In this article, we discuss the 10 stocks to sell according to Michael Burry.
There are few hedge fund managers on Wall Street who command as much attention during an economic slowdown as Michael Burry of Scion Asset Management, the renowned investor of The Big Short fame who rose to stardom after accurately predicting the financial crisis of 2008 and making hundreds of millions from shorting the housing market. Burry, who manages a 13F stock portfolio worth just $41 million at the end of the third quarter of 2022, has repeatedly warned investors in the past few months that the stock market is about to crash.
Burry held stakes in top stocks like Alphabet Inc. (NASDAQ:GOOG), Warner Bros. Discovery, Inc. (NASDAQ:WBD), and Booking Holdings Inc. (NASDAQ:BKNG) in the past year or so but sold off these positions entirely in the second quarter of 2022, trying to shield his fund from the impact of the slowing economy. Burry recently tweeted that the market was mimicking the patterns seen in 2007. He also teased his followers on Twitter by saying that they had no idea how many shorts bets he had on this collapse.
The stocks that Burry sold off in the past few months have been severely impacted by the macro slowing of the economy. Of the 10 stocks that he sold off in the second and third quarter of 2022, seven have witnessed their share prices decline by more than 10% in the past year. Of the three remaining stocks, one is down in the past six months and the other one year-to-date. Only one of these stocks, Nexstar Media Group, Inc. (NASDAQ:NXST), is trading up by more than 20% in the past twelve months.
Our Methodology
The companies listed below were picked from the investment portfolio of Scion Asset Management at the end of the third quarter of 2022. The stocks which the hedge fund sold off completely in the past few months were selected. Data from around 900 elite hedge funds tracked by Insider Monkey in the third quarter of 2022 was used to identify the number of hedge funds that hold stakes in each firm. It is important to clarify that Burry, in the past few months, has repeatedly warned of a looming market crash, advising investors to prepare for a crisis unlike anything seen before. He sold off his entire portfolio in the second quarter of 2022 to shield his fund from the impact of such a crash.
Michael Burry of Scion Asset Management
Michael Burry Stock Portfolio: Stocks He Sold
10. Sportsman’s Warehouse Holdings, Inc. (NASDAQ:SPWH)
Number of Hedge Fund Holders: 22
Decline in Share Price Over Past Year: 10%
Sportsman’s Warehouse Holdings, Inc. operates as an outdoor sporting goods retailer in the United States. On September 1, Sportsman’s Warehouse Holdings posted earnings for the second quarter of 2022, reporting earnings per share of $0.36, beating market estimates by $0.10. The revenue over the period was $351 million, down 3.0% compared to the revenue over the same period last year and beating market estimates by $12.73 million. Burry bought a stake in the firm in the first quarter of 2022 but sold it during the second quarter.
On September 26, B. Riley analyst Eric Wold maintained a Buy rating on Sportsman’s Warehouse Holdings, Inc. stock and raised the price target to $16 from $14, noting that management plans to accelerate store growth in the coming years with the flexible store format.
At the end of the third quarter of 2022, 22 hedge funds in the database of Insider Monkey held stakes worth $105.9 million in Sportsman’s Warehouse Holdings, Inc., compared to 20 in the previous quarter worth $108.8 million.
Just like Alphabet Inc., Warner Bros. Discovery, Inc., and Booking Holdings Inc., Sportsman’s Warehouse Holdings, Inc. is one of the stocks feeling the heat of an economic slowdown.
In its Q1 2022 investor letter, Merion Road Capital, an asset management firm, highlighted a few stocks and Sportsman’s Warehouse Holdings, Inc. was one of them. Here is what the fund said:
“During the quarter I added to Sportsman’s Warehouse Holdings, Inc.. SPWH is an outdoor sporting goods retailer with about half of its 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, 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 SPWH, Dicks Sporting Goods and Walmart decided to exit the category; their absence makes the competitive landscape for 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. 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 many other internal initiatives including store expansion, omnichannel growth (e‐comm up to 15% of revenues), loyalty programs (at 3mm members) and new co‐branded credit cards…(read more)
9. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 25
Decline in Share Price Over Past Year: 12%
Stellantis N.V. (NYSE:STLA) engages in the design, engineering, manufacturing, distribution, and sale of automobiles and parts. On October 26, Magna’s said that its 48-volt hybrid transmission has made its debut in Stellantis’ Jeep Renegade, Fiat 500 X, Compass e Hybrid and Tipo models as part of a multi-program agreement. This 48-volt hybrid transmission is produced at Magna’s Slovakia facility. Burry had held a stake in the firm worth nearly 600,000 shares during the first quarter but sold it off completely between March and June.
On October 20, Nomura analyst Anindya Das upgraded Stellantis N.V. stock to Buy from Neutral with a price target of EUR 19.80, up from EUR 15.70, noting the better-than-expected year-to-date net pricing strength in company’s major markets of North America and Europe.
At the end of the third quarter of 2022, 25 hedge funds in the database of Insider Monkey held stakes worth $905.5 million in Stellantis N.V., compared to 25 in the preceding quarter worth $714.6 million.
8. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 32
Rise in Share Price Over Past Year: 23%
Nexstar Media Group, Inc. is a television broadcasting and digital media company. On October 3, Nexstar Media Group said that it has closed on its acquisition of the CW network. Nexstar Media sealed its deal for 75% ownership interest from the co-owners of Network, Warner Bros. Discovery and Paramount Global. Burry sold off his stake in the firm completely during the second quarter of 2022 after holding it for a brief period in the first quarter.
On September 6, Rosenblatt analyst Barton Crockett upgraded Nexstar Media Group, Inc. stock to Buy from Neutral with a price target of $246, up from $181, noting that a mix-driven ad resilience and new revenues from next-gen transmission technology can support growth for Nexstar.
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 965,922 shares worth more than $161 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 (NXST up 24.8%) – 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.”
7. Ovintiv Inc. (NYSE:OVV)
Number of Hedge Fund Holders: 47
Decline in Share Price Over Past Week: 10%
Ovintiv Inc. (NYSE:OVV) engages in the exploration, development, production, and marketing of natural gas, oil, and natural gas liquids. On September 28, Ovintiv Inc. said that it has received regulatory approvals for the renewals of its shares’ buyback program. Burry held the stock for brief period during the second quarter of 2021 and the first quarter of 2022. He sold off the stake completely during the second quarter of 2022.
On October 19, Jefferies analyst Lloyd Byrne initiated coverage of Ovintiv Inc. stock with a Buy rating and $75 price target, noting that the current macro slowdown is likely to incrementally gain focus within the exploration group.
Among the hedge funds being tracked by Insider Monkey, London-based investment firm Marshall Wace LLP is a leading shareholder in Ovintiv Inc. with 4 million shares worth more than $187.6 million.
In its Q2 2022 investor letter, Carillon Tower Advisers, an asset management firm, highlighted a few stocks and Ovintiv Inc. was one of them. Here is what the fund said:
“Oil and gas exploration and production company Ovintiv Inc. fell as oil prices faded late in the quarter due to aggressive Fed rate hikes and growing credit fears in emerging markets, a source of demand growth for oil. Although oil and fuel product inventories remain scarce, the Fed has been so aggressive with rhetoric and tightening that the dollar rose sharply and investor sentiment shifted toward anticipating a recession. Ovintiv is a self-help improvement story as it lowers debt levels through cash generation and asset sales while detailing plans to buy back shares more aggressively and pay a higher dividend.”
6. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 59
Decline in Share Price Over Past Year: 22%
Global Payments Inc. (NYSE:GPN) provides payment technology and software solutions for cards, electronic, check, and digital-based payments. On August 1, EVO Payments and Global Payments announced that Global Payments will acquire EVO in an all-cash transaction for $34 per share in cash indicating a $4 billion enterprise value for EVO. The purchase price represents a premium of 24% to EVO’s last closing price of July 29. The firm was part of a group of firms Burry sold off completely during the second quarter of 2022.
On November 1, BMO Capital analyst James Fotheringham maintained an Outperform rating on Global Payments Inc. stock and lowered the price target to $224 from $232, noting that the company reported in-line third quarter results.
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 5.8 million shares worth more than $620.8 million.
In addition to Alphabet Inc., Warner Bros. Discovery, Inc., and Booking Holdings Inc., Global Payments Inc. is one of the stocks under pressure from rising interest rates.
5. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 61
Decline in Share Price Over Past Year: 37%
Warner Bros. Discovery, Inc. is a media company that provides content across various distribution platforms. On November 3, The CEO of Warner Bros. Discovery Inc, on the earnings call, announced that the company’s streaming platform will combine HBO Max and Discovery+ and will roll out by spring 2023. Burry held a stake in the firm in the second quarter of 2021 and the first quarter of 2022. This was sold off completely in the second quarter of 2022.
On November 7, RBC Capital analyst Kutgun Maral maintained an Outperform rating on Warner Bros. Discovery, Inc. stock and lowered the price target to $27 from $44, noting that the company reported mixed third quarter results.
At the end of the third quarter of 2022, 61 hedge funds in the database of Insider Monkey held stakes worth $1.6 billion in Warner Bros. Discovery, Inc., compared to 68 in the preceding quarter worth $2.3 billion.
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, rebuild 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: 68
Decline in Share Price Over Past Six Months: 1%
Bristol-Myers Squibb Company (NYSE:BMY) discovers, develops, licenses manufactures, and markets pharmaceutical products worldwide. On October 31, Bristol Myers Squibb announced that their FDA-approved anaemia therapy, Reblozyl, which was developed in partnership with Merck, a multinational pharmaceutical company, reached the primary and key secondary endpoints in a phase three trial. Burry had bought a stake in the firm in the fourth quarter of 2021 but sold it off completely in the second quarter of 2022.
