In this article, we discuss top 10 stock picks of Michael Burry’s 2022 portfolio.
Michael Burry is the famous investor who predicted the housing market crash of 2007 a couple years before anybody could see it. Resisting revolts from his investors over the magnitude of his claims, Burry ultimately made $100 million in personal profits from betting against the subprime loan market, and made his clients well over $700 million. The story of this visionary bet was chronicled in Hollywood film ‘The Big Short’, where actor Christian Bale played Burry’s character and aptly emulated the investor’s eccentric mannerisms as well.
Burry holds an MD from the Vanderbilt University School of Medicine, but did not practice medicine to pursue his interest, and talent, in financial investing. He founded Scion Capital in 2000, and generated extraordinary returns for his clients. From 2000 to 2008, after which he liquidated his hedge fund in order to focus on his personal wealth, Scion Capital posted returns of 489.34%, while the the S&P 500 returned just below 3% during the same period. The investor reopened his hedge fund, this time named Scion Asset Management, in 2013 and initially started investing exclusively in water, gold, and farm land.
‘Greatest Speculative Bubble of All Time’
Come 2022, and Burry once again has views on the market not everybody likes to hear. In May, the investor noted that the US market seems to be following the patterns of previous bubbles, leaving it positioned for a crash of monumental proportions. The tech-heavy Nasdaq Composite has lost 27% in the year to date, and mega-cap stocks such as Alphabet Inc. (NASDAQ:GOOG), Meta Platforms, Inc. (NASDAQ:FB), and Amazon.com, Inc. (NASDAQ:AMZN) have plummeted significantly in recent months. Burry thinks the S&P 500’s trajectory over the last 10 years is similar to its chart for the 10 years prior to the dot.com crash in 2000, as well as the Dow’s chart for the decade leading up to the Great Crash of 1929. He blames human nature for this repetition of history, where stock market bubbles are formed and ultimately burst with painful consequences. In June 2021, he tweeted about the ‘Greatest Speculative Bubble of All Time’ predicting that excessive speculation and loans could cause a crash. He has also said in since-deleted tweets that the market is ”dancing on a knife’s edge’.
Michael Burry of Scion Asset Management
In the fourth quarter of 2021, Scion Asset Management held a total of 6 stocks. In the first quarter of 2022, the fund sold out of all its stocks except one, and added a number of tech names with a total portfolio of 12 stocks. Michael Burry also placed a $36 million bet against Apple Inc. (NASDAQ:AAPL), with a put position on 206,000 of the firm’s shares.
Let’s now take a look at the top 10 stocks to buy according to Michael Burry.
Our Methodology
The Q1 2022 portfolio of Michael Burry’s Scion Asset Management was used to pick its top 10 holdings. Hedge fund sentiment around each stock has been derived from Insider Monkey’s database of 924 elite hedge funds tracked at the end of the fourth quarter of 2021.
Michael Burry’s 2022 Portfolio: Top 10 Stock Picks
10. Global Payments Inc. (NYSE:GPN)
Number of Hedge Fund Holders: 67
Scion Asset Management’s Stake Value: $9.12 million
Scion Asset Management’s 13F Portfolio: 4.53%
Global Payments Inc. (NYSE:GPN) provides software solutions and payment technology for digital-based payments around the world. Scion Asset Management, according to its 13F filings for the first quarter of 2022, owns 67,000 shares of the firm at a value of $9.12 million.
Out of all the hedge funds tracked by Insider Monkey at the close of the fourth quarter of 2021, Global Payments Inc. was held by 67 hedge funds with a combined value of $3.31 billion. This is down from 68 hedge funds a quarter ago with $3.46 billion worth of positions in the company. Its largest shareholder in Q1 2022 was Orbis Investment Management, which held a $763 million stake in the firm consisting of 5.57 million shares.
On May 3, Global Payments Inc. was given a ‘Buy’ rating by Citi analyst Ashwin Shirvaikar, along with a price target of $180. The analyst noted that the stock fell 9% after the company downwardly revised its FY22 revenue outlook by $35 million, which he thinks was unjustified, and that the current share price presents a “remarkably attractive” buying opportunity.
