Michael Burry, famously known for predicting the US housing market crash in 2007, now manages the Scion Asset Management fund. The latest update released on August 14th reveals that as of June this year, he held positions in ten companies.
His largest holding is the Chinese tech giant Alibaba, making up a whopping 21% of his portfolio. Despite the stock’s lackluster performance in recent years, Burry has chosen to increase his stake in the company.
Market Struggles
Alibaba has not performed well in the market, with only a 2% increase in stock value so far this year. Over the past three to five years, the stock has seen a decline of 50%. The company has faced challenges with decreasing profitability due to economic slowdowns in China and emerging competitors.
In addition to Alibaba, Burry’s portfolio is heavily weighted towards other Chinese companies. Baidu and JD.com hold significant positions, each representing over 12% of the portfolio’s value.
Baidu, often referred to as “China’s Google,” is best known for its search engine and offers various other services and products, including AI technologies and cloud services. JD.com is one of China’s largest e-commerce platforms and a direct competitor to Alibaba, known for its efficient logistics network.
Not Alone in China Investments
Burry is not the only hedge fund manager buying Chinese stocks. David Tepper’s fund, Appaloosa, also holds positions in Alibaba, Baidu, and Chinese e-commerce company Pinduoduo.
Other significant holdings in Burry’s portfolio include Shift4 Payments, a payment services company, and Molina Healthcare, operating in the healthcare sector. These two new additions make up nearly 14% of the portfolio each.
Additional holdings in Burry’s portfolio consist of Hudson Pacific Properties, The RealReal Inc, American Coastal Insurance Corp, Olaplex Holdings, and Bioatla, a biotechnology company focused on developing new cancer treatments through antibody-based therapies.
Michael Burry describes himself as a value investor in the spirit of Benjamin Graham and has a successful track record in the financial markets.
About Michael Burry
Michael Burry hails from San Jose, California, and has a background in medicine. While studying to become a doctor, he ventured into financial investments and later founded the hedge fund Scion Capital, which he managed from 2000 to 2008.
The fund gained early success by shorting highly valued internet companies before the dot-com bubble burst. Burry’s focus shifted to the subprime mortgage market in 2005, predicting its collapse around 2007. His successful bets against the housing market led to substantial profits for his fund.
Despite facing challenges and investor withdrawals during the subprime crisis, Burry’s foresight ultimately paid off, with the fund making a profit of $700 million. Burry himself earned around $100 million from the venture, leading to the liquidation of the fund in April 2008.
Analysis:
Michael Burry’s investment choices, particularly his heavy allocation to Chinese tech companies, reflect his contrarian approach to finding value in the market. While these companies have faced challenges, Burry’s strategic bets on undervalued assets have the potential to deliver significant returns over time. Investors can learn from Burry’s disciplined investment style and long-term perspective, emphasizing the importance of thorough research and risk management in navigating volatile markets.
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