Here’s what Michael Burry has been buying—and what it tells me about the stock market

Michael Burry’s company, Scion Asset Management filed its 13F last night, revealing the company’s portfolio as of the end of 2021. Burry is best known for betting against the housing market in 2008, and more recently, against Elon Musk’s Tesla Motors and Cathie Wood’s ARK Innovation ETF.

I like following the 13F reports of investors that I admire. Doing so lets me see exactly what they’ve been buying and selling. It also allows me to try and figure out what they’re thinking about the stock market and investing more generally. By learning from those that I look up to, I hope to improve my own thinking. Here is what I took from Burry’s 13F.

Burry’s 13F

Towards the end of last year, Michael Burry opened new positions in Bristol-Myers Squibb, General Dynamics, Fidelity National Financial, and AEA-Bridges Impact Corp. He also sold out of positions in Lockheed Martin, NOW, and SCYNEX. In addition, Burry’s 13F revealed that Scion had added to an existing position in CoreCivic and reduced a position in the GEO Group.

I found it noteworthy that Burry’s 13F didn’t include any options contracts. Recent 13Fs from Scion have disclosed Burry’s use of options contracts to make short-term bets on certain stocks. The most recent filing indicates that there were none of these open at the end of last year.

It’s important to note that Scion’s 13F only reports on the US portion of Burry’s investment portfolio. A good amount of Burry’s overall exposure is elsewhere, with significant investment in companies listed in the UK such as Imperial Brands. Even though Burry’s 13F only tells us part of the story, I believe it reveals important insights.

Here today, gone tomorrow

Burry’s 13F revealed that investments that Scion had made in Q3 had been sold by the end of Q4. Investments in Lockheed Martin, NOW, and Scynexis that appeared as new additions on Scion’s 13F from Q3 no longer appear on the company’s Q4 report. This tells me that I should be very wary of reading too much into the fact that Burry bought shares in Bristol-Myers Squibb (which I own). Scion might, for all I know, have already sold them and replaced them with other investments, as it did with Lockheed Martin (which I also own).

Value

The obvious feature that all of Burry’s holdings have in common is that they trade on low price-to-earnings (P/E) multiples. Burry has been active on Twitter, forecasting turbulence in the stock market as a result of rising inflation. Scion’s limited exposure to US stocks, combined with the tilt towards value, indicates to me that Burry is still proceeding with caution.

Conclusion

I view Michael Burry as an extremely sophisticated, intelligent, and thoughtful investor. I think that Scion’s 13F can tell me quite a bit. This is true even if I don’t attribute much significance to the particular holdings in Burry’s portfolio. The absence of any options contracts, the clear bias towards stocks trading on low valuations, and the limited overall exposure to the US indicate to me that Burry is keeping cash on the sidelines and treating the market with caution.

Stephen Wright owns Bristol-Myers Squibb and Lockheed Martin. The Motley Fool UK has recommended Imperial Brands and Lockheed Martin. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.