Summary
- The investor bought positions in Black Knight
BKI , Coherent
COHR , Alibaba, JD.com and Wolverine World Wide
WWW .
Michael Burry, the famed investor covered in Michael Lewis’ book, “The Big Short,” and portrayed by Christian Bale in a 2015 movie of the same name, released the fourth-quarter 2022 equity portfolio for Scion Asset Management earlier this month.
Having predicted the subprime housing bubble would burst prior to the financial crisis in 2008, Burry made a killing by betting against collateralized mortgage obligations. Influenced by Warren Buffett (Trades, Portfolio) and Benjamin Graham, the guru’s Cupertino, California-based firm, which was founded in 2013, is known for its value-focused, contrarian investing strategy. It also has a history of managing a fairly concentrated portfolio.
Based on these guidelines, 13F filings show he entered seven new positions during the three months ended Dec. 31, sold out of four stocks and trimmed two holdings. His most notable buys for the period were Black Knight Inc. (BKI, Financial), Coherent Corp. (COHR, Financial), Alibaba Group Holding Ltd. (BABA, Financial), JD.com Inc. (JD, Financial) and Wolverine World Wide Inc. (WWW, Financial).
Investors should be aware that 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Black Knight
The guru invested in 150,000 shares of Black Knight (BKI, Financial), allocating 19.90% of the equity portfolio to the position. The stock traded for an average price of $60.78 per share during the quarter.
It is now Burry’s second-largest holding.
The Jacksonville, Florida-based tech company, which provides software, data and analytics solutions to the mortgage, consumer loan, real estate and capital markets industries, has a $9.92 billion market cap; its shares were trading around $63.59 on Thursday with a price-earnings ratio of 19.93, a price-book ratio of 3.89 and a price-sales ratio of 6.35.
The GF Value Line
GF Value Line for Black Knight.
At 73 out of 100, the GF Score indicates the company is likely to have average performance going forward. While it received a high rating for GF Value, the profitability, growth, financial strength and momentum ranks were more moderate.
GF Score for Black Knight
Of the gurus invested in Black Knight, Jeremy Grantham (Trades, Portfolio) has the largest stake with 0.27% of its outstanding shares. Wallace Weitz (Trades, Portfolio), Ray Dalio (Trades, Portfolio)’s Bridgewater Associates, Louis Moore Bacon (Trades, Portfolio), Mario Gabelli (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), Murray Stahl (Trades, Portfolio) and Keeley-Teton Advisors, LLC (Trades, Portfolio) also have positions in the stock.
Coherent
Burry picked up 150,000 shares of Coherent (COHR, Financial), dedicating 11.31% of the equity portfolio to the holding. Shares traded for an average price of $34.78 each during the quarter.
It is now the guru’s third-largest position.
Previously known as II-VI Inc. (IIV), the company changed its name following the acquisition of Coherent Inc. in July. Headquartered in Saxonburg, Pennsylvania, the company, which supplies lasers and photonics technology for scientific, commercial and industrial use, has a market cap of $6.06 billion; its shares were trading around $43.59 on Thursday with a price-book ratio of 1.28 and a price-sales ratio of 1.25.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should do thorough research before making a decision.
GF Value Line form Coherent.
Further, the GF Score of 49 implies it has weak performance potential. Despite raking in high ratings for profitability and financial strength, the growth and GF Value ranks are low. However, it did not get a rating for momentum, so the full potential of the company may not be reflected.
GF Score for Coherent.
With a 13.71% stake, Dodge & Cox is Coherent’s largest guru shareholder. Other top guru investors include Barrow, Hanley, Mewhinney & Strauss, Hotchkis & Wiley, Chuck Royce (Trades, Portfolio), First Eagle Investment (Trades, Portfolio), Greenblatt and Baillie Gifford (Trades, Portfolio).
Alibaba
Having previously sold out of Alibaba (BABA, Financial) in the third quarter of 2019, the investor entered a new 50,000-share position. During the quarter, the stock traded for an average per-share price of $78.85.
