‘Last Hurray’: Michael Burry says don’t get too excited about rosy corporate earnings. But he’s starting to see value in these 4 stocks

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‘Last Hurray’: Michael Burry says don’t get too excited about rosy corporate earnings. But he’s starting to see value in these 4 stocks

Michael Burry – the hedge fund manager described by Christian Bale in The Big Short – has invested aggressively during this market decline.

Burry’s latest 13F filing for Q1 2022 shows a wide range of new investments and some interesting strategic moves with options. That’s a significant shift from the previous quarter, when Burry sold most of his stock portfolio, calling for the “mother of all crashes.”

He is not exactly bullish on the general market and has recently issued a serious warning about the current earnings season that is relatively positive.

“These earnings reports and by Jove throughout the season have a ‘Last Hurrah’ feel,” Burry wrote in a tweet that has since been deleted.

But the man who shorted – and won – the US housing market clearly sees opportunities.

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Metaplatforms (META) and Alphabet (GOOG)

Burry’s commitment to big technology is clearly remarkable.

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Technology and growth stocks have been out of favor for nearly half a year. It is a contrarian move to add these two stocks to the portfolio for the first time. Burry’s portfolio now includes 6,500 shares of Google parent Alphabet Inc. and 80,000 shares of Meta Platforms Inc., Facebook’s parent company. They are respectively his fourth and sixth largest possessions.

The move can be seen as a vote of confidence in digital advertising. It can also be a signal of undervaluation. Both stocks are trading at approximately 14 and 20 times future 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 shares trade at a free cash flow ratio of 18. That means the cash flow return is as high as 5.6%. With international borders reopening and lockdowns easing, Booking could be an ideal bet for the recovery of global travel.

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Apple (AAPL)

Burry bought a lot of technology stocks this quarter, but that doesn’t mean he’s bullish on the entire industry. Hidden in the 13F application was a huge short bet against Apple.

He reported 206,000 put options on Apple stock at the end of the first quarter. The face value of this bet is approximately $33 million. However, the actual cost may be much lower given the way option premiums are priced.

Nevertheless, it is surprising that one of the world’s most famous short-sellers is targeting one of the world’s most valuable companies. Apple has lost about 12% of its value so far. Supply chain disruptions in China coupled with declining consumer purchasing power could have short-term consequences for Apple.

The stock also trades at a relatively high valuation. Apple shares are trading at a price-to-earnings ratio of 26, significantly higher than the historical average of 15.

Warner Brothers Discovery (WBD)

Media giant Warner Brothers Discovery is now the third largest holding company in Burry’s portfolio. He added 750,000 shares in the first quarter.

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The merger of Discovery and Warner Media has led to a global content juggernaut. This conglomerate has rights to iconic characters including Batman, sports channels in Europe, HBO and UKTN.

The stock is down about 40% due to debt concerns and the competitive landscape for online streaming. However, the company expects to generate $3.65 in free cash flow per share next year, which would represent a 24% FCF return at current market value.

This could be why Burry has made such a big bet on it.

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This article provides information only and should not be construed as advice. It comes without any kind of warranty.

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