For Q1 2022, Global Payments Inc. reported an EPS of $2.07, beating estimates by $0.03. Revenue of $1.95 billion increased 7.75% year-on-year, but fell slightly below estimates by $1.26 million.
Investment firm Oakmark Funds talked about Global Payments Inc. in its Q1 2022 investor letter. Here’s what it said:
“Global Payments 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 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.
Along with Alphabet Inc., Amazon.com, Inc. and Meta Platforms, Inc., Global Payments Inc. is a exciting stock to watch out for.
9. Stellantis N.V. (NYSE:STLA)
Number of Hedge Fund Holders: 23
Scion Asset Management’s Stake Value: $9.76 million
Scion Asset Management’s 13F Portfolio: 4.84%
Then there’s Stellantis N.V. (NYSE:STLA), in which Michael Burry owns 600,00 shares with a price tag of $9.76 million, representing 4.84% of his Q1 2022 portfolio. The Dutch company makes and sells cars under a range of brands such as Vauxhall, Peugeot, Chrysler and Fiat.
On May 10, Berenberg analyst Adrian Yanoshik initiated coverage of Stellantis N.V. with a ‘Buy’ rating and €21 price target. The analyst expects tight volumes due to supply chain issues actually supporting pricing through a ‘modest’ recession, and feels a ‘deep’ order book will support positive free cash flow.
23 hedge funds held $1.25 billion worth of positions in Stellantis N.V. at the close of Q4 2021. This shows a slight downward trend from the previous quarter where 24 hedge funds were long on the company shares. Arrowstreet Capital held a $829.5 million stake in Stellantis N.V. consisting of 50.64 million shares, making it the firm’s largest shareholder in the first quarter of 2022.
For 2021, Stellantis N.V. posted a revenue of $176.8 billion, which showed an increase of 78.55% increase from its 2020 revenue of $99 billion. As of May 19, shares of the firm are down 20.39% in the last 12 months.
8. Nexstar Media Group, Inc. (NASDAQ:NXST)
Number of Hedge Fund Holders: 41
Scion Asset Management’s Stake Value: $14.36 million
Scion Asset Management’s 13F Portfolio: 7.13%
Nexstar Media Group, Inc. (NASDAQ:NXST) is a Texas-based firm which provides digital media and television broadcasting services. It was given a ‘Buy’ rating by Deutsche Bank analyst Connor Murphy on May 12, who raised the firm’s price target to $225 from $216, noting higher revenue, EBITDA, and free cash flow estimates after Nexstar released its Q1 results.
Nexstar Media Group, Inc. posted EPS of $6.01 for the first quarter, beating estimates by $1.70. The company pulled $1.21 billion in revenue for the quarter, beating estimates by $24.02 million and jumping 8.63% year-on-year. As of May 19, shares of Nexstar Media Group, Inc. have soared 19.41% in the last 12 months, and 14.97% in the year to date.
In the first quarter, Michael Burry’s Scion Asset Management owned 76,000 shares of Nexstar Media Group, Inc. worth $14.36 million. Investors were bullish on the firm at the close of Q4 2021, where 41 hedge funds reported ownership of company shares at a value of $900.8 million. This is up from 38 hedge funds with $874 million worth of stakes in the company a quarter ago. With a $216.3 million stake, Seth Klarman’s Baupost Group was the largest shareholder of Nexstar Media Group, Inc. in the first quarter of 2022.
Here is what investment firm Richie Capital Group had to say about Nexstar Media Group, Inc. in its Q1 2022 investor letter:
“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: 44
Scion Asset Management’s Stake Value: $16.22 million
Scion Asset Management’s 13F Portfolio: 8.05%
Up next on Michael Burry’s list of top stocks to buy is Ovintiv Inc. (NYSE:OVV), a Colorado-based energy firm which explores for and develops oil, natural gas and natural gas liquids products across the United States and Canada. On the back of soaring energy prices, shares of Ovintiv Inc. have jumped 33.21% in the year to date, and 85.23% in the last 12 months.
