4 Stocks Michael Burry Invests in As He Calls the Stock Market a Plane Crash in Progress.

And a Tech stock he's betting against.

The name Michael Burry must mean something to you. Indeed, he is the man who inspired the movie “The Big Short”. Since the financial crisis of 2008, Michael Burry is logically much more listened to. He takes advantage of his exposure to deliver his more or less pessimistic advice.

Those that Michael Burry has just delivered are rather pessimistic: Michael Burry has just compared the stock market to a plane crashing. Despite this, he doesn't forget to be opportunistic for companies where he thinks good market development will occur.

“The mother of all crashes is coming,’ Michael Burry proclaimed in the fall of 2021, believing that speculation was overexcited. For some, the investor known as “The Big Short” (for having shorted the American real estate market amid the 2007 subprime scandal) is considered a bird of ill fortune.

Last week, he wrote this on Twitter, about the market situation right now:

“As I said about 2008, it's like watching a plane crash. It hurts, it's not funny, and I'm not smiling.”

As he does quite frequently, Michael Burry then deleted his tweet. Deleting his Twitter posts, or even his entire profile is something of an investor's modus operandi.

The entire market may not be on the same plane. Burry is not pulling his marbles out, as in the previous quarter (as part of the mother of all crash announcements), but has recently invested in new assets.

That's according to a quarterly tax return filed with the Securities and Exchange Commission. It shows some interesting strategic moves with options. Here are the 4 stocks Michael Burry is betting on for the coming months, and the one he is betting against.

Meta et Alphabet

Since the beginning of the year, technology stocks have been particularly depressed; the inflation-higher interest rate environment is unfavorable to them. Seeing Michael Burry invest in Google (Alphabet) and Facebook (Meta) may therefore seem surprising.

This is the first time Burry has added these two stocks to his portfolio. His portfolio now contains 65,000 shares of Alphabet and 80,000 of Meta, and they are the 4th and 6th largest holdings in the portfolio.

Why these purchases? No direct answer from Michael Burry of course. Perhaps he is buying the shares at a discount (their share price to earnings per share ratio is currently between 20 and 25, which is considered close to the limit of undervaluation of a stock), and believes in a tech rally.

Booking.com

Burry also bought 8,000 shares of Booking.com, the hotel booking site, making it the second-largest holding in the portfolio. The company is doing well financially, with strong free cash flow, yielding 4.7% per share.

Beyond the financials, tourism is expected to have a strong summer, after two summers held back by the COVID-19 pandemic. On the other hand, tourism will in any case be an important gauge of the impact of inflation, and the strength of consumer spending. Vacations are generally considered a time to spend less carefully, or even to save money. Poor results in this area could in any case be interpreted as a sign of the recession.

Warner Brothers Discovery

With the merger of Warner Brothers and Discovery, Burry purchased 750,000 shares of the new entity, which then became the third-largest holding in the portfolio. Despite a drop in Warner Bros. Discovery's stock has fallen 25% since the beginning of 2022, due to concerns about debt and its place in a congested streaming market, the bright prospects for the future may be what attracted Burry.

For next year, the company expects a free cash flow of $3.65, calculated on a per-share basis. With today's stock price, that would equate to a 20% return per share.

A bet against Apple

Another tech stock, but this time it's more of a bet against the company in question, namely Apple. He has 206,000 put options on Apple shares, which is a contract that allows him to sell these shares as soon as a predetermined price is reached. This contract becomes more valuable when the share price falls and is generally considered a form of short-selling. Burry is betting that the stock will go down, and he has bet $28 million on it.

He is thus betting against the company with the second-largest market capitalization in the world (which just lost the gold medal to Aramco). Since the beginning of the year, the stock has lost 15% of its value, and the company should still be impacted by the delay caused by the confinements in China for some time. It remains to be seen whether Burry's gamble, a real Bear for Apple, can be realized.

Final Thoughts

On one hand, Burry is predicting big crashes, but on the other hand, he's betting on a strong tech comeback, good vacation numbers, and success in the streaming world. Alone for Apple, Burry seems like a bird of ill fortune. It's up to you to make up your mind about Michael Burry's investments for the coming months.

But it's always interesting to have such indications to feed your thinking process.