In this article, we discuss the 10 stocks that Michael Burry is selling.
Even though the stock market rallied for the best part of August based on better-than-expected inflation data from the United States government, the bull sentiment on Wall Street was spoiled by Michael Burry of Scion Asset Management, the celebrated investor of The Big Short fame, who rose to prominence in the finance world after accurately predicting the housing crash of 2008 and the crisis that followed it. He minted millions for his clients in the process. Inflation data from August has once again sent the markets into turmoil, proving Burry right.
Benchmark indexes like the S&P 500, the NASDAQ Composite, and the Dow Jones Industrial Average are down 5.82%, 6.58%, and 5%, respectively. Burry, who sold prominent names in his portfolio like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG) in the second quarter, believes that the market is yet to hit bottom, warning recently that “2 SPAC ETFs failing is not near enough” and that the “silliness in the markets” was back.
Burry shared these thoughts through tweets that have since been deleted but are a part of public record because news outlets reported them when they were made. Burry has likened the present market situation to the bubbles of the early 2000s and early 2010s, both of which led to financial meltdowns with devastating consequences for the global economy. Burry has warned investors to check for such crash signals, tweeting, “Crypto crash. Check. Meme crash. Check. SPAC crash. Check. Inflation. Check. 2000. Check. 2008. Check. 2022. Check.”
Our Methodology
The companies listed below were picked from the investment portfolio of Scion Asset Management at the end of the second quarter of 2022. The stocks which the hedge fund sold off completely in the second quarter, compared to filings for the first quarter of 2022, were selected. Data from around 900 elite hedge funds tracked by Insider Monkey in the second 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 Selling These Stocks
10. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 25
Stellantis N.V. (NYSE:STLA) engages in the design, engineering, manufacturing, distribution, and sale of automobiles and parts. On September 16, news agency Reuters reported that the company had halted the production of cars at a factory in Spain due to an ongoing chip shortage. The partial shutdown is expected to last several days. A union in Italy warned Stellantis N.V. earlier this year that the chip shortage could cost the company the production of over 220,000 cars in 2022.
On September 6, Jefferies analyst Philippe Houchois maintained a Buy rating on Stellantis N.V. stock with a price target of $18, noting that there was confidence around the operating performance of the firm.
At the end of the second quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $714.6 million in Stellantis N.V., compared to 29 in the preceding quarter worth $1.2 billion.
Just like Alphabet Inc., Warner Bros. Discovery, Inc., and Booking Holdings Inc., Stellantis N.V. is one of the stocks that elite investors are monitoring.
9. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 33
Nexstar Media Group, Inc. (NASDAQ:NXST) is a television broadcasting and digital media company. In mid-August, the company announced that it had agreed to purchase a controlling interest in The CW Network. Warner Bros. Discovery and Paramount Global are the other two media giants with partial ownership in the firm. Per Nexstar, the purchase will help the company in solidifying revenue opportunities, diversifying content outside of news, and increasing exposure to the national advertising market.
On September 6, Rosenblatt analyst Barton Crockett upgraded Nexstar Media Group, Inc. stock to Buy from Neutral and raised the price target to $246 from $181, noting that TV political ads retained a get-out-the-vote prominence that was not fading.
Among the hedge funds being tracked by Insider Monkey, Wisconsin-based investment firm Cardinal Capital is a leading shareholder in Nexstar Media Group, Inc., with 1 million shares worth more than $171 million.
In its Q1 2022 investor letter, Richie Capital Group, an asset management firm, highlighted a few stocks and Nexstar Media Group, Inc. was one of them. Here is what the fund said:
“Nexstar Media Group, Inc. – 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. 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.”
8. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 47
Ovintiv Inc. (NYSE:OVV) engages in the exploration, development, production, and marketing of fossil fuels. The company has an impressive dividend profile. It has consistently paid a dividend to shareholders for the past thirty-two years. The sector median in this regard is just six years, attesting to the solidity of the business model of the firm compared to peers. These payouts have also registered uninterrupted growth in the past three years. On September 13, the firm declared a quarterly dividend of $0.25 per share, in line with previous.
On August 31, Barclays analyst Jeanine Wai maintained an Overweight rating on Ovintiv Inc. stock and raised the price target to $75 from $71, noting that energy stocks had maintained their top-tier free cash flow yields in a challenging environment.
At the end of the second quarter of 2022, 47 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Ovintiv Inc., compared to 44 in the previous quarter worth $2.1 billion.
In its Q4 2021 investor letter, Miller Value Partners, an asset management firm, highlighted a few stocks and Ovintiv Inc. 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 (…read more)
7. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 57
Global Payments Inc. (NYSE:GPN) provides payment technology and software solutions for card, electronic, check, and digital-based payments. On August 1, the company posted earnings for the second quarter of 2022, reporting earnings per share of $2.36, beating market estimates by $0.02. The revenue over the period was $2.2 billion, up over 6% compared to the revenue over the same period last year and beating analyst estimates by $190 million. The firm said the constant currency adjusted net revenue in 2022 before dispositions would be in the range of $8.48 billion to $8.55 billion versus consensus estimates of $8.40 billion.
