In this article, we discuss the 5 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 10 Stocks As Recession Fears Mount.
5. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 44
Ovintiv Inc. (NYSE:OVV) markets oil and natural gas. Latest data shows Scion Asset Management owned 300,000 shares of the company at the end of the first quarter of 2022 worth $16.2 million, representing 8.05% of the portfolio. Burry had last bought shares in the firm in the second quarter of 2022. That position, comprising around 600,000 shares, was purchased at an average price of $26.87 per share. The present holding was acquired at an average price of $42.95 per share. The stake bought in 2021 was sold off entirely in the third quarter of 2021.
On June 14, Barclays analyst Jeanine Wai maintained an Overweight rating on Ovintiv Inc. (NYSE:OVV) stock and raised the price target to $72 from $56, noting that overall mood on the oil and gas sector was constructive.
At the end of the first quarter of 2022, 44 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Ovintiv Inc. (NYSE:OVV), the same as in the previous quarter worth $1 billion.
In its Q4 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Ovintiv Inc. (NYSE:OVV) was one of them. Here is what the fund said:
“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.
We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently.
One new name that illustrates the potential we see is Ovintiv Inc. (NYSE:OVV), an oil and gas producer. We’ve seen a huge shift in the industry away from growth towards returns on capital, cash generation, and capacity discipline. Ovintiv Inc. (NYSE:OVV) exemplifies the change.
OVV’s new CEO Brendan McCracken says: “We are at the forefront of driving innovation to produce oil and gas from shale both profitably and sustainably. We will generate superior returns and free cash flow by continuously improving capital efficiency and expanding margins while driving down emissions. We will deliver that value to our shareholders through disciplined capital allocation.”
Based on crude at $65 (well below the current $83.82 as of 1/14/22), Ovintiv Inc. (NYSE:OVV) guides to free cash flow generation of $11B over the next 5 years and $21B in the next 10 years. The company’s market cap is currently $10B and its enterprise value is $16B. It’s returning a significant portion of the capital to shareholders. If crude averages $70 in 2022, the company will return $700M to shareholders (in addition to paying down a significant amount of debt), which implies a yield of 7% at the current $39.53 price. In other words, there’s a good shot the company will return nearly its entire market cap to shareholders over the next 5 years.”
4. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 200
Meta Platforms, Inc. (NASDAQ:META) is a diversified technology company. Securities filings reveal that Scion Asset Management owned 80,000 shares of Meta Platforms, Inc. (NASDAQ:META) at the end of March 2022 worth $17.7 million, representing 8.83% of the portfolio. Burry first purchased a stake in the company in the fourth quarter of 2018. The stake comprised over 64,000 shares bought at an average price of over $144 per share. This holding was sold off a couple of quarters later.
On June 8, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. (NASDAQ:META) stock with a price target of $220, noting that the firm was the best in terms of ad-tech and scale but faced TikTok competition.
At the end of the first quarter of 2022, 224 hedge funds in the database of Insider Monkey held stakes worth $19 billion in Meta Platforms, Inc. (NASDAQ:META), compared to 248 in the preceding quarter worth $31 billion.
In its Q4 2021 investor letter, Boyar Value Group, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. (NASDAQ:META) was one of them. Here is what the fund said:
“Corporate executives can have many different reasons for selling shares (anticipation of tax law changes, philanthropy, diversification, and much more), but the sheer number of billionaire founders who sold shares in 2021 should raise eyebrows and might well be signaling a market top. Bloomberg’s Ben Steverman and Scott Carpenter report not only that Mark Zuckerberg of Meta Platforms, Inc. (NASDAQ:META) (formerly known as Facebook) sold shares in his company almost every day last year but also that the founders of Google sold ~$3.5 billion worth of stock (the first time either Sergey Brin or Larry Page has sold shares since 2017).”
3. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology firm. Securities filings reveal that Scion Asset Management owned 6,500 shares of Alphabet Inc. (NASDAQ:GOOG) at the end of March 2022 worth $18 million, representing 8.97% of the portfolio. Burry had first bought the stock in the fourth quarter of 2019. The stake comprised over 8,000 shares purchased at an average price of over $1,000 per share. This holding was sold off by the second quarter of 2019 and a new position was opened in early 2022.
