Michael Burry Portfolio: Investments and Insights

Michael Burry is undoubtedly one of the most popular investors in the United States. He brought an almost 490% return between 1 November 2000 and June 2008 when compared to 3% of total returns of the S&P 500 in the same time frame. He betted against the real estate market in 2008 which made him famous. Burry's investments are often a starting point for many investors, so we will go through key investments in Michael Burry's Portfolio.

Burry is an owner and a hedge fund manager of Scion Asset Management. It currently holds 8 security holdings in its portfolio, whose value is reported at nearly $83 million. Burry expanded his positions in a major Chinese e-commerce company JD.com (NASDAQ:JD), and another Chinese tech giant Baidu (NASDAQ:BIDU). He closed two positions - Hudson Pacific Properties (NYSE:HPP) and Bioatla Inc (NASDAQ:BCAB).

Burry is known for his good prediction of market movements, and that is why his opinion is held in high regard. We will go through his investment strategies, his insights, and the background of Scion Asset Management. To learn how to invest like Michael Burry, stay with us.

Key Takeaways

• Michael Burry is the founder of Scion Asset Management a company that keeps a concentrated portfolio and utilizes a long term investment strategy.
• He became famous in 2007 when he shorted the mortgage bond market by swapping collateralized debt obligations. In the blockbuster movie dealing with this topic, The Big Short is portrayed by Christian Bale.
• Currently, Scion Asset Management has 8 holdings and an AUM of $83 million.

Notable Stock Holdings

The largest Burry's stock holdings in q3 2024 include:

• Alibaba Group (NYSE:BABA). He currently holds 200,000 shares of this Chinese e-commerce giant. Since Q3 2023 when Burry owned 50 thousand stock, he was constantly increasing this position. The share price between Q3 2023 and now didn't change much staying in the range of $80 to $85. Alibaba Group Holding takes 25.55% of Burry's current portfolio and is valued at $21.22 million.
• JD.com (NASDAQ:JD). Burry has a thing for Chinese e-commerce companies since the two largest positions are from the same sectors and geographies. At the moment he owns 500 thousand JD stocks which is a sharp rise from the last quarter when he owned only half of that. The stock gained some value back (from $25 to $35) in 2024 after a significant decline in two previous years. The value of the position is $20 million and it takes 24.08% of the portfolio.
• Shift4 Payments Inc (NYSE:FOUR). American company from the payment processing sector is a relatively new addition to Burry's portfolio, which was added in Q2 2024. In the last quarter, he bought 100 thousand shares, on which he added 50 thousand in the last quarter. FOUR has been on the rise since August and in this period stock peaked from $80 to $110. FOUR takes 16% of the portfolio and the position is valued at $13.29 million.
• Baidu Inc (NASDAQ:BIDU). Baidu is another example of Chinese stocks as a major part of Burry's portfolio which he started building in Q1 2024. During three quarters he tripled his investment from 40 thousand to 125 thousand shares. Stock value is declining, and since he made an initial investment it dropped from ~$100 to $80. Baidu takes 15.85% of the portfolio and the position is valued at $13.16 million.
• Molina Healthcare Inc (NYSE:MOH). MOH is another recent addition to Scion Asset Management portfolio which was initially invested in Q2 2024. This stock is like Baidu in the red, losing value from the beginning of 2024 (drop from $380 to $280). 30 thousand shares that make this position with a price tag of $10.34 million constituting 12.45% of the company's portfolio.

Investment in Undervalued Assets

One of Burry's key investment principles is identifying, predicting, and capitalizing on undervalued assets. Some of the key undervalued assets he invested in recently were:

• Hudson Pacific Properties Inc (NYSE:HPP). A real estate investment trust. Recently it has been poised to benefit from long-term trends in online shopping
• Crescent Energy Co (NYSE:CRGY). A major player in the gas exploration and production sector. It can potentially benefit from rising energy prices due to geopolitical tensions and disruptions in the supply chain.
• RealReal Inc (NASDAQ:REAL). This is an online luxury consignment marketplace that aims to capitalize on the rise of the popularity of used luxury goods.

