Dr. Michael Burry took advantage of this year's market crash during the first six months of 2020, according to 13F filings.
History
Burry became one of the world's best-know investors after the financial crisis. Immortalized in the film "The Big Short," Burry founded his hedge fund, Scion Asset Management, in the early 2000s.
In the early years, he spent his time trying to hunt out deep value stocks, or as he called them, "diamonds in the rough" and "ick stocks."
His strategy changed sharply in 2006, when he decided to move a large chunk of his portfolio into credit default swaps. This ultimately became his most successful trade, although the stresses of running the position were too much for the fund manager. Burry quit the business after the crisis.
After a few years of radio silence, Scion returned to the public eye several years ago when assets under management rose over $100 million. Any fund with more than $100 million of assets is required to report positions on the 13F form with the SEC.
Recent trades and short-term bets
A few months ago, I noted that Burry made some large transactions during the last first quarter. The most significant addition to the portfolio in the first quarter was Jack in the Box (JBX). Burry acquired 300,000 shares in this company. The fund sold all of this position during the second quarter, according to its SEC filing.
It looks as if Burry made a considerable amount by profit-taking on this investment. We don't know exactly when he bought the stock, but on the last day of the first quarter, it was trading at $35. By the end of the second quarter, it had more than doubled.
Other additions to the portfolio in the first quarter included Facebook (FB, Financial), Boeing (BA, Financial) and Michaels Companies (MIK, Financial). All of these holdings were sold by the end of the second quarter. It seems likely Burry booked big gains on each position.
Scion Asset Management's 13F shows that Burry added nine new holdings to his portfolio during the first quarter and added to one existing position. On top of these trades, he made five sales in total and reduced three positions.
Portfolio additions in the first quarter that the guru did not sell during the second quarter included Bed Bath & Beyond (BBBY, Financial), Trip.com Group (TCOM, Financial), Copa Holdings (CPA, Financial) and Helmerich & Payne (HP, Financial).
The largest of these was Bed Bath & Beyond. Burry bought one million shares in the retailer in the first quarter, giving it a 12% portfolio weight. Like many of its retail peers, Bed Bath & Beyond has suffered a hit to sales from the pandemic. However, the stock has been recovering over the past few months. It is planning to close stores and shore up its balance sheet. Management is looking at closing 200 stores, which could save as much as $250 million to $300 million a year. Bed Bath and Beyond is now Burry's second-largest position behind GameStop (GME, Financial). This retailer makes up 13% of the portfolio.
Recent deals put Trip.com as the third-largest position in the investor's portfolio. This travel service provider is based in China and provides accommodation booking, transportation ticketing, package tours and corporate travel management. Like many other travel stocks, the firm has been battered by the pandemic. However, it seems as if Burry senses an opportunity. It's unclear if this is a bet on the Chinese travel market or the stock in general. Looking at the figures, it is not easy to see if the stock is undervalued. It's slated to make a loss this year with earnings set to recover in 2021. It's trading at a forward price-earnings ratio of 21.8 on current estimates for 2021 earnings.
Disclosure: The author owns no share mentioned.
Read more here:
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- Some Thoughts on Warren Buffett's Recent Stock Moves
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