Michael Burry appears to have taken advantage of the banking turmoil in the first quarter.
The “Big Short” investor bought into First Republic, PacWest, and other embattled lenders.
Burry’s Scion Asset Management more than doubled the dollar value of its portfolio to $107 million.
Michael Burry scooped up shares of smaller banks in the first quarter of this year, likely capitalizing on the chaos surrounding regional lenders in the period.
The investor of “The Big Short” fame built stakes in First Republic, Pacific Western, Western Alliance, New York Community Bank, and Huntington Bank last quarter, a Securities and Exchange Commission filing revealed on Monday.
Burry also bought other financial stocks, specifically Wells Fargo and Capital One. It’s worth emphasizing that the SEC filing shows his holdings as of March 31; he may have exited the positions over the past six weeks.
The Scion chief is a value investor who specializes in sniffing out bargains. He may have determined that bank stocks were oversold, and decided to snap up a bunch of them at discount prices.
The sudden collapse of Silicon Valley Bank and Signature Bank in mid-March spurred regional-bank customers to yank their deposits in droves. The tidal wave of withdrawals stoked fears of further bank collapses, sparked sharp declines in bank stocks, and fanned concerns of a financial crisis and credit crunch.
JPMorgan agreed to acquire First Republic in a rescue deal earlier this month. Meanwhile, PacWest’s stock has plummeted by 82% since early March as investors fear it could be the next lender to run into trouble.
Burry loaded up on energy and commodity stocks last quarter too. Stocks in those sectors tend to perform well in periods of inflation and economic turmoil. He invested in Coterra Energy, Devon Energy, and Sibanye Stillwater. Moreover, he snapped up shares in various other companies including Zoom Video, The RealReal, and Signet Jewelers.
On the other hand, Scion exited its positions in Black Knight, MGM Resorts, Qurate Retail, SkyWest, and Wolverine Worldwide. The only survivors from the fourth quarter of last year were Alibaba, JD.com, Geo Group, and Coherent.
Burry’s shopping spree lifted Scion’s total number of holdings from nine to 21, and fueled a 130% increase in the value of its US stock portfolio to $107 million.
It’s notable that Burry, known for issuing dire warnings and grim predictions about stock-market crashes, tweeted a single word on January 31: “Sell.” He seemed to backtrack on his advice in late March, when he tweeted that he “was wrong to say sell.”
The Scion chief shot to fame after his massive bet against the mid-2000s housing bubble was immortalized in the book and movie “The Big Short.” He’s also known for betting on GameStop before it became a meme stock, and taking short positions against Elon Musk’s Tesla and Cathie Wood’s flagship Ark fund last year.
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