In this piece, we will take a look at Michael Burry's top ten stock picks for Q3. If you want to skip out on our introduction to the famous hedge fund investor and the latest news about him, then head on over to Michael Burry's Top 5 Stock Picks For Q3.
Few hedge fund owners have had movies made about them, and perhaps even fewer have predicted the Great Recession of 2008. Michael Burry, the hedge fund boss who ran Scion Capital back in 2008, has seen both, and he currently runs the private investment firm Scion Capital Group, LLC.
Dr. Burry is one of the rare hedge fund investors in the industry who is not a Ph.D. doctor. Instead, he is a Doctor of Medicine, through a degree that he earned from the University of California, Los Angeles. He is also another rare hedge fund boss who is still licensed to practice medicine, as he regularly keeps up with the educational requirements needed to maintain the ability to practice medicine in the United States.
In case you're unaware, Dr. Burry rose to prominence in the financial world when he correctly predicted that the real estate market in America would crash by 2007. His hypothesis was based on the fact that subprime mortgages, which are loans made to borrowers with low FICO scores, would rapidly drop in value once their teaser rates were replaced by higher rates. Since these loans formed the basis of financial assets such as mortgage backed securities, the broader implications of the subprime borrowers being unable to make their loan payments in the finance industry would be severe. Subsequently, Dr. Burry shorted the subprime market and proved his detractors wrong when he netted nearly a billion dollars in profit during a time when wealthy and regular Americans witnessed large wipeouts in their assets.
However, since then, several of his predictions have proven to be wrong. One of Dr. Burry's most famous short positions has been against the electric vehicle manufacturer Tesla, Inc. (NASDAQ:TSLA). He posted on the social media platform X (formerly Twitter) in December 2020 that he was short on Tesla and advised the firm's chief Mr. Elon Musk that he should take advantage of the high share price back then to raise capital by issuing more shares. Adjusting for all stock splits to date, Tesla's shares were worth $235 as 2020 ended (they were trading above $550 before the splits when Burry made the bearish remarks), and since then, they gained nearly 81% in value to touch $407 in just 11 months. Currently, Tesla is trading around $225, having lost only $10 since Dr. Burry revealed his position.
Going against Tesla isn't the only thing that Dr. Burry's been up to since the housing market crash before the Great Recession. One of his latest predictions came in January when he outlined on X:
Inflation peaked. But it is not the last peak of this cycle. We are likely to see CPI lower, possibly negative in 2H 2023, and the US in recession by any definition.Fed will cut and government will stimulate. And we will have another inflation spike. It's not hard.
Since then, the U.S. economy has grown during the second quarter, inflation has consistently fallen, and the Federal Reserve continues to hike interest rates. In fact, the Fed's potential decisions have created some unease among investors, who are uncertain whether robust economic data provides the central bank with more leeway to increase interest rates. At the same time, banks such as Goldman Sachs and Bank of America have either reduced their odds of a recession or scrapped the forecasts completely.
With the second quarter hedge fund filing season upon us, Dr. Burry's private investment firm Scion Asset Management also filed its 13-F report with the SEC. This report created ripples in the market and the media as it revealed two massive bearish bets against the stock market. These are the largest bets in his portfolio, and cumulatively, they represent nearly 94% of Michael Burry's latest holdings. In investing, there are derivatives that are called options. They are of two kinds, namely a Put and a Call. Among these, a Put option is a bearish bet since it provides an investor with the opportunity to sell the shares at a predetermined price called the strike price. So, if the underlying security is trading at a price lower than the strike price, the investor profits by buying the security at the lower price and then selling it at a higher price.
Dr. Burry's investment portfolio shows that he has bought a stunning $1.6 billion worth of Put options. One of these is for an index fund that tracks the NASDAQ 100 and and the other is for the S&P 500. Seems like the Big Short investor is really going all in when it comes to betting against the market, and only time can tell whether he succeeds or not.