Burry also aims to conduct bearish bets on overvalued assets. Some of the bearish assets in Michael Burry's portfolio are:

• iShares Semiconductor ETF (NASDAQ:SOXX). His firm bought up options for both this company and Booking Holdings. The semiconductor sector outperformed in recent times, but Burry is afraid that this trend is coming to an end. He bets that the sector will go through a potential slowdown or correction in the future.
• Booking Holdings Inc (NASDAQ:BKNG). This is one of the notable stock holdings that Burry bought in the last quarter. It takes more than 10% of his whole portfolio, and he is betting that the company will lose its value. His bearish bet could be a hedge against a potential decline in the travel industry during 2024.

Michael Burry’s Investment Strategy

Value Investing Principles

Michael Burry was the one who saw the 2007 - 2008 economic crisis hovering over long before it happened. He was the inspiration for the movie Big Short, but many don't know that he built his investment reputation through the principles of value investing.

He adopted many of the investment pillars that Ben Graham already developed and implemented. Burry adjusted these principles to today's market and used them with much success.

One of his core concepts is a strong fundamental analysis and search for undervalued assets. He knows that finding assets of low value doesn't mean much. These companies could be just bad, with bad management, and with a lot of debt.

That is where the analysis comes in. Michael Burry is looking for companies with solid balance sheets and that have sustainable cash flow. Next in line is identifying companies' competitive advantage. Those companies have something to offer in the long run, which can result in solid positive returns.

Also, an important factor for a fundamental analysis is assessing the management team's track record. By assessing the management track record, he is essentially checking the organizational culture, their view on ethical practices, their compensation, their characters, and finally their performance.

Crucial in his analysis is the evaluation of the whole industry sector, major competition, and how the company is fair in that surrounding. Does it have what it takes to make major advances, and take the lead in the sector? Does it have something unique to offer?

Like Ben Graham, Michael Burry also favors reaping the long-term benefits, in favor of short-term stints that are often based on current market trends. He is known as a patient investor and is ready to withstand market volatility if he concludes that the company has long-term potential.

Contrarian Approach

Michael Burry always swims against the current. He never wanted to get caught in an investment bubble that herds masses into massive losses. Investing into companies out of favor he can capitalize on potential mispricings and market overreactions.

The core of his investment approach helps him capitalize on his contrarian approach. Without the deep analysis, he would know what overlooked companies are worth investing in. Some overlooked companies, just like those that are undervalued are just bad investments.

With detailed and thorough analysis he can identify those that can offer something to the market. Even when they have a lowered reported price they still could be a good deal in the long run.

Focusing on companies and their intrinsic value he creates a hedge against possible losses. When he buys assets of low-valued companies at a discount he already got a deal, because even in the case of a loss, he will not lose much.

One of the most famous examples of a contrarian approach was Burrie's shorting of the subprime mortgage market in 2007. Most of the investors thought that it was a major miss at the time. However, Burry conducted detailed and meticulous research that brought results. In the end, he was right and that decision ended up with major returns both for him and his investors.

Sometimes he made mistakes like when in 2020 he predicted that Tesla stocks would crumble very fast. He bought 100,000 shares with the intent to short them. After almost a year, Tesla's stocks rose by 100%, and Burry said that he is no longer looking to short them.

From this example, we can see some issues in his approach that can cause a problem. The first issue is that it is not always good to swim against the tide. In case his contrarian assumption is wrong and the market remains irrational for a longer time, you can end up with big losses. Another issue with the contrarian approach is market timing. If you enter too late or too early into the market you can end up with empty pockets.

With that being said it is not easy being Michael Burry. You need to know how to conduct fundamental analysis in detail. You must be patient and not give in to your emotions. Enduring through times of high market volatility is not for everyone. If you are considering utilizing Burry's approach, consider these factors and how you would fare in these conditions.

