In this article, we discuss the 9 stocks Michael Burry is loading up on.
There are very few investors who command sweeping attention on Wall Street. Michael Burry, the California-born hedge fund manager with a background in biology, is one of the names that fits this description. Burry manages Scion Asset Management with a portfolio value of more than $2 billion. The top five holdings account for close to 40% of the entire portfolio. Between 2000 and 2008, Scion Capital, a hedge fund Burry oversaw, returned 150% when compared against the returns of the benchmark S&P 500 over the same time period.
Burry, who was recently in the news for betting against EV maker Tesla and the ARK Innovation ETF, rose to fame on Wall Street by making money during the dotcom market collapse at the turn of the millennium and the subprime mortgage crisis a decade afterwards. Both financial meltdowns caught the market off-guard, resulting in billions in losses to top hedge funds, while Burry profited as he had predicted both events and placed his bets accordingly. As a result, Burry has gained a huge fan following in the finance world.
Some of the top stocks in the Scion Asset Management portfolio at the end of June 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. Between March and June this year, Burry quietly loaded up on infrastructure stocks, perhaps in anticipation of an infrastructure boom after lawmakers passed a multi-trillion dollar jobs plan to rebuild roads and bridges and jumpstart American manufacturing.
Over the years, the success of Burry has been an exception in a sector that has otherwise struggled with 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 9 stocks Michael Burry is loading up on. These were ranked according to the investment portfolio of Scion Asset Management at the end of the second quarter of 2021.
Only those stocks in which the fund has increased stakes during the second quarter as compared to the first quarter of the year 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.
Michael Burry is Loading Up on These Stocks
9. Golden Ocean Group Limited (NASDAQ: GOGL)
Number of Hedge Fund Holders: 15
Percentage Increase in Stake During Q2: 33%
Golden Ocean Group Limited (NASDAQ: GOGL) is placed ninth on our list of 9 stocks Michael Burry is loading up on. The firm provides shipping services and is headquartered in Bermuda. According to the latest filings, Scion Asset Management owned 700,000 shares in the company at the end of the second quarter of 2021 worth $7.7 million, representing 0.37% of the portfolio.
On May 4, investment advisory BTIG reiterated a Buy rating on Golden Ocean Group Limited stock and raised the price target to $12 from $8. Gregory Lewis, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Golden Ocean Group Limited with 1.9 million shares worth more than $21 million.
Just like Facebook, Inc., Walmart Inc., Alphabet Inc., The Kraft Heinz Company, and CVS Health Corporation, Golden Ocean Group Limited is one of the stocks Michael Burry is loading up on.
8. SunCoke Energy, Inc. (NYSE: SXC)
Number of Hedge Fund Holders: 19
Percentage Increase in Stake During Q2: 43%
SunCoke Energy, Inc. (NYSE: SXC) is ranked eighth on our list of 9 stocks Michael Burry is loading up on. The firm markets coal products and is headquartered in Illinois. Regulatory filings show that Scion Asset Management owned more than 1.5 million shares in the company at the end of June 2021 worth $11.1 million, representing 0.53% of the portfolio.
On July 30, investment advisory B Riley kept a Buy rating on SunCoke Energy, Inc. stock and raised the price target to $10 from $9, appreciating the strong second quarter results posted by the firm.
At the end of the second quarter of 2021, 19 hedge funds in the database of Insider Monkey held stakes worth $83 million in SunCoke Energy, Inc., down from 22 in the preceding quarter worth $86 million.
In addition to Facebook, Inc., Walmart Inc., Alphabet Inc., The Kraft Heinz Company, and CVS Health Corporation, SunCoke Energy, Inc. is one of the stocks Michael Burry is loading up on.
7. Marinus Pharmaceuticals, Inc. (NASDAQ: MRNS)
Number of Hedge Fund Holders: 13
Percentage Increase in Stake During Q2: 111%
Marinus Pharmaceuticals, Inc. (NASDAQ: MRNS) is a Pennsylvania-based biopharmaceutical company. It is placed seventh on our list of 9 stocks Michael Burry is loading up on. 13F filings reveal that Scion Asset Management owned 625,000 shares in the company worth $11.2 million, representing 0.53% of the portfolio.