Occupying 9.46% of the equity portfolio, it is Burry’s fourth-largest holding.
The Chinese e-commerce company has a $248.42 billion market cap; its shares were trading around $93.83 on Thursday with a price-earnings ratio of 243.71, a price-book ratio of 1.84 and a price-sales ratio of 1.95.
Based on the GF Value Line, the stock appears to be significantly undervalued currently.
GF Value for Alibaba.
The GF Score of 91 means the company has high outperformance potential, driven by solid ratings for profitability, growth and financial strength. The GF Value and momentum ranks were more moderate.
GF Score for Alibaba.
PRIMECAP Management (Trades, Portfolio) is the largest guru shareholder of Alibaba with a 0.65% stake. The stock is also being held by Dodge & Cox, Philippe Laffont (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Al Gore (Trades, Portfolio)’s Generation Investment, Steven Cohen (Trades, Portfolio), Ron Baron (Trades, Portfolio) and Sarah Ketterer (Trades, Portfolio), among others.
JD.com
After selling out of JD.com (JD, Financial) in 2019, the guru scooped up 75,000 shares, giving it 9.05% space in the equity portfolio. The stock traded for an average price of $50.31 per share during the quarter.
It is Burry’s fifth-largest position.
The e-commerce company based in Beijing has a market cap of $72.21 billion; its shares were trading around $46.13 on Thursday with a price-earnings ratio of 501.36, a price-book ratio of 2.39 and a price-sales ratio of 0.48.
The GF Value Line suggests the stock is currently significantly undervalued.
GF Value Line for JD.com.
On the back of high ratings for growth and financial strength, the company is likely to have average performance going forward with a GF Score of 74. The profitability and GF Value ranks were more moderate, while momentum was low.
GF Score for JD.com.
Holding a 1.39% stake, Chase Coleman (Trades, Portfolio) is JD.com’s largest guru shareholder. Dodge & Cox, Fisher, Chris Davis (Trades, Portfolio), Laffont and Baron also have large investments.
Wolverine World Wide
Burry purchased 356,101 shares of Wolverine World Wide (WWW, Financial), which now represent 8.36% of the equity portfolio. During the quarter, shares traded for an average price of $13.29 each.
The investment is now the guru’s sixth-largest holding.
The footwear manufacturer headquartered in Rockford, Michigan has a $1.30 billion market cap; its shares were trading around $16.56 on Thursday with a price-earnings ratio of 8.49, a price-book ratio of 1.99 and a price-sales ratio of 0.53.
According to the GF Value Line, the stock, while undervalued, is a possible value trap currently. As such, potential investors should cautiously consider its financials and other metrics before making a decision.
GF Value Line for Wolverine.
With a GF Score of 68, the company has poor future performance potential. Although Wolverine has a solid profitability rank, its ratings for financial strength, GF Value and momentum were more moderate and growth was low.
GF Score for Wolverine.
Diamond Hill Capital (Trades, Portfolio) is Wolverine’s largest guru shareholder with a 2.44% stake. Other top guru investors include Fisher, Royce, Paul Tudor Jones (Trades, Portfolio), Jim Simons (Trades, Portfolio)’ Renaissance Technologies, Gabelli, Caxton Associates (Trades, Portfolio) and Barrow, Hanley, Mewhinney & Strauss.
Additional trades and portfolio composition
During the quarter, Burry also established positions in MGM Resorts International (MGM, Financial) and SkyWest Inc. (SKYW, Financial), curbed his stakes in The GEO Group Inc. (GEO, Financial) and Qurate Retail Inc. (QRTEA, Financial) and divested of the CoreCivic
The guru’s $47 million equity portfolio, which is composed of 47 stocks, is most heavily invested in the consumer cyclical sector, followed closely by the technology and industrials spaces.
Burry’s holdings by sector.
Source: https://www.forbes.com/sites/gurufocus/2023/02/24/michael-burrys-top-buys-of-the-4th-quarter/