On August 3, BMO Capital analyst James Fotheringham maintained an Outperform rating on Global Payments Inc. stock and increased the price target to $232 to $217, noting that the Evo Payments acquisition of the firm was revenue growth accretive.
Among the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in Global Payments Inc., with 5.7 million shares worth more than $626.9 million.
6. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 66
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. On August 4, the company posted earnings for the second quarter of 2022, reporting earnings per share of $6.22, beating market estimates by $0.73. The revenue over the period was $45 billion, up over 5% compared to the revenue over the same period last year and beating analyst estimates by $1.1 billion. The firm said the total customer relationships in the second quarter 2022 grew by 3% year to date to 191.3 million.
On August 8, UBS analyst Kevin Caliendo maintained a Buy rating on Cigna Corporation stock and raised the price target to $330 from $310, noting that the stock had outperformed peers in the past few months.
At the end of the second quarter of 2022, 66 hedge funds in the database of Insider Monkey held stakes worth $3.2 billion in Cigna Corporation, compared to 63 in the preceding quarter worth $2.7 billion.
In addition to Alphabet Inc., Warner Bros. Discovery, Inc., and Booking Holdings Inc., Cigna Corporation is one of the stocks that hedge funds are keeping a close eye on.
In its Q4 2021 investor letter, Davis Funds, an asset management firm, highlighted a few stocks and Cigna Corporation was one of them. Here is what the fund said:
“Healthcare is included in the portfolio both for company-specific reasons, as well as big picture trends. At the company level, we hold select companies in pharmaceuticals, healthcare services and health insurance at attractive valuations. This is at a time when the average age of the U.S. population is fast approaching 40, older than Asia-Pacific and a little younger than the aged populations of Europe and Japan. The number of seniors in the U.S.—i.e., 65 years or older— now surpasses 54 million, or about 15% of the population. Seniors, on average, take a much greater number of medications and account for a large and disproportionate share of healthcare spending, and we expect that trend to continue due to both raw demographics and a proliferation in the number of available treatments and services available now, the latter being driven by innovation and investment in the healthcare industry. Representative holdings in the Fund include Cigna Corporation, United Health Group, Viatris and Quest Diagnostics.”
5. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 68
Warner Bros. Discovery, Inc., a media company, provides content across various distribution platforms. The company has increased focus in the digital space in recent years with investments in the streaming and gaming sector. On August 4, the firm posted earnings for the second quarter of 2022, reporting a revenue of more than $9.8 billion, up over 221% compared to the revenue over the same period last year. The firm said it had ended the second quarter with $3,896 million of cash on hand and gross debt of $53 billion.
On August 23, Citi analyst Jason Bazinet maintained a Buy rating on Warner Bros. Discovery, Inc. stock and lowered the price target to $21 from $29, noting the firm offered a direct-to-consumer pivot to investors.
At the end of the second quarter of 2022, 68 hedge funds in the database of Insider Monkey held stakes worth $2.3 billion in Warner Bros. Discovery, Inc., compared to 47 in the preceding quarter worth $790.8 million.
In its Q2 2022 investor letter, Mayar Capital, an asset management firm, highlighted a few stocks and Warner Bros. Discovery, Inc. was one of them. Here is what the fund said:
“We sold the last of our shares in Warner Bros. Discovery, Inc. in early April. Luckily, we were able to sell the majority of our long-held holdings in the crazy run-up that accompanied the Archegos Capital debacle in early 2021. We did, however, re-build a position in the stock when the stock went back down and this second go was disappointing.
We weren’t happy with the shift in strategy from the company’s core non-scripted and documentary content—where it commanded a leading position— into the wider media business it dived into with the Warner Media acquisition. We were also unhappy with the resulting increase in debt levels. It was time to take our money and walk away.”
4. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 69
Bristol-Myers Squibb Company (NYSE:BMY) manufactures and markets pharmaceutical products worldwide. The company has an impressive dividend profile. It has consistently paid a dividend to shareholders for the past thirty-two years. The sector median in this regard is just eleven years, attesting to the solidity of the business model of the firm compared to peers. These payouts have also registered uninterrupted growth in the past five years. On September 14, the firm declared a quarterly dividend of $0.54 per share, in line with previous.
On September 12, BMO Capital analyst Evan Seigerman maintained an Outperform rating on Bristol-Myers Squibb Company stock and raised the price target to $94 from $92, noting that the commercial story on Sotyktu will take time to play out for the firm.
At the end of the second quarter of 2022, 69 hedge funds in the database of Insider Monkey held stakes worth $2.2 billion in Bristol-Myers Squibb Company, compared to 70 in the preceding quarter worth $2.4 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company was one of them. Here is what the fund said:
“We established a position in Bristol-Myers Squibb Company , a global biopharmaceutical company focused on discovering, developing, and selling medicines for patients in the therapeutic areas of oncology, immunology, cardiovascular, and neurology. The stock trades at a low valuation relative to its current earnings because the company faces loss of exclusivity on several key drugs over the next eight years, including Revlimid, Eliquis, and Opdivo.