On August 18, investment advisory Truist maintained a Buy rating on Marinus Pharmaceuticals, Inc. stock and raised the price target to $40 from $35, appreciating the topline results of a pipeline drug revealed by the firm recently.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Lion Point is a leading shareholder in Marinus Pharmaceuticals, Inc. with 3.6 million shares worth more than $65 million.
Along with Facebook, Inc., Walmart Inc., Alphabet Inc., The Kraft Heinz Company, and CVS Health Corporation, Marinus Pharmaceuticals, Inc. is one of the stocks Michael Burry is loading up on.
6. Scorpio Tankers Inc. (NYSE: STNG)
Number of Hedge Fund Holders: 20
Percentage Increase in Stake During Q2: 216%
Scorpio Tankers Inc. (NYSE: STNG) is a Monaco-based seaborne transportation firm. It is ranked sixth on our list of 9 stocks Michael Burry is loading up on. Latest data shows that Scion Asset Management owned 600,000 shares in the company at the end of the second quarter of 2021 worth $13.2 million, representing 0.63% of the portfolio.
On July 23, investment advisory HC Wainwright reiterated a Buy rating on Scorpio Tankers Inc. stock with a price target of $28, underlining that the pullback in the share price was a buying opportunity for investors.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm Hosking Partners is a leading shareholder in Scorpio Tankers Inc. with 803,540 shares worth more than $17 million.
Facebook, Inc., Walmart Inc., Alphabet Inc., The Kraft Heinz Company, and CVS Health Corporation are some of the stocks Michael Burry is loading up on, just like Scorpio Tankers Inc..
In its Q2 2020 investor letter, Evermore Global Advisors, an asset management firm, highlighted a few stocks and Scorpio Tankers Inc. (NYSE: STNG) was one of them. Here is what the fund said:
“Scorpio Tankers (STNG US), one of the world’s largest product tanker operators, was the largest detractor to Fund performance during the second quarter. COVID-19 has caused significant demand destruction in oil and other refined oil products which resulted in contango for diesel, jet fuel and gasoline forward prices that made floating storage an attractive option for traders and refiners. We saw the positive impact on spot rates at the end of March and April, which pushed rates higher to unprecedented levels.
Starting in late April, Saudi Arabia, Russia and OPEC+ eventually agreed to cut oil production which led to the contango trade to dissipate, which negatively impacted spot rates and STNG’s stock price. While current rates are no longer at record high levels, we believe STNG secured attractive rates during the second quarter and we expect the company to generate significant cash flows, a view that has been dismissed by the broader market. In addition, STNG has reached an agreement with scrubber manufacturers to delay the purchase and installation of 19 scrubbers until at least 2021 in order to take advantage of the current environment.”
5. CoreCivic, Inc. (NYSE: CXW)
Number of Hedge Fund Holders: 13
Percentage Increase in Stake During Q2: 19%
CoreCivic, Inc. (NYSE: CXW) is placed fifth on our list of 9 stocks Michael Burry is loading up on. The firm owns and operates partnership correctional, detention, and residential reentry facilities. It is headquartered in Tennessee. According to the latest filings, Scion Asset Management owned 1.3 million shares in the company at the end of June 2021 worth $13.6 million, representing 0.65% of the portfolio.
On June 18, investment advisory Wedbush initiated coverage of CoreCivic, Inc. stock with a Neutral rating and a price target of $10.85, acknowledging the historical ability of the firm to generate high levels of cash flow.
At the end of the second quarter of 2021, 13 hedge funds in the database of Insider Monkey held stakes worth $97 million in CoreCivic, Inc., down from 18 in the previous quarter worth $95 million.
