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‘A cold dark place’ – Michael Bury thinks the market has plenty of room to dip. But he finally sees the value in these 4 stocks

‘A cold dark place’ – Michael Bury thinks the market has plenty of room to dip. But he finally sees the value in these 4 stocks

‘A cold dark place’ – Michael Bury thinks the market has plenty of room to dip. But he finally sees the value in these 4 stocks

Michael Bury – the hedge fund manager portrayed by Christian Bale in The Big Short – is investing aggressively in the meantime market downturn,

Buri’s latest 13F filing for the first quarter of 2022 shows some interesting strategic moves with a wide range of new investments and options. That’s a significant change from the previous quarter when Buri was selling off most of his stock portfolio and calling for the “mother of all mishaps.”

He is not exactly bullish on the overall market, issuing a dire warning about inflation recently.

“Temporary, no. Peak, no. To the moon? If you mean a cold dark place,” Bury wrote in a later-deleted tweet.

But the man who shorted — and won — the US housing market clearly sees pockets of opportunity.

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Meta Platform (META) and Alphabet (GOOG)

Bury’s bet on big tech is clearly noteworthy.

Tech and growth stocks have been doing poorly for almost half a year. Adding these two stocks to the portfolio for the first time is a reverse step. Bury’s portfolio now includes Google parent Alphabet Inc. 6,500 shares of and Facebook’s parent company Meta Platforms Inc. of 80,000 shares. They are his fourth and sixth largest holdings respectively.

The move can be seen as a vote of confidence in digital advertising. It can also be a sign of devaluation. Both the stocks are trading at around 13 and 20 times forward earnings, respectively.

Booking.com (BKNG)

Travel website Booking.com is now the second largest holding in Burry’s Scion Asset Management portfolio. He bought 8,000 shares of the company in the first quarter.

Booking stock is trading at a price-to-free cash flow ratio of 17. This means that the cash flow yield is up to 5.9%. As international borders reopen and lockdowns ease, bookings could be an ideal bet on the rebound of global travel.

Apple (AAPL)

Bury bought a lot of tech stocks this quarter, but that shouldn’t suggest he’s optimistic about the sector as a whole. Hidden in the 13F filing was a pretty small bet against Apple.

He reported 206,000 put options on Apple shares by the end of Q1. The estimated value of this bet is approximately $28 million. However, given the cost of the option premium, the actual cost may be much lower.

Still, it’s unsurprising that one of the world’s best-known short-sellers is targeting one of the world’s most valuable companies. Apple has lost about 18% of its value year on year so far. Supply chain disruptions in China and weak consumer purchasing power could impact Apple in the near future.

The stock is also trading at a relatively high valuation. Apple shares trade at a price-to-earnings ratio of 22 — significantly higher than the historical average of 15.

Warner Bros. Discovery (WBD)

Media giant Warner Bros. Discovery now holds the third largest stake in Bury’s portfolio. He added 750,000 shares in the first quarter.

The merger of Discovery and Warner Media has created a global content juggernaut. The group owns the rights to iconic characters including Batman, sports channels in Europe, HBO and CNN.

The stock is down about 44% due to concerns about debt and the competitive landscape for online streaming. However, the company expects to generate $3.65 in free cash flow per share by next year, which would be a 26% FCF yield at current market price.

Perhaps this is the reason why Bari made such a big bet on it.

This article provides information only and should not be taken as advice. It is provided without warranty of any kind.

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‘A cold dark place’ – Michael Bury thinks the market has plenty of room to dip. But he finally sees the value in these 4 stocks

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