Michael Burry Just Doubled Down on Stocks

TL;DR

Michael Burry doubled down on two contrarian themes in Q1 2023: beaten-down U.S. regional banks and Chinese tech giants JD.com and Alibaba. His regional-bank purchases represented 24.26% of the disclosed portfolio, though the speaker estimated that figure fell to roughly 22% after First Republic shareholders were wiped out. Read on for the specific trades, the basket-bet theory, and the crucial limitations of 13F filings.

Transcript

as you all know Michael Barry depicted in The Big Short by Christian Bale made his millions by betting against the U.S housing market in the lead-up to the 2008 Global financial crisis by buying credit default swaps on doomed mortgage-backed Securities burrow was able to profit over 100 million dollars personally and made his investors around 700 m... Read More

Key Insights

• 💝 Michael Barry's latest 13f filing reveals bold bets on US Regional Banks and Chinese Tech stocks, showcasing his contrarian investing style.
• 📼 The move to buy undervalued assets like Regional Banks reflects Barry's belief in the market's overreaction to potential risks.
• 🥹 Barry's cash position highlights a conservative investment strategy, with a significant amount of capital held back for future opportunities.
• 🍉 His focus on Chinese Tech stocks indicates a bet on long-term potential despite current market challenges.
• 🥹 The 13f filing provides valuable insights into Barry's investment decisions but may not capture the full scope of his portfolio, including short positions, international equities, and cash holdings.
• 🤔 Barry's approach aligns with his cautious sentiment on market conditions, emphasizing the importance of critical thinking when analyzing investment data.
• ✳️ Observers should consider the broader context of Barry's portfolio, including his risk management strategies and overall market outlook.

Questions & Answers

Q: What stocks did Michael Burry buy in Q1 2023?

Burry bought 17 stocks during the quarter. His purchases included New York Community Bancorp, Capital One Financial, Western Alliance, PacWest Bancorp, First Republic, and Huntington Bank, while he also added heavily to JD.com and Alibaba.

Q: Why did Michael Burry invest in U.S. regional banks?

The speaker’s best guess is that Burry believed the regional-bank sell-off was overblown and saw attractive risk and reward in a diversified basket. The banks discussed had fallen between 30% and 90%, making their prices potentially appealing despite the risk of further bank runs.

Q: How much of Michael Burry’s portfolio was invested in regional banks?

The regional-bank positions represented 24.26% of the disclosed portfolio. The speaker estimated that the share was probably closer to 22% after First Republic shareholders were wiped out.

Q: Which Chinese technology stocks did Michael Burry add to?

Burry added heavily to JD.com and Alibaba, described in the transcript as Chinese tech giants. These additions formed one of the two prominent themes in his Q1 2023 filing, alongside regional banks.

Q: What did Michael Burry sell or reduce in Q1 2023?

Burry sold out of five stocks, including Black Knight and Curate. He also reduced his Geo Group position by 62%, after the private-prison company had been his largest stock for three consecutive quarters.

Q: What is a 13F filing, and when must it be filed?

A 13F is an SEC filing required from institutional investment managers with more than $100 million in assets under management. It is filed after each quarter and shows their reported stock portfolios, giving the public a view of their holdings.

Q: What are the limitations of Michael Burry’s 13F filing?

The disclosed information arrives 45 days after the quarter ends, so it is already delayed when released. Short positions also do not appear in 13F filings, meaning the listed bank shares might not reveal Burry’s complete strategy.

Q: Could Michael Burry’s bank shares have been used to cover short positions?

The transcript says this is possible because short positions are not disclosed in 13F filings. Shares could have been purchased to cover shorts, but the speaker favors the alternative theory that Burry was making a diversified bet on heavily beaten-down community banks.

Summary & Key Takeaways

• Michael Barry, known for his contrarian investing style, made significant bets on US Regional Banks and Chinese Tech stocks in his latest 13f filing.

• He sold out of some stocks, reduced positions in others, and added heavily to his holdings in companies like Capital One, Alibaba, and JD.com.

• Barry's approach seems to involve making diversified bets on undervalued assets while also being cautious of potential risks in the market.