Facebook, Inc., Walmart Inc., Alphabet Inc., The Kraft Heinz Company, and CVS Health Corporation are some of the stocks Michael Burry is loading up on, alongside CoreCivic, Inc..
4. CVS Health Corporation (NYSE: CVS) CALL
Number of Hedge Fund Holders: 67
Percentage Increase in Stake During Q2: 32%
CVS Health Corporation is ranked fourth on our list of 9 stocks Michael Burry is loading up on. The company provides healthcare services and operates from Rhode Island. Regulatory filings reveal that Scion Asset Management owned CALL options on 525,300 shares in the firm at the end of the second quarter of 2021 worth $43.8 million, representing 2.1% of the portfolio.
On August 5, investment advisory Deutsche Bank maintained a Buy rating on CVS Health Corporation stock and raised the price target to $101 from $95. George Hill, an analyst at the firm, issued the ratings update.
Out of the hedge funds being tracked by Insider Monkey, Chicago-based firm Harris Associates is a leading shareholder in CVS Health Corporation with 8.5 million shares worth more than $713 million.
In its Q1 2021 investor letter, Vulcan Value Partners, an asset management firm, highlighted a few stocks and CVS Health Corporation (NYSE: CVS) was one of them. Here is what the fund said:
“We sold our position in CVS Health Corp. to allocate capital to companies with larger margins of safety. During the five years that we owned CVS Health Corp., the company acquired Aetna. At the time, we also owned Aetna, and we believed the combination of the two companies would create additional value. After the acquisition, its business performance has been disappointing. We reevaluated our assumptions and determined its value has not grown.”
3. The Kraft Heinz Company (NASDAQ: KHC) CALL
Number of Hedge Fund Holders: 33
Percentage Increase in Stake During Q2: 22%
The Kraft Heinz Company is a Pennsylvania-based food and beverage firm. It is placed third on our list of 9 stocks Michael Burry is loading up on. 13F filings reveal that Scion Asset Management owned CALL options on more than 1.4 million shares in the firm at the end of June 2021 worth $58.1 million, representing 2.79% of the portfolio.
On August 20, investment advisory Piper Sandler maintained a Neutral rating on The Kraft Heinz Company stock and lowered the price target to $39 from $41, noting the ratings update reflected accounting for stranded costs and input cost inflation.
Out of the hedge funds being tracked by Insider Monkey, Nebraska-based investment firm Berkshire Hathaway is a leading shareholder in The Kraft Heinz Company with 325 million shares worth more than $13 billion.
In its Q4 2020 investor letter, Berkshire Hathaway highlighted a few stocks and The Kraft Heinz Company (NASDAQ: KHC) was one of them. Here is what the firm said:
“We exclude our Kraft Heinz holding — 325,442,152 shares — (In the list of 15 common stock investments that at yearend were our largest in market value) because Berkshire is part of a control group and therefore must account for that investment using the “equity” method. On its balance sheet, Berkshire carries the Kraft Heinz holding at a GAAP figure of $13.3 billion, an amount that represents Berkshire’s share of the audited net worth of Kraft Heinz on December 31, 2020.
Berkshire and its subsidiaries hold investments in certain businesses that are accounted for pursuant to the equity method. Currently, the most significant of these is our investment in the common stock of The Kraft Heinz Company (“Kraft Heinz”). Kraft Heinz is one of the world’s largest manufacturers and marketers of food and beverage products, including condiments and sauces, cheese and dairy, meals, meats, refreshment beverages, coffee and other grocery products. Berkshire currently owns 325,442,152 shares of Kraft Heinz common stock representing 26.6% of the outstanding shares.
We recorded equity method earnings from our investment in Kraft Heinz of $95 million in 2020, $493 million in 2019 and losses of approximately $2.7 billion in 2018. Equity method earnings (losses) included the effects of goodwill and identifiable intangible asset impairment charges recorded by Kraft Heinz. Our share of such charges was approximately $850 million in 2020, $450 million in 2019 and $3.7 billion in 2018. We received dividends from Kraft Heinz of $521 million in each of 2020 and 2019 and $814 million in 2018, which we recorded as reductions in our carrying value.