Truist analyst Neal Dingmann on May 11 lowered the firm’s price target on Ovintiv Inc. to $72 from $80 and kept a ‘Buy’ rating on the company shares. He notes that increased selling pressure after the firm’s below-consensus Q1 earnings was an ‘overreaction’, and presents investors with a good buying opportunity.
On May 9, Ovintiv Inc. reported its first quarter earnings, and posted EPS of $2.17, missing estimates by $0.32. Quarterly revenue of $1.97 billion also underperformed estimates by $302.9 million.
Scion Asset Management held 300,000 shares of Ovintiv Inc. in the first quarter with a price tag of $16.22 million. Of the 900+ hedge funds tracked by Insider Monkey, 44 held positions in the firm at the close of Q4 2021, with a combined worth of $1.07 billion. The same number of hedge funds were bullish on the company shares a quarter ago as well.
Miller Value Partners, an investment firm, talked about many stocks in its Q4 2021 investor letter, and Ovintiv Inc. was one of them. 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 (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. 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), the company 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.”
6. Meta Platforms, Inc. (NASDAQ:FB)
Number of Hedge Fund Holders: 224
Scion Asset Management’s Stake Value: $17.78
Scion Asset Management’s 13F Portfolio: 8.83%
Michael Burry initiated his position in Meta Platforms, Inc. during the first quarter of 2022 with 80,000 shares valued at $17.78 million. This represented 8.83% of the Big Short investor’s total portfolio.
Evercore ISI analyst Mark Mahaney on April 28 kept an ‘Outperform’ rating on Meta Platforms, Inc. shares and lowered the price target to $325 from $350. He notes that the firm is facing three key concerns: ad platform impairment owing to Apple’s privacy changes, monetization challenges related to Reels, and competition from TikTok. However, he is increasingly confident the firm can address these issues successfully, and sees shares as “truly compelling” at current levels.
For the first quarter, Meta Platforms, Inc. posted an EPS of $2.72, beating estimates by $0.21. Revenue of $27.9 billion for the quarter was below estimates by roughly $314 million. As part of the market sell-off in tech, shares of the Meta have dropped 43.21% in the year to date as of May 19.
Meta Platforms, Inc. stock was held by 224 hedge funds at the close of Q4 2021, with an aggregate holding value of $31.8 billion. This is down from 248 hedge funds in the preceding quarter. Adam Capital was the largest shareholder of Meta Platforms, Inc. during the first quarter of 2022, with a massive stake worth $48.66 billion.
Investment firm Vulcan Value Partners talked about Meta Platforms, Inc. in its Q1 2022 investor letter, stating:
“Meta Platforms Inc., the parent company of Facebook, reported excellent operating results in 2021. Its revenue increased 37%, operating earnings increased 40%, and the company generated $40 billion of free cash flow. Despite these excellent results, Meta experienced extreme volatility in its stock price during the first quarter. We believe that two factors are responsible for this volatility. First, the company quantified the headwind to revenue from Apple’s recent privacy changes in the amount of approximately $10 billion for 2022. Meta is rebuilding its advertising technology, and we believe the long-term headwinds from Apple’s privacy changes will be limited because Meta will create a suitable solution. Second, Meta continues to invest heavily into its Reality Labs segment, also known as the metaverse. While we believe the metaverse presents great opportunity for Meta, we are not assigning any value to it in our valuation work. While 2022 may be challenging for Meta, the company’s competitive advantages are still intact, and the company trades at a significant discount to our estimate of its intrinsic value. Despite our concerns about a possible recession, we expect Meta to return to double-digit bottom line growth next year.”
Along with Amazon.com, Inc. and Alphabet Inc., Meta Platforms, Inc. is on the radar of institutional investors.
5. Cigna Corporation (NYSE:CI)
Number of Hedge Fund Holders: 53
Scion Asset Management’s Stake Value: $17.97 million
Scion Asset Management’s 13F Portfolio: 8.92%
Cigna Corporation (NYSE:CI) is an insurance and healthcare services provider based in Connecticut. As of May 19, the firm’s shares have recorded an uptick of 9.91% in the year to date. Scion Asset Management, according to its Q1 2022 portfolio, owned a $17.97 million stake in the company consisting of 75,000 shares, which represented 8.92% of its total holdings.
