'Big Short' investor Michael Burry bet on Tesla stock to tumble and inflation to crush long-dated bonds. Here's what he bought and sold last quarter.
- Michael Burry bet on Tesla stock to fall and inflation to hammer long-dated bonds.
- "The Big Short" investor sold Wells Fargo and reinvested in CVS Health last quarter.
- Burry's Scion fund exited 15 out of 23 holdings, and added 18 new names to its portfolio.
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Michael Burry bet against Elon Musk's Tesla last quarter, and backed up his warnings of higher inflation with a slew of bets against Treasury bonds, a portfolio update revealed this week. He also overhauled his holdings, swapping out the likes of Pfizer and Wells Fargo for Alphabet and Occidental Petroleum.
Burry is best known for his billion-dollar bet against the US housing bubble in the mid-2000s, which was chronicled in Michael Lewis' book "The Big Short." He also helped pave the way for the GameStop short squeeze earlier this year by investing in the video-games retailer and pressuring its bosses to make changes back in 2019.
The investor's Scion Asset Management firm held bearish put options on Tesla shares, the iShares 20+ Year Treasury Bond ETF, and the iShares Russell 2000 Growth ETF at the end of March. Those positions suggest Burry expected Tesla stock to tumble, inflation to erode the value of long-dated bonds, and for small-cap companies to slump in price.
Burry and his team made sweeping changes to their stock portfolio last quarter, exiting 15 out of 23 positions and adding 18 new names to their holdings. They sold their stakes in Allstate, Ares Capital, Designer Brands, Discovery, Geo Group, Hollyfrontier, Kimball International, Molson Coors, MSG Network, Qurate Retail, Uniti, Wells Fargo, and Western Digital. Moreover, they exited their calls against Citigroup and Pfizer stock.
On the other hand, Scion bought shares in Aerpio Phamaceuticals, CVS Health, Genco Shipping & Trading, Golden Ocean, Helmerich & Payne, Marinus Pharmaceuticals, Meredith, Occidental Petroleum, Precision Drilling, ProShares UltraShort 20+ Year Treasury, Scorpio Tankers, Vector Acquisition, and Zymeworks.
Burry's firm also purchased bullish call options on Alphabet, CVS Health, Facebook, Netapp, Direxion Daily 20+ Year Treasury Bear 3X Shares, ProShares UltraShort 20+ Year Treasury, and ProShares UltraPro Short 20+ Year Treasury. Those bets on index funds underscore Burry's inflation fears and negative outlook for long-dated Treasury bonds.
It's worth noting that Scion reestablished positions in Alphabet, CVS Health, Facebook, and Precision Drilling last quarter. All four names were in its portfolio in the third quarter of 2020, but it exited them in the fourth quarter.
Only eight of Scion's holdings survived the first quarter. Those were its direct stakes in Corecivic, Ingles Markets, Lumen Technologies, Now Inc, RPT Realty, Suncoke Energy, and Urstadt Biddle, and its call options against Kraft Heinz stock.
Excluding options bets, Burry's biggest holdings as of March 31 were a $10 million stake in Corecivic, roughly $9 million positions in Ingles Markets, Lumen Technologies, and Zymeworks, and $8 million of CVS Health stock.
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