(TheStreet) - Michael Burry has accustomed business circles and the general public to unusual decisions.
The legendary investor is accustomed to blows of brilliance.
The financier, known for having bet on the collapse of subprime mortgages before the 2008 crisis, likes to go against the general trend on Wall Street.
For the past months, the man whose business acumen was made famous by the film "The Big Short" in 2015, keeps predicting that the economy will fall into recession. He anticipates a fall in the equity market.
The worst, he says, is yet to come. He adds that he foresees a household debt crisis that would pose a serious danger to the economy.
"Remember the savings glut problem? No more. COVID helicopter cash taught people to spend again, and it's addictive. Winter coming," Burry warned last August.
"Winter coming" seems to be a reference to HBO series “Game of Thrones." Characters used the phrase as a warning.
Burry suggested that households continue to spend money without looking, which also affects their savings. In doing so, Americans are putting themselves in a precarious financial situation while inflation remains a drag on the economy.
Media and Prisons
He then confirmed terrible prediction by liquidating almost all of his U.S. stock portfolio in the second quarter. Scion Asset Management, his firm, only owned shares of a single company, Geo Group (GEO) - Get Free Report, as of June 30, according to regulatory filings.
Scion owned at the time 501,360 Geo shares worth $3.31 million. The company invests in private prisons and mental health sites.
As of March 31, Scion Asset Management had invested in 11 companies, including Alphabet (GOOG) - Get Free Report, Meta Platforms (META) - Get Free Report, Stellantis (STLA) - Get Free Report, Bristol-Myers Squibb (BMY) - Get Free Report and Cigna (CI) - Get Free Report. Geo Group was not on the list in March. It's therefore a new addition.
Burry's investment strategy has evolved further. As of September 30, the financier seems to have bought the dip of the market shares. He added shares of new companies to his portfolio, which now has six companies compared to only one as of June 30.
What is also interesting are the sectors in which he has chosen these companies: Burry bets on the media, aerospace and maintains his confidence in prisons. According to new regulatory documents, show that he acquired shares of Aerojet RocketDyne (AJRD) - Get Free Report, Charter Communications (CHTR) - Get Free Report, Corecivic (CXW) - Get Free Report, Geo Group, Liberty Latin America (LILAB) - Get Free Report and Qurate Retail (QRTEA) - Get Free Report.
In total, his equity portfolio has a total value of $41.3 million, up $38 million from three months earlier.
Burry's choice to invest in media is surprising as the sector is one of those most affected by the recent stock market sell-offs.
Stock market regulations require managers of funds with more than $100 million in U.S. equities to file a document, known as a 13F, within 45 days of the end of the quarter to list their holdings in stocks that trade on U.S. exchanges.
By Luc Olinga
November 14, 2022
