central bank might reconsider hiking interest rates too aggressively or even reversing a planned hike for later this year. However, Burry has also said that consumer spending will slump and dismissed a rebound in stocks, stressing that the market drawdown will only end if people swore off “tech stocks, cryptocurrencies, and non-fungible tokens”.
The comments are somewhat bizarre considering that the latest filings of his hedge fund as of the end of Q1 reveal that Burry holds stakes in several tech-focused firms like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG). Burry had previously predicted that US households are on track to exhaust their savings by the end of 2022 because of soaring food, fuel, and housing costs. He has also forecast that the benchmark S&P 500 Index might plunge 52% from record highs during the upcoming recession.
Our Methodology
The stocks were picked from the first quarter regulatory filings of Scion Asset Management. The stocks that are a new addition to the portfolio, compared to filings for the fourth quarter of 2021, were selected. Data from around 900 elite hedge funds tracked by Insider Monkey in the first quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm.
Michael Burry of Scion Asset Management
Michael Burry is Buying These Stocks As Recession Fears Mount
10. Apple Inc. (NASDAQ:AAPL) PUT
Number of Hedge Fund Holders: 131
Apple Inc. (NASDAQ:AAPL) is a consumer electronics firm. Per 13F filings for the first quarter of 2022, Scion Asset Management owned PUT options on 206,000 shares of Apple Inc. (NASDAQ:AAPL) worth $35.9 million, representing 17.86% of the portfolio. On June 27, the top court in the US rejected a bid by the company to appeal a decision that had upheld two smartphone patents in favor of Qualcomm in a dispute between the two firms. The two companies have already agreed to a settlement but the former claims that the latter can sue again once that settlement expires.
On June 27, Bernstein analyst Toni Sacconaghi maintained a Market Perform rating on Apple Inc. (NASDAQ:AAPL) stock with a price target of $170, backing the company to grow the paying subscribers of AppleTV+ to up to 40 million.
At the end of the first quarter of 2022, 131 hedge funds in the database of Insider Monkey held stakes worth $182 billion in Apple Inc. (NASDAQ:AAPL), compared to 134 in the previous quarter worth $186 billion.
Just like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG), Apple Inc. (NASDAQ:AAPL) is one of the growth stocks in the limelight as interest rates rise.
In its Q4 2021 investor letter, Berkshire Hathaway highlighted a few stocks and Apple Inc. (NASDAQ:AAPL) was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) – our runner-up Giant as measured by its yearend market value – is a different sort of holding. Here, our ownership is a mere 5.55%, up from 5.39% a year earlier. That increase sounds like small potatoes. But consider that each 0.1% of Apple’s 2021 earnings amounted to $100 million. We spent no Berkshire funds to gain our accretion. Apple’s repurchases did the job. It’s important to understand that only dividends from Apple are counted in the GAAP earnings Berkshire reports – and last year, Apple paid us $785 million of those. Yet our “share” of Apple’s earnings amounted to a staggering $5.6 billion. Much of what the company retained was used to repurchase Apple Inc. (NASDAQ:AAPL) shares, an act we applaud. Tim Cook, Apple’s brilliant CEO, quite properly regards users of Apple Inc. (NASDAQ:AAPL) products as his first love, but all of his other constituencies benefit from Tim’s managerial touch as well.”
9. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH)
Number of Hedge Fund Holders: 19
Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) is a sporting goods retailer. Latest data shows that Scion Asset Management owned 250,000 shares of Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) at the end of the first quarter of 2022 worth over $2.6 million, representing 1.32% of the portfolio. The firm recently posted earnings for the first quarter of 2022, reporting earnings per share of $0.05, beating estimates by $0.06. The revenue over the period was $309 million, beating expectations by $3.3 million.
On June 1, Craig-Hallum analyst Ryan Sigdahl maintained a Buy rating on Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) stock and lowered the price target to $15 from $20, noting that the “everyday value and no frills” model of the firm was more defensible than higher priced destination retailers.
Among the hedge funds being tracked by Insider Monkey, Wyoming-based investment firm Cannell Capital is a leading shareholder in Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) with 2.5 million shares worth more than $27 million.
In its Q1 2022 investor letter, Merion Road Capital Management, an asset management firm, highlighted a few stocks and Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) was one of them. Here is what the fund said:
“During the quarter I added to Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH). SPWH is an outdoor sporting goods retailer with about half of their revenue coming from hunting & shooting products (guns, ammo). I initiated our position back in December following their failed merger with Great Outdoors on the grounds of anti‐trust concerns. It appeared that the stock was being sold off indiscriminately by merger arbitrageurs and valuation seemed attractive, particularly after adjusting for the receipt of a $55mm termination payment and unwind of excess inventory.