On June 2, Piper Sandler analyst Thomas Champion maintained an Overweight rating on Alphabet Inc. (NASDAQ:GOOG) stock and lowered the price target to $2,775 from $2,900, noting that group multiples had declined in the digital ad sector.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in Alphabet Inc. (NASDAQ:GOOG) with 2.3 million shares worth more than $6.6 billion.
In its Q4 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ:GOOG) was one of them. Here is what the fund said:
“In contrast, we made a different kind of mistake about a decade ago. Google, now Alphabet Inc. (NASDAQ:GOOG), performed very well for us while we owned it. The company kept outperforming our assumptions and we kept lowering them to be conservative. “Trees do not grow to the sky.” The stock kept going up and our value grew but did not keep pace with the stock. It hit our estimate of fair value and we sold it with a nice gain, patting ourselves on the back. We kept following the company and what they actually did over the next several years was roughly double the assumptions we used to value it. Therefore, our value was too conservative, and we sold it too cheaply, missing many years of compounding. Fortunately, we experienced some volatility several years ago that allowed us to purchase Alphabet Inc. (NASDAQ:GOOG) (Google) again with a margin of safety.”
2. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: N/A
Warner Bros. Discovery, Inc. (NASDAQ:WBD) operates as a media firm. Regulatory filings show that Scion Asset Management owned 750,000 shares of Warner Bros. Discovery, Inc. (NASDAQ:WBD) at the end of March 2022 worth $18.7 million, representing 9.29% of the portfolio. On June 14, news publication The Information reported that the company was considering reducing the advertising sales force by up to 30%. The move is part of a cost-cutting approach by new management.
On June 16, JPMorgan analyst Philip Cusick reinstated coverage of Warner Bros. Discovery, Inc. (NASDAQ:WBD) stock with a Neutral rating and a price target of $22, backing the firm to overachieve synergy guidance in the coming months.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Laurion Capital Management is a leading shareholder in Warner Bros. Discovery, Inc. (NASDAQ:WBD) with 13.5 million shares worth more than $338 million.
In its Q1 2022 investor letter, Silver Ring Value Partners, an asset management firm, highlighted a few stocks and Warner Bros. Discovery, Inc. (NASDAQ:WBD) was one of them. Here is what the fund said:
“Discovery completed the acquisition of the Warner Media business from AT&T in April, and the combined business is now named Warner Bros. Discovery, Inc. (NASDAQ:WBD). We are currently in the middle of an interesting technical event, following the spin-off special situation playbook.
The acquisition was structured as a spin-off of Warner Media, with AT&T shareholders receiving ~ 70% of the shares in the combined entity, or ~ 1.7B shares. Many of these shareholders owned AT&T for its phone business and its dividend. It appears that there has been elevated noneconomic selling as these shareholders exit regardless of price. On the other side, few if any investors want to buy the Warner Bros. Discovery, Inc. (NASDAQ:WBD) shares prior to this forced selling being over.” (Click here to read full text)
1. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 99
Booking Holdings Inc. (NASDAQ:BKNG) provides online reservation services. Latest data shows that Scion Asset Management owned 8,000 shares of Booking Holdings Inc. (NASDAQ:BKNG) at the end of the first quarter of 2022 worth over $18.7 million, representing 9.32% of the portfolio. Macro pressures have started to weigh on the stock in recent weeks after a brief rise in travel at the start of summer. BTIG has forecast that slower travel trends will persist for the rest of the year.
On June 22, JMP Securities analyst Nicholas Jones maintained an Outperform rating on Booking Holdings Inc. (NASDAQ:BKNG) stock and lowered the price target to $2,300 from $2,750, noting that the broader travel market was under pressure from recession fears.
At the end of the first quarter of 2022, 99 hedge funds in the database of Insider Monkey held stakes worth $7.5 billion in Booking Holdings Inc. (NASDAQ:BKNG), compared to 92 in the previous quarter worth $7.7 billion.
In its Q4 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Booking Holdings Inc. (NASDAQ:BKNG) was one of them. Here is what the fund said:
“The pandemic created opportunities for us to be more aggressive in a variety of areas of the market. We were opportunistic throughout the year, for example, in positioning the portfolio to benefit from a flush consumer eager to return to spending and traveling. New positions included Booking Holdings Inc. (NASDAQ:BKNG), an online travel agency with industry-leading margins and a dominant footprint in Europe.”
You can also take a peek at 10 Penny Stocks Redditors are Buying in August and 10 Best Nickel Stocks to Buy Now.