Portfolio Diversification Strategies

Although Burry is known for his concentration approach he is not forgetting about the importance of diversification. He aims to own securities in a small number of companies, but they are almost always in different industries and sectors.

Now he switched his focus to investing in healthcare, travel, technology, the gas industry, financial services, and consumer staples. From this list, you can see how he diversified his portfolio. There are only a handful of companies in it, but they are so diverse that they cannot be impacted by one type of risk.

Another approach that Burry uses to diversify his portfolio is by investing in put options and precious metals. This is seen as a hedging method against inflation and sudden market crashes.

Take A Look At Michael Burry's Investing Formula:

Background of Scion Asset Management

Michel Burry was a well-known investor even before the global economic crisis of 2007 - 2008. In 2000 he started his hedge fund Scion Capital, and soon he proved his investment mettle.

In 2001 S&P fell 11.88% and Scion Capital was up 55%. The next year S&P fell again, this time for 22.11%, but Scion again was successful with an upturn of 16%. During 2003 the S%P finally saw a rise of 28.69%, but Burry again delivered a major increase of 50%.

In 2005 he shifted his investment focus to the subprime market. He conducted a deep analysis of mortgage lending practices in recent years. From the data he gathered, he predicted that the real estate bubble would burst by 2007.

Burry convinced Goldman Sachs and other major investment firms to sell him credit default swaps against subprime deals that he identified as vulnerable. He conducted payments toward credit default swaps, which naturally enraged his investors. The majority of investors accused him of bad judgment and wanted to withdraw their capital.

But, in the end, Burry was right. He earned $100 million and brought another $700 million to his investors. Between 1 November 2000 and June 2008, Scion Capital had total returns of 489.34%. In the same period, the S&P 500 regarded as a benchmark for the whole United States market had a return of just over 3%.

He claimed that he liquidated his credit default swap short positions by April 2008. From that, the conclusion can be that he didn't benefit from the bailouts later in 2008 and 2009. After that endeavor, he liquidated his company and focused on his investments.

Scion Asset Management’s Performance

In April 2013 he reopened his hedge fund that he renamed Scion Asset Management. His new focus was on water, gold, and farmland. Since its formation, the company has consistently outperformed the S&P 500.

Historical Returns

In the past three years, the annualized return of the Scion hedge fund is +25.48%. These returns slightly outperform the S&P 500 which had an annual return of 23.40% in the last three years.

Impact of Economic Events

The core of Burry's investment approach is finding overvalued assets while taking contrarian bets. His bearish positions in specific companies or industries have a potential for major returns in periods of corrections phases of the market.

The best examples of this approach are put options that he utilized iShares Semiconductor ETF and Booking. He benefited from slowdowns in the semiconductor and travel industries in the past quarter.

Burry likes to invest in sectors that are prone to impact from geopolitical tensions, natural disasters, or disruptions in supply chains. That is why major parts of his portfolio are made from investments in energy and commodity sectors.

Risk Management Strategies

Michael Burry has through time shown the ability to profit from bear markets. But, bear markets can prove to be challenging when combined with his favorite approaches including value investing and contrarian approach.

To make this approach so profitable, Burry pays a lot of attention to research and analysis. He often invests in a small number of companies that he went over from top to bottom. In case his analysis and calculations are wrong he could face major losses. But, since he is constantly overperforming the key is in his risk management strategies.

As we said, he usually invests in a handful of companies, which results in a highly concentrated portfolio. This strategy allows him to maximize potential returns. But, it also comes with a concentration risk

At this point comes his preferred value investing approach. His fundamental analysis aims to identify undervalued assets. He is always searching for companies whose intrinsic value exceeds its purchase price. The higher the difference, the better. This way he is creating a margin of safety that works as a hedge against high volatility.