JPMorgan analyst Lisa Gill on May 16 upgraded Cigna Corporation to ‘Overweight’ from ‘Neutral’ with a price target of $304, up from $248. The analyst appreciated the firm’s Q1 results, and noted further possible upside to its already updated 2022 guidance. She views the shares as trading at an attractive valuation. Raymond James analyst John Ransom on May 10 gave Cigna Corporation a ‘Strong Buy’ rating and a price target of $300, up from $275.
In the first quarter of 2022, Cigna Corporation reported EPS of $6.01, above estimates by $0.83. Quarterly revenue stood at $44.1 billion, outperforming consensus figures by $629.9 million.
53 hedge funds held positions worth $1.92 billion in Cigna Corporation at the end of December, as compared to 58 hedge funds with $2.3 billion worth of stakes in the firm at the end of September.
Davis Funds, an investment firm, talked about multiple stocks in its Q4 2021 investor letter, and Cigna Corporation was one of them. 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, United Health Group, Viatris and Quest Diagnostics.”
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 158
Scion Asset Management’s Stake Value: $18.07 million
Scion Asset Management’s 13F Portfolio: 8.97%
Michael Burry’s Q1 2022 portfolio included 6,500 shares of Google parent company Alphabet Inc., with a price tag of $18.07 million and representing a 8.97% slice of his total portfolio.
For the first quarter of 2022, Alphabet Inc. reported an EPS of $24.62, missing consensus estimates by $0.93. Quarterly revenue of $68 billion saw a growth of 22.95% year-on-year, and also beat consensus estimates by $124.6 million.
Jefferies analyst Brent Thill in late April maintained a ‘Buy’ rating on Alphabet Inc. shares and lowered the price target to $3,400 from $3,600. The firm saw healthy growth in its Search and Cloud business, but its advertising revenue from Youtube missed estimate figures for the third quarter in a row. The analyst decreased his FY2022 estimates for gross and net revenue, operating margin and EPS.
158 hedge funds reported owning stakes in Alphabet Inc. at the end of Q4 2021, as compared to 156 hedge funds in the preceding quarter.
Investment firm Baron Funds mentioned Alphabet Inc. in its Q1 2022 investor letter. The fund stated:
“We have modestly reduced the size of our position in Alphabet Inc. (from 6.5% at the end of the fourth quarter of 2021 to 5.3% as of the end of the first quarter of 2022), after the stock rallied 64% in 2021 and continued outperforming during the first quarter, declining just 3%.”
3. Warner Bros. Discovery, Inc. (NASDAQ:WBD)
Number of Hedge Fund Holders: 76
Scion Asset Management’s Stake Value: $18.72 million
Scion Asset Management’s 13F Portfolio: 9.29%
Warner Bros. Discovery, Inc. (NASDAQ:WBD) shares represented 9.29% of Michael Burry’s portfolio for the first quarter of 2022, with a stake worth $18.7 million. The firm was formed after AT&T Inc. spun off its Warner Bros segment and merged it with Discovery (DISCA) in April 2022.
Cowen analyst Doug Creutz on May 12 gave Warner Bros. Discovery, Inc. an upgraded rating of ‘Outperform’ from ‘Market Perform’, and revised the price target to $24 from $31. He is cautious on the highly competitive streaming space, and sees the firm’s decision not to spend big amid the ongoing consumer wars as a more sustainable strategy than its peers.
76 hedge funds were bullish on Warner Bros. Discovery, Inc. shares at the end of Q4 2021. The largest shareholder of the firm during the first quarter was Laurion Capital Management, which held a stake consisting of 13.58 million shares valued at $338.4 million.
Silver Ring Value Partners, an investment firm, talked about Warner Bros. Discovery, Inc. in its Q1 2022 investor letter, stating:
“Discovery completed the acquisition of the Warner Media business from AT&T in April, and the combined business is now named Warner Brothers Discovery. 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 WBD shares prior to this forced selling being over.