While the dust has largely settled from an investor base perspective, Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) remains attractively priced with a few upcoming catalysts. Fundamentally the company is well positioned. Following the tragic Parkland school shooting two large competitors to Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH), Dicks Sporting Goods and Walmart, made the decision to exit the category; their absence makes the competitive landscape for Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) a lot more favorable than in prior years. Furthermore, it is no surprise that gun and ammo sales during covid experienced tremendous growth. Unlike prior cycles, however, this wave saw an increase in new gun buyers rather than purchases by existing owners. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH) estimates that over the past 18 months the industry created 12mm new firearm owners; using a prior base of 100mm, this implies an increase to their addressable market of 12%. The company is executing on many other internal initiatives including store expansion, omni‐channel growth (e‐comm up to 15% of revenues), loyalty programs (at 3mm members) and new co‐branded credit cards…” (Click here to see the full text)
8. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 64
Global Payments Inc. (NYSE:GPN) is a Georgia-based payments technology and software solutions provider. According to the latest data, Scion Asset Management owned 66,700 shares in Global Payments Inc. (NYSE:GPN) at the end of March 2022 worth $9.1 million, representing 4.53% of the portfolio. In early May, the firm announced that it had agreed to collaborate with digital asset platform Bakkt to work on the development of cryptocurrency use cases. The partnership also covers multinational merchant payments acceptance.
On May 17, Goldman Sachs analyst Will Nance initiated coverage of Global Payments Inc. (NYSE:GPN) stock with a Neutral rating and a price target of $151, noting that there were concerns around the SMB exposure and credit volume exposure of the firm.
Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in Global Payments Inc. (NYSE:GPN) with 5.5 million shares worth more than $762 million.
In its Q1 2022 investor letter, Oakmark Funds, an asset management firm, highlighted a few stocks and Global Payments Inc. (NYSE:GPN) was one of them. Here is what the fund said:
“Global Payments Inc. (NYSE:GPN) is a leading provider of merchant acquiring services. The company is also one of the largest providers of payment processing and related technology solutions to credit card issuers. We believe Global Payments’ merchant acquiring business is well positioned given its strength in software-driven payments. This is one of the fastest growing parts of the industry as small business customers are increasingly recognizing the efficiency benefits of having payments seamlessly integrated into the software they use to run their businesses. In addition, Global Payments Inc. (NYSE:GPN) benefits from the broader secular shift away from cash and toward electronic payment methods. Together, these tailwinds have the potential to drive low-double-digit revenue growth and even faster earnings growth. With this strong outlook and with management returning a significant portion of free cash flow to shareholders via repurchase, we think the stock looks attractive at its current valuation of just 12.5x next year’s expected EPS.”
7. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 29
Stellantis N.V. (NYSE:STLA) is a Netherlands-based automobile manufacturer. Regulatory filings show that Scion Asset Management owned 600,000 shares of Stellantis N.V. (NYSE:STLA) at the end of March 2022 worth $9.7 million, representing 4.84% of the portfolio. On June 24, the company announced that it was expanding a partnership with decarbonized lithium company Vulcan Energy Resources. As part of the expansion, the carmaker will become the second-largest shareholder in Vulcan with a €50 million investment.
On May 10, Berenberg analyst Adrian Yanoshik initiated coverage of Stellantis N.V. (NYSE:STLA) stock with a Buy rating and a price target of EUR 21, noting that despite inflationary pressures, deep order books could help generate free cash flow for the firm.
At the end of the first quarter of 2022, 29 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Stellantis N.V. (NYSE:STLA), compared to 22 in the previous quarter worth $1.2 billion.
6. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 39
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadening and digital media group. It is one of the top media stocks in the finance world. Per latest data, Scion Asset Management owned 76,200 shares in the company at the end of the first quarter of 2022 worth $14.3 million, representing 7.13% of the portfolio. In mid-June, the shareholders of the company approved a plan to eliminate the Class B and Class C share classes of the stock. Ther move was a formality since only Class A shares have been outstanding since 2013.
On May 12, Deutsche Bank analyst Connor Murphy maintained a Buy rating on Nexstar Media Group, Inc. (NASDAQ:NXST) stock and raised the price target to $225 from $216, backing the firm to top expectations on earnings in the coming months.
Among the hedge funds being tracked by Insider Monkey, Canada-based investment firm Cardinal Capital is a leading shareholder in Nexstar Media Group, Inc. (NASDAQ:NXST) with 1 million shares worth more than $204 million.
In addition to Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG), Nexstar Media Group, Inc. (NASDAQ:NXST) is one of the stocks that elite investors are monitoring.
In its Q1 2022 investor letter, Richie Capital Group, an asset management firm, highlighted a few stocks and Nexstar Media Group, Inc. (NASDAQ:NXST) was one of them. Here is what the fund said:
“Nexstar Media Group, Inc. (NASDAQ:NXST) – The television broadcasting and digital media company surged during the quarter after presenting at an investor conference where management pointed to a strong 2022 for both political advertising and retransmission. They have exposure to more than 80% of markets with competitive mid-term political races. Nexstar Media Group, Inc. (NASDAQ:NXST) is developing new ad categories such as sports betting and they are focused on expanding digital ad revenue and providing digital solutions to local advertisers. Auto advertising will return in the fall as auto dealerships re-enter the market to sell their replenished inventory.”
Click to continue reading and see Michael Burry is Buying These 5 Stocks As Recession Fears Mount.
Suggested Articles:
- 10 Stocks Warren Buffett is Selling
- 10 Best Small-Cap Stocks to Buy According to Hedge Funds
- 10 Best SPACs to Invest In According to Reddit
Disclosure. None. Michael Burry is Buying These 10 Stocks As Recession Fears Mount is originally published on Insider Monkey.