A crucial part of his investment strategy is combating risk. One of the ways to minimize investment risk is through deep analysis of companies' fundamentals. He is thoroughly researching the company management team, their experience, and their track record. Next, he is overviewing the industry and its competitive landscape.

Through this detailed research, he is always searching for potential undervalued companies that have the potential for high returns. He knows that only through analysis you can predict potential issues with the company, which can help in reducing risk in the future.

Another approach that he favors is a contrarian approach. This is regarded as a potentially risky strategy since the majority of investors are avoiding investing in particular companies or sectors.

But Burry sees it as a risk-mitigating approach. By investing in sectors that are undervalued, he avoids common traps in the currently overvalued sectors that are often in a financial bubble. Throughout his career, he avoided following the herd, and investing in overinflated assets that are proven to be an investment risk.

But, to be successful in contrarian investing, one must be experienced and diligent when analyzing potential investments. Going against the market without any real backing from data could lead to massive losses.

Although his portfolio is often focused on a small number of assets he calculates the the size of every position in his portfolio. By doing so he is still achieving diversification and minimizing the risk of a negative impact from any single investment.

As a part of his risk management strategy, Burry frequently utilizes position sizing and stop-loss orders. He sets the prices he is willing to go to and then sells to limit the potential losses and protect his returns.

Investment Insights from Michael Burry

Burry’s Investment Philosophy

There are 5 key takeaways that investors can focus on when studying Burry's investment philosophy:

• Focusing on intrinsic value. Since Burry is known as a value investor, identifying stocks below their intrinsic value is a priority. By doing so Burry is practically trading stocks at the discount. This allows him to create a hedge against market downturns.
• Using a contrarian approach. Burry is always trying to find good picks in industries and sectors that are undervalued or deemed risky. This way he doesn't want to get caught into the economic bubble. This approach comes with its risk, since the sector or a particular company may not be worth the investment.
• Utilizing deep research and due diligence. To be able to successfully employ these approaches Burry needs to be disciplined when conducting research and analysis. Through analysis and research, he can identify profitable options and make an informed investment decision.
• Managing risk. Burry doesn't like handling large portfolios, and usually, he invests in a handful of securities. But, he still manages to diversify his portfolio by carefully choosing companies from different sectors. By doing so he is minimizing concentration risk. As another risk management strategy, he occasionally shorts his position as a hedge.
• Preferring a long-term investment horizon. In his research, Burry is looking for companies with a strong foundation that can bring solid returns in the long run. By focusing on the company's fundamentals he can stay calm even during periods of high volatility of the market.

Michael Burry is known as an investor who is constantly delivering positive returns by using an unorthodox approach. We do not recommend utilizing his strategies to everyone. To manage a successful portfolio by using his strategy an investor must have a lot of knowledge, experience, and a correct mindset.

FAQs

Which Stocks Is Michael Burry Buying?

Some of the most recent stocks that Michael Burry acquired are:

• Euronav NV (NYSE:EURN). A Belgian shipping company with a focus on the transportation of crude oil
• Com Inc (NASDAQ:JD). A Chinese e-commerce giant, a top competitor of Alibaba
• Crescent Energy Co (NYSE:CRGY). A private company with a focus on oil and gas exploration and production.

What Are Michael Burry’s Current Holdings?

Currently, Michael Burry's portfolio holds 8 assets:

• Alibaba Group Holding
• com Inc.
• Shift4 Payments Inc
• Baidu Inc
• Molina Healthcare Inc
• Olaplex Holdings Inc
• The Realreal Inc
• American Coastal Insurance Corp.

Finding inspiration is often the stepping stone when starting anew or trying to find a focus. Michael Burry and his unique approach to life and investments is a light that many investors follow.

From his portfolio, we can see that he likes to concentrate his investments, but still manages to diversify them. Burry's deep analysis approach helps him in identifying often undervalued companies that can bring solid returns in the long run. This is backed by his track record which will outperform the S&P 500.

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