At the same time, Bristol-Myers has multiple new products in the early stages of launch (e.g., Opdualag, Camzyos, Breyanzi, and Reblozyl), a robust new product pipeline (e.g., Deucravacitinib, Milvexian, and CELMoD agents), and a strong balance sheet combined with strong free cash flow generation that the company can use for acquisitions. Management believes these growth drivers can more than offset the loss of exclusivity and drive revenue growth through the end of the decade. Given the company’s low valuation, if the company can execute, we think there is substantial upside in the stock.”
3. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 93
Booking Holdings Inc. provides travel and restaurant online reservation and related services worldwide. On August 3, the company posted earnings for the second quarter of 2022, reporting earnings per share of $19.08, beating market estimates by $1.41. The revenue over the period was $4.3 billion, up over 99% compared to the revenue over the same period last year and missing analyst estimates by $50 million. The firm said the gross travel bookings were $34.5 billion, an increase of 57% from the prior year quarter.
On August 5, Susquehanna analyst Shyam Patil maintained a Positive rating on Booking Holdings Inc. stock and lowered the price target to $2,800 from $2,900, noting that travel demand was strong in the second quarter of 2022.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Booking Holdings Inc., with 761,500 shares worth more than $1.3 billion.
In its Q2 2022 investor letter, L1 Capital International, an asset management firm, highlighted a few stocks and Booking Holdings Inc. was one of them. Here is what the fund said:
“We have been increasing our investment in Booking Holdings Inc. which now lies on the edge of the top 10 holdings. The investment thesis for Booking, the world’s largest online travel agent (OTA), was outlined in our inaugural June 2019 Quarterly Report. Back then, no-one could have envisaged the subsequent disruption to the travel industry caused by COVID-19. Today the world, outside of China, has adjusted to COVID-19 and life has largely returned to normal. Travel is rapidly normalising with domestic travel ahead of 2019 levels and international travel recovering strongly (see Figure 9).
Yet Booking’s share price is lower than where it was trading post the onslaught of COVID-19 and pre the widespread approval of vaccines. Yes, travel is discretionary, and yes more challenging economic conditions and higher fuel costs will have a negative impact on the travel industry. However, we consider travel activity recovering to prior trend levels is a question of when, not if. Consumers will adapt to economic circumstances – travelling to cheaper destinations, going on holiday for a shorter period or staying at a lower cost hotel, but we still expect travel activity to rapidly recover.”
2. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 153
On September 16, news publication The New York Times reported that Alphabet Inc. was considering stepping up monetization in the short-form video format on YouTube. The publication said that the tech giant was readying an announcement to lower barriers to entry for the partner program at YouTube Shorts, allowing more video creators to make money there.
On August 3, Tigress Financial analyst Ivan Feinseth maintained a Strong Buy rating on Alphabet Inc. stock and raised the price target to $186 from $183, noting the resilience of the core cloud and search business of the firm despite misses on earnings.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel investment Group is a leading shareholder in Alphabet Inc., with 3.1 million shares worth more than $6.9 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Alphabet Inc. was one of them. Here is what the fund said:
“Alphabet Inc. is the parent company of Google, the world’s largest search and online advertising company. Shares of Alphabet declined 21.6% in the quarter due to concerns about slower global growth impacting the company’s core advertising business. We retain conviction in Alphabet’s merits as it continues to benefit from growth in mobile and online video advertising, which accrues to its core assets of search, YouTube, and the Google ad network. We are further encouraged by Alphabet’s investments in Cloud, AI, and Autonomous Driving (through its Waymo subsidiary).”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 184
Meta Platforms Inc. (NASDAQ:META) develops products that enable people to connect and share with friends and family through mobile devices, personal computers, virtual reality headsets, wearables, and in-home devices worldwide. On September 13, news platform Axios reported that the company had merged the moderated ad content with the central integrity team which moderates user posts. The merger is part of a larger plan by the tech giant to cost-cut goals as it looks to tighten amid the macroeconomic downturns.
On September 12, Piper Sandler analyst Thomas Champion maintained a Neutral rating on Meta Platforms, Inc. stock and lowered the price target to $175 from $190, noting that checks indicated that app tracking transparency headwinds were significant for the firm.
At the end of the second quarter of 2022, 184 hedge funds in the database of Insider Monkey held stakes worth $18.2 billion in Meta Platforms, Inc., compared to 200 the preceding quarter worth $19.3 billion.
In its Q2 2022 investor letter, Baron Funds, an asset management firm, highlighted a few stocks and Meta Platforms, Inc. was one of them. Here is what the fund said:
“Shares of Meta Platforms, Inc., the owner of Facebook, the world’s largest social network, fell 28.4% during the second quarter due to quarterly results that missed consensus estimates, driven by the impact of Apple’s new privacy changes in its iOS operating system. These changes have made it harder for Facebook to measure the effectiveness of its advertising across its mobile apps.
In the longer term, we expect Facebook to continue utilizing its leadership in mobile to provide global advertisers targeted marketing capabilities at scale, with substantial monetization optionality ahead in newer areas such as Reels (Meta’s competing solution to TikTok) and e-commerce.”
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This article is originally published at Insider Monkey.
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