On October 12, Barclays analyst Carter Gould maintained an Equal Weight rating on Bristol-Myers Squibb Company stock and lowered the price target to $66 from $69, noting that “another round of challenging setups is expected for biopharmaceuticals in third quarter due to COVID, currency and macro headwinds as well as mixed trends.
At the end of the third quarter of 2022, 68 hedge funds in the database of Insider Monkey held stakes worth $1.7 billion in Bristol-Myers Squibb Company, compared to 69 in the preceding quarter worth $2.2 billion.
In its Q3 2022 investor letter, RGA Investment Advisors, an asset management firm, highlighted a few stocks and Bristol-Myers Squibb Company was one of them. Here is what the fund said:
“Bristol-Myers Squibb Company, which we referenced above, boasts a double-digit free cash flow yield that gets divided roughly equally between repurchases, a dividend and M&A in what is the best environment for acquisitions perhaps ever. In 2019, BMY acquired Celgene, which had one of the better corporate development programs in the industry. We view this as a great outlet for us as generalists considering a company like BMY should truly thrive with the ability to acquire outstanding assets and science at depressed valuations. We touched on the Turning Point acquisition above and we expect the company to be increasingly active in the M&A landscape. Importantly, Celgene also came to BMY with a phenomenal CAR-T platform. CAR-T is a cell therapy that activates the body’s immune system to target cancers. This will be a key growth vector alongside M&A in overcoming the company’s patent cliff.”
3. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 76
Decline in Share Price Year-to-Date: 6%
Cigna Corporation (NYSE:CI) provides insurance and related products and services in the United States. On November 3, Cigna Corp posted earnings for the third quarter of 2022, reporting earnings per share of $6.04, beating market estimates by $0.33. The revenue over the period was $45.28 billion, up 2.2% compared to the revenue over the same period last year and beating market estimates by $570 million. The firm was part of a wide group of stocks sold off by Burry completely in the second quarter of 2022.
On November 8, Wells Fargo analyst Stephen Baxter maintained an Overweight rating on Cigna Corporation stock and raised the price target to $370 from $319, highlighting that the company reported strong third quarter results.
At the end of the third quarter of 2022, 76 hedge funds in the database of Insider Monkey held stakes worth $3.1 billion in Cigna Corporation, compared to 66 in the preceding quarter worth $3.2 billion.
In its Q2 2022 investor letter, Aristotle Capital Management, LLC, an asset management firm, highlighted a few stocks and Cigna Corporation was one of them. Here is what the fund said:
“Cigna Corporation contributed to performance in the second quarter, outpacing the benchmark Health Care sector return. We believe Cigna benefited from investors seeking relative “safety” in the managed care sector and the stock’s attractive valuation at just over 10 times next year’s earnings. During the quarter, Cigna reported an earnings beat due to a better-than-expected medical loss ratio.”
2. Apple Inc. (NASDAQ:AAPL)
Number of Hedge Fund Holders: 140
Decline in Share Price Over Past Year: 14%
Apple Inc. (NASDAQ:AAPL) designs, manufactures and markets smartphones, personal computers, tablets, wearables, and accessories. Burry had bought PUT options on Apple stock in the first quarter of 2022 and sold off these options in the second quarter.
On November 8, UBS analyst David Vogt maintained a Buy rating on Apple Inc. (NASDAQ:APPL) stock and lowered the price target to $180 from $185, noting that iPhone availability across 30 countries indicates that wait times across most markets including the US ticked higher for the second straight week.
At the end of the third quarter of 2022, 140 hedge funds in the database of Insider Monkey held stakes worth $144 billion in Apple Inc., compared to 128 in the previous quarter worth $143 billion.
In its Q2 2022 investor letter, Alger Capital, an asset management firm, highlighted a few stocks and Apple Inc. was one of them. Here is what the fund said:
“Apple Inc. (NASDAQ:AAPL) is a leading technology provider in telecommunications. computing and services. Apple’s iOS operating system is the company’s unique intellectual property and competitive strength. This software drives extremely tight engagement with consumers and enterprises. The engagement is fostering the growing purchase of high-margin services like music, apps, and apple pay. Apple’s shares detracted from performance as management lowered its guidance for the second quarter due to headwinds from the war in Ukraine, adverse foreign currency shifts, and dampened consumer demand associated with the coronavirus in China. Additionally, many investors were concerned that lockdowns implemented to curtail the spread of COVID-19 would impact the production of apple products, however, the manufacturing facilities have resumed activity.”
1. Meta Platforms, Inc. (NASDAQ:META)
Number of Hedge Fund Holders: 177
Decline in Share Price Over Past Year: 41%
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 October 18, Meta Platforms announced that it will sell its Giphy, an animated search engine. Burry sold off a previously-held stake in the firm completely in the second quarter of 2022.
On November 7, Itau BBA analyst Thiago Kapulskis upgraded Meta Platforms, Inc. stock to Outperform Market Perform with a $102 price target.
At the end of the third quarter of 2022, 177 hedge funds in the database of Insider Monkey held stakes worth $14 billion in Meta Platforms, Inc., compared to 185 in the preceding quarter worth $18.2 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.