Shares of Kraft Heinz common stock are publicly-traded and the fair value of our investment was approximately $11.3 billion at December 31, 2020 and $10.5 billion at December 31, 2019. The carrying value of our investment was approximately $13.3 billion at December 31, 2020 and $13.8 billion at December 31, 2019. As of December 31, 2020, the carrying value of our investment exceeded the fair value based on the quoted market price by $2.0 billion (15% of carrying value). In light of this fact, we evaluated our investment in Kraft Heinz for impairment. We utilize no bright-line tests in such evaluations. Based on the available facts and information regarding the operating results of Kraft Heinz, our ability and intent to hold the investment until recovery, the relative amount of the decline and the length of time that fair value was less than carrying value, we concluded that recognition of an impairment loss in earnings was not required. However, we will continue to monitor this investment and it is possible that an impairment loss will be recorded in earnings in a future period based on changes in facts and circumstances or intentions.”
2. Alphabet Inc. (NASDAQ: GOOG) CALL
Number of Hedge Fund Holders: 155
Percentage Increase in Stake During Q2: 15%
Alphabet Inc. is a California-based technology company. It is ranked second on our list of 9 stocks Michael Burry is loading up on. Latest data shows that Scion Asset Management owned CALL options on 91,900 shares in the company at the end of the second quarter of 2021 worth over $230 million, representing 11.06% of the portfolio.
On July 28, investment advisory Wedbush reiterated an Outperform rating on Alphabet Inc. stock and raised the price target to $3,424 from $3,127, noting that the company had posted “another stellar quarter” with strong earnings beats.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm TCI Fund Management is a leading shareholder in the firm with 2.9 million shares worth more than $7.3 billion.
In its Q1 2021 investor letter, Artisan Partners, an asset management firm, highlighted a few stocks and Alphabet Inc. (NASDAQ: GOOG) was one of them. Here is what the fund said:
“Large-cap tech companies have been resilient through the pandemic—Alphabet among them. A top contributor, Alphabet’s Play Store and Google Cloud are in demand as businesses accelerate online activity which, along with strong YouTube user growth, is helping stabilize temporarily weaker search ad revenue trends. Through the lens of our disciplined bottom-up research process, we view Alphabet as one of the best businesses in the world, capable of expanding revenues at a rapid rate for years to come, with a bullet proof balance sheet and an average asking price. It’s a name we’ve owned since 2012 and for which we continue to have high hopes regarding future prospects.”
1. Facebook, Inc. (NASDAQ: FB) CALL
Number of Hedge Fund Holders: 266
Percentage Increase in Stake During Q2: 72%
Facebook, Inc. is placed first on our list of 9 stocks Michael Burry is loading up on. The company owns and runs several social media platforms. It is headquartered in California. Latest filings show that Scion Asset Management owned CALL options on 941,200 shares in the company at the end of the second quarter of 2021 worth over $327 million, representing 15.71% of the portfolio.
On July 29, investment advisory Evercore maintained an Outperform rating on Facebook, Inc. stock and raised the price target to $450 from $400, underlining that the firm was posting strong growth and the advisory was bullish on the long-term outlook.
At the end of the second quarter of 2021, 266 hedge funds in the database of Insider Monkey held stakes worth $42 billion in Facebook, Inc., up from 257 in the preceding quarter worth $40 billion.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Facebook, Inc. (NASDAQ: FB) was one of them. Here is what the fund said:
“We continued to keep our learnings from 2020 in mind during the quarter as we sought to increase the up capture of the portfolio. We also made adjustments to the portfolio’s top 10 holdings to increase the participation of select stocks, including Facebook, while trimming our weighting to stable names, which now represent 47% of the portfolio. Our repositioning has been encouraging so far with the portfolio performing better on up days in the market while maintaining good down capture during more turbulent sessions.”
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This article is originally published at Insider Monkey.
