Strategic portfolio adjustments by Michael Burry in Q4 2023

Imagine a housing bubble like a bunch of overblown balloons. Michael Burry, unlike everyone else, saw they were about to pop.

He figured out a way to bet against them (basically selling them before they crashed) and made a ton of money when they did. This daring move during the 2007 mortgage crisis made him famous, even though he's not your typical fancy Wall Street guy. You might know him from the movie "The Big Short," which tells his story.

Scion Asset Management, led by Burry, revealed its activities during the last quarter of 2023, unveiling significant purchases and sales across different industries. One notable move was the acquisition of 375,000 shares of Warner Brothers Discovery (WBD:US), indicating a deliberate change in investment emphasis. These disclosures, submitted as 13-F forms, provide insight into the investment approaches of typically secretive hedge funds, offering a retrospective view of their portfolio strategies.

One notable move was the acquisition of 375,000 shares of Warner Brothers Discovery (WBD:US), indicating a deliberate change in investment emphasis.

Last quarter, the celebrated investor expanded his US stock portfolio from 13 to 25 positions, leading to a remarkable increase in its total value from $44 million to $95 million. Scion Asset Management's new holdings included prominent names such as Oracle (ORCL:US), Citigroup (C:US), CVS (CVS:US), MGM Resorts (MGM:US), Warner Bros Discovery (WBD:US), and Toast (TOST:US). Additionally, the fund increased its stakes in Alibaba (BABA:US) and JD.com (JD:US), elevating them to its top two positions, each valued at nearly $6 million. Meanwhile, Scion divested from stocks like Crescent Energy (CRGY:US), Stellantis (STLA:US), and Hudson Pacific Properties (HPP:US).

Burry's strategic moves included purchasing bearish put options on BlackRock's iShares Semiconductor ETF in the third quarter of last year. Notably absent from his latest portfolio update was his previous bet against the microchip fund, which has since seen Nvidia (NVDA:US) become its largest holding with over a 10% weighting.

The surge in Big Tech investments by Scion last quarter is noteworthy, especially considering Burry's past scepticism about the sustainability of the tech-stock boom and his warnings about potential market downturns. Burry's recent actions add to his eventful 2023, marked by issuing grim forecasts for the stock market and economy, betting against major indexes like the S&P 500 and Nasdaq, and capitalizing on opportunities arising from the regional banking sector turmoil.

The surge in Big Tech investments by Scion last quarter is noteworthy, especially considering Burry's past scepticism about the sustainability of the tech-stock boom and his warnings about potential market downturns.

Burry's reputation is anchored in his bold bet against the mid-2000s housing bubble and his early investment in GameStop (GME:US) before its meteoric rise during the meme-stock frenzy of early 2021. Renowned for his dire warnings and bleak predictions, Burry has consistently cautioned against what he views as speculative bubbles, including his notable concerns about meme stocks and cryptocurrencies potentially leading to a "mother of all crashes."

New Positions:

·       HCA Healthcare Inc (HCA:US), with 20,000 shares, making up 5.72% of the portfolio and valued at $5.41 million.

·       Oracle Corp (ORCL:US), comprising 50,000 shares, which accounts for approximately 5.57% of the portfolio, with a total value of $5.27 million.

·       Citigroup Inc (C:US), with 100,000 shares, representing 5.44% of the portfolio and a total value of $5.14 million.

New Increases:

·       JD.com Inc (JD:US) saw an additional 75,000 shares, bringing the total to 200,000 shares. This represents a 60% increase in share count and a 2.29% impact on the current portfolio, valued at $5.78 million.

·       Alibaba Group Holding Ltd (BABA:US) increased by 25,000 shares, reaching a total of 75,000 shares. This adjustment marks a 50% increase in share count, with a total value of $5.81 million.

Closed Positions:

·       Stellantis NV (STLA:US): All 400,000 shares were sold, resulting in a -7.73% impact on the portfolio.

·       Euronav NV (EURN:US): The entire stake of 250,000 shares was liquidated, causing a -4.15% impact on the portfolio.

Positions Reduced:

·       Nexstar Media Group Inc (NXST:US) was reduced by 16,151 shares, a -33.2% decrease, impacting the portfolio by -2.34%. The stock traded at an average price of $146.43 during the quarter and has returned 13.09% over the past three months and 7.48% year-to-date.

·       Booking Holdings Inc (BKNG:US) saw a reduction of 250 shares, a -16.67% decrease, with a -0.78% impact on the portfolio. The stock's average trading price was $3,118.13 during the quarter, with returns of 17.54% over the past three months and 5.16% year-to-date.

Source: Yahoo Finance, Gurufocus

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