This has caused the stock to decline substantially despite being already priced at a low valuation and reporting good recent results. The people selling aren’t likely considering either of those factors, which is what creates the opportunity. One wrinkle as compared to the usual spin-off special situation setup is that the non-economic selling is likely to last for some time given the retail nature of the shareholder base. This is different from the typical pattern where there is a quick sharp sell-off as institutional investors dump their shares quickly following the spin.
In anticipation of this situation, I had sold our equity prior to the major declines, and replaced it with January 2024 call options. I have since been using a portion of the cash generated from the equity sale to add to the option position as the stock price declines. While this does give up some time horizon, which I am usually loathe to do, both the technical selling and the question of the success of the merger integration are likely to be resolved well before then.
If I am correct and this is a much more valuable business than the market is giving it credit for, we will make a hefty profit. If I am wrong, and the combination of financial leverage, merger integration problems and secular risks are more serious than I foresee, we will have a moderate loss. I like our odds and the asymmetry of risk vs. reward.”
2. Booking Holdings Inc. (NASDAQ:BKNG)
Number of Hedge Fund Holders: 92
Scion Asset Management’s Stake Value: $18.78 million
Scion Asset Management’s 13F Portfolio: 9.32%
Scion Asset Management initiated its position in Booking Holdings Inc. (NASDAQ:BKNG) during the first quarter with 8,000 shares worth $18.78 million. This represented 9.32% of its total portfolio. Out of all the hedge funds tracked by Insider Monkey at the close of Q4 2021, 92 reported ownership of stakes in Booking Holdings Inc. with a combined value of $7.7 billion.
Booking Holdings Inc. is a travel and tourism company which operates Booking.com and Rentalcars.com. On May 5, Citi analyst Ronald Josey kept a ‘Buy’ rating on Booking Holdings Inc. shares and increased the price target to $2,800 from $2,600. He sees the company gaining further share of the recovering global travel market, with gross travel bookings reaching record levels in April.
Booking Holdings Inc. disclosed its first quarter earnings on May 4, and posted an EPS of $3.90, outperforming estimates by $2.56. The company raked in $2.7 billion in revenue for the quarter which exceeded analysts’ forecasts by $167.2 million and showed a jump of 136.2% in comparison to the year-ago quarter.
1. Bristol-Myers Squibb Company (NYSE:BMY)
Number of Hedge Fund Holders: 66
Scion Asset Management’s Stake Value: $21.90 million
Scion Asset Management’s 13F Portfolio: 10.87%
According to regulatory filings for the first quarter of 2022, Bristol-Myers Squibb Company (NYSE:BMY) is Michael Burry’s largest holding, with 300,000 shares priced at $21.9 million. The New York-based biopharmaceutical firm develops, manufactures and sells a range of medicinal therapies around the globe. As of May 19, the company’s shares have gained 13.37% in the last year, and 22.75% in the year to date.
On May 17, Wells Fargo analyst Mohit Bansal raised the firm’s price target on Bristol-Myers Squibb Company to $70 from $65 and maintained an ‘Equal Weight’ rating on the company shares. The analyst thinks the stock has outperformed in the year to date thanks to the market favoring value stocks, and continues to see long-term challenges for the firm. He feels that the its new product portfolio could fall below its mark of $10-$13 billion by 2025.
Bristol-Myers Squibb Company posted EPS of $1.96 for the first quarter, exceeding analysts’ expectations by $0.07. The revenue posted during the first quarter was $11.65 billion, outperforming estimates by $308.4 million.
Out of all the hedge funds tracked by Insider Monkey, 66 reported bullish bets on Bristol-Myers Squibb Company at the end of Q4 2021, with a collective worth of $3,31 billion. This is down from 74 hedge funds a quarter ago. Two Sigma Advisors was the most prominent shareholder of Bristol-Myers Squibb Company during the first quarter, with a $318.4 million stake.
You can also take a look at 15 Best Semiconductor Stocks to Buy Now and 15 Best Undervalued Stocks to Buy Now