While we wait to see how Michael Burry's bet against the S&P 500 and NASDAQ 100 plays out, here's a list of his top stock picks during this year's second quarter. Some notable names are Charter Communications, Inc. (NASDAQ:CHTR), Generac Holdings Inc. (NYSE:GNRC), and Expedia Group, Inc. (NASDAQ:EXPE).
Michael Burry's Top 10 Stock Picks For Q3
Michael Burry of Scion Asset Management
Our Methodology
To make our list of Michael Burry's top stock picks for the third quarter, we took a look at his latest investments during the second quarter. While he might have sold some of these in the period between the filing date and the publishing date of this piece, the list nevertheless provides an insight into the investor's mind and sentiment about the market.
Warner Bros. Discovery, Inc. (NYSE:WBD) is one of the biggest entertainment companies in the world. However, not only is the firm currently facing a Hollywood strike, but it has also missed analyst EPS estimates for all four of its latest quarters.
Michael Burry's investment firm bought 375,000 Warner Bros. Discovery, Inc. (NYSE:WBD) shares during Q2 2023 leading it to own a $4.7 million stake. Along with him, 67 of the 910 hedge funds surveyed by Insider Monkey had also invested in the firm.
Along with Generac Holdings Inc. (NYSE:GNRC), Charter Communications, Inc. (NASDAQ:CHTR), and Expedia Group, Inc. (NASDAQ:EXPE), Warner Bros. Discovery, Inc. (NYSE:WBD) is a top Michael Burry stock pick.
Signet Jewelers Limited (NYSE:SIG) is one of the largest diamond jewelers in the world. Dr. Burry reduced his stake in the firm by 31% during Q2 2023, potentially because he might be worried about the impacts of a recession on the firm's business and its stocks.
During this year's second quarter, 23 of the 910 hedge funds profiled by Insider Monkey had invested in the firm. Signet Jewelers Limited (NYSE:SIG)'s largest hedge fund shareholder is Robert Joseph Caruso's Select Equity Group through a stake worth $569 million.
Vital Energy, Inc. (NYSE:VTLE) is an American oil and gas exploration and production firm with facilities in Texas. Its second quarter of 2023 earnings results revealed that its revenue dropped significantly over the year but it still managed to beat analyst EPS estimates.
As June 2023 ended, Scion Capital had owned a $5.6 million stake in Vital Energy, Inc. (NYSE:VTLE). Along with the firm, 23 hedge funds part of Insider Monkey's database had also bought its shares. Out of these, the firm's largest investor is Israel Englander's Millennium Management through a $15.8 million investment.
Stellantis N.V. (NYSE:STLA) is one of the largest car manufacturers in the world. The firm owns some of the most popular car brands in the world, such as Alfa Romeo, Chrysler, Fiat, Jeep, and Maserati. Its shares are up by more than 22% year to date, and have an average analyst rating of Strong Buy with an average share price target of $22.85.
During 2023's second quarter, 27 of the 910 hedge funds surveyed by Insider Monkey had invested in Stellantis N.V. (NYSE:STLA). Within this list, Michael Burry's Scion Capital held a $5.7 million stake while the company's biggest shareholder is Peter Rathjens, Bruce Clarke, and John Campbell's Arrowstreet Capital since it owns 23.9 million shares that are worth $420 million.
MGM Resorts International (NYSE:MGM) is an American casino firm with a presence in the lucrative Las Vegas strip, China, and other regions. Its performance is tied to the state of the American economy, but perhaps Dr. Burry is betting on a recovery in the casino area as his $6.6 million investment during Q2 2023 was a fresh one.
During the same time period, 50 of the 910 hedge funds profiled by Insider Monkey had bought the firm's shares. MGM Resorts International (NYSE:MGM)'s largest hedge fund investor is Keith Meister's Corvex Capital through a stake worth $282 million.
Charter Communications, Inc. (NASDAQ:CHTR), MGM Resorts International (NYSE:MGM), Generac Holdings Inc. (NYSE:GNRC), and Expedia Group, Inc. (NASDAQ:EXPE) are some of Michael Burry's top stock picks for Q3 2023.
