After disappearing from public quarterly filings for more than two years, Dr. Michael Burry reappeared in the fourth quarter with a slew of stock holdings to report. In the first quarter, his buying continued with the addition of three stocks, including a new largest position, JD.com Inc. (JD, Financial).
Burry, whose lucrative giant bet against the mortgage market was memorialized in the movie The Big Short, closed his former hedge fund Scion Capital in 2008. In 2013, he opened the Cupertino, California-based Scion Asset Management but has only intermittently filed quarterly updates, which the Securities and Exchange Commission requires for funds above $100 million. At the end of the first quarter, GuruFocus valued his equity portfolio at $98 million.
In the fourth quarter of 2018, Burry reported 16 stocks in his portfolio. He rearranged them in the first quarter, exiting his second largest position, Alexander & Baldwin (ALEX, Financial), along with four other stocks: Biogen Inc. (BIIB, Financial), Celgene Corp. (CELG, Financial), McKesson Corp. (MCK, Financial) and Mohawk Industries Inc. (MHK, Financial). Burry also trimmed stakes in Alphabet Inc. (GOOGL, Financial) and Facebook (FB, Financial), among others.
The other two stocks purchased were GreenSky Inc. (GSKY, Financial) and PetIQ Inc. (PETQ, Financial).
Burry rarely gives interviews or discusses his investment strategy, but in a 2001 letter to shareholders he gave a glimpse of his approach at the time:
“I have previously written that I strive to discover the proverbial dollar bill selling for 50 cents, preferably with enough volatility as my friend – and hence your friend.”
He also said:
“As much as the Fund is a value fund, it is an opportunistic fund. And as much as I enthusiastically explore the value of each business behind every stock, I seek the pockets of the market that are the most inefficient, the most temporarily imbalanced in terms of price. Whatever extra return this Fund will earn will be borne of buying absurdly cheap rather than selling dearly smitten. I certainly have proven no ability to pick tops, and I do not anticipate such a feat in the future. Rather, fully aware that wonderful businesses make wonderful investments only at wonderful prices, I will continue to seek out the bargains amid the refuse.”
From its inception on Nov. 1, 2000, to Dec. 31, 2001, the Scion Value Fund had collected a 68.24% return, compared to an 18.45% dive in the S&P 500 index.
New buys
Burry purchased 300,000 shares of JD.com Inc., giving it 9.21% portfolio and making it his largest stock holding. The stock’s first-quarter share price averaged $25.
JD.com Inc. has a market cap of $47.16 billion; its shares were traded around $28.23 Wednesday with a price-earnings ratio of 88.23 and price-sales ratio of 0.57.
GreenSky Inc. (GSKY, Financial)
Burry purchased 272,021 shares of GreenSky, giving it 3.59% portfolio weight. The stock’s first-quarter share price averaged $11.
GreenSky Inc. has a market cap of $2 billion; its shares were traded around $11.00 Wednesday with a price-earnings ratio of 24.44 and price-sales ratio of 4.76.
Burry purchased 106,232 shares of PetIQ, giving it 3.40% portfolio weight. The stock’s first-quarter share price averaged $28.
PetIQ Inc has a market cap of $808.530 million; its shares were traded around $28.67 Wednesday with a price-earnings ratio of 143.35 and price-sales ratio of 0.96.
See Michael Burry’s portfolio here.
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