Below is the list of inflation resistant top 3 stock picks of Michael Burry. For a detailed discussion about why Michael Burry compares current market conditions to 1977 please see Michael Burry’s Warning On Inflation and His Top 6 Stock Picks.
3. General Dynamics Corporation (NYSE:GD)
Scion Asset Management’s Stake Value: $16.6 million
Percentage of Scion Asset Management’s Portfolio: 22.39%
Numbers of Hedge Fund Holders: 51
Michael Burry’s strategy of initiating a new position in General Dynamics Corporation (NYSE:GD) appears to be working because shares of the defense company soared more than 9% year to date. The company’s stock price surged due to global political unrest, Russian aggression, and increasing defense budgets. Moreover, record financial numbers for fiscal 2021 added to investors’ sentiments. General Dynamics posted net earnings of $3.3 billion on $38.5 billion in revenue in fiscal 2021. The company ended 2021 with a total estimated contract value of $127.5 billion.
Elite funds also look bullish over the fundamentals of General Dynamics. In the fourth quarter, the number of long hedge funds’ positions increased to 51 compared to 39 positions in the previous quarter. Longview Asset Management and Harris Associates were among the leading stakeholders in the company.
2. Fidelity National Financial, Inc. (NYSE:FNF)
Scion Asset Management’s Stake Value: $16.9 million
Percentage of Scion Asset Management’s Portfolio: 22.77%
Numbers of Hedge Fund Holders: 41
Fidelity National Financial, Inc. (NYSE:FNF) is also a newcomer in Scion Asset Management’s portfolio. It is a mid-cap Fortune 500 company engaged in providing title insurance and settlement services to the mortgage and real estate industries. Like Burry’s Scion Asset Management, other elite funds were also bullish about the company. As of December, the number of long hedge funds’ positions in Fidelity National was at 41 compared to 32 in the previous quarter.
In the fourth quarter investor letter, Weitz Investment Management, an investment management firm, mentioned a few stocks including Fidelity National Financial. Here is what Weitz Investment Management stated:
“Another in this category, Fidelity National Information Services, has a very stable, growing, mission-critical software business serving banks. It entered the payments business a few years ago and is now being painted in the same light as other payment stocks. We think that global spending will eventually revert to its trend line. Further, payments companies’ revenues are generally a function of payment volume, so revenues are indexed to inflation while expenses rise more slowly. This is great for profit margins. We expect all three of these companies to be excellent contributors to our results over the next few years.”
1. Bristol-Myers Squibb (NYSE:BMY)
Scion Asset Management’s Stake Value: $18.7 million
Percentage of Scion Asset Management’s Portfolio: 25.12%
Numbers of Hedge Fund Holders: 67
Scion Asset Management’s top performers in the first quarter of 2022 include Bristol-Myers Squibb (NYSE:BMY). It is also one of the inflation protection stocks with the potential to perform well in various market cycles. In addition to inflation, its business model is less exposed to global political unrest. This is clearly reflected from its stock price rally of close to 7% year to date.
In the fourth quarter investor letter, Saturna Capital, an investment management firm, expressed a different opinion about Bristol-Myers Squibb. Here is what Saturna Capital stated:
“Given the likelihood of rising inflation and interest rates ahead, we anticipate adjustments to the portfolio to reduce exposure to highly valued stocks dependent on low-interest rates to support terminal year valuations, while seeking investments in companies more correlated with a return to economic normalcy. We sold our positions in Bristol Myers. We believe there are better opportunities than Bristol in pharmaceuticals.”
You can also take a look at 10 Dividend Stocks Warren Buffett is Backing in 2022 and 10 Dividend Stocks to Buy According to Billionaire Jeffrey Talpins.
