In my view, Michael Burry is one of the most sophisticated, intelligent, and thoughtful investors on the planet. And a 13F filing last night revealed what he’s been buying since the start of the year.
At first sight, there are a few interesting purchases, including Alibaba and Zoom Video Communications. But the really eye-catching thing was some investments in US regional banks.
Burry buys banks
The uncertainty in the banking system has been one of the major stock market stories of 2023. And Michael Burry has been seizing the opportunity to be greedy when others are fearful.
To some extent this isn’t surprising. The CEO of Scion Asset Management is known for a contrarian outlook when it comes to investing, both in finding stocks to buy and companies to bet against.
Furthermore, Burry tweeted in March that he didn’t see real danger in the US banking sector. Given this, Scion’s bank investments are just the CEO putting the company’s money where his mouth is.
It’s probably fair to say at least one of the investments hasn’t been a success. The filing lists shares in First Republic, which was subsequently seized by the US authorities.
Importantly, though, even if that investment was a dead loss, it was less than 2% of Burry’s portfolio. As a result, it’s more than possible for strong performances elsewhere to offset the losses.
More importantly, Burry clearly sees opportunity in shares that have been falling during the crisis. So does this mean I should be buying them for my own portfolio?
Caveats
I take Michael Burry very seriously as an investor. But before following his lead and loading up on bank shares, there are a few things to consider.
Most obviously, Scion’s 13F filing from last night isn’t a description of what the company’s current investments. It’s a statement of what they owned at the end of March, around six weeks ago.
It’s therefore possible Burry’s attitude towards any of the stocks listed on the filing might have changed. They might have been sold from Scion’s portfolio by now.
The second reason (no less important than the first) is it’s important for an investor like me to use my own ideas when it comes to investments. I need to understand for myself the risks and rewards.
The fact someone else sees value in a stock, or even a sector, isn’t a good enough reason for my to invest. And that’s true even when the investor in question is someone as intelligent as Burry.
Third, the Scion CEO doesn’t typically make investments for the long term. In general, Burry’s recent stock purchases have been ways of turning a quick profit on a buyout or a short-term event.
This matters because it makes Burry’s stock picking a different sport to the kind of long-term investing I focus on. It’s definitely still worth studying and there are insights to be had, but it’s not the same.
Should I buy bank stocks?
Bank stocks look attractive to me right now. While that’s probably for different reasons to Michael Burry, it’s always nice to know a thoughtful, sophisticated investor is on the same side as me.
The post Michael Burry has been buying bank stocks. Should I do the same? appeared first on The Motley Fool UK.
Don’t miss this top growth pick for the ‘cost of living crisis’
While the media raves about Google and Amazon, this lesser-known stock has quietly grown 880% – with a:
Greater than 20X increase in margins
Nearly 60% compounded revenue growth over 5 years – more than Apple, Amazon and Google!
A 3,000% earnings explosion
Of course, past performance is no guarantee of future results. However, we think it’s stronger now than ever before. Amazingly, you may never have heard of this company.
Yet there’s a 1-in-3 chance you’ve used one of its 250 brands. Many are household names with millions of monthly website visitors, and that often help consumers compare items, shop around and save.
Now, as the ‘cost of living crisis’ bites, we believe its influence could soar. And that might bring imminent new gains to investors who’re in position today. So please, don’t leave without your FREE report, ‘One Top Growth Stock from The Motley Fool’.
Claim your FREE copy now
setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()
More reading
2 UK shares near 52-week lows: a rare chance to boost my passive income?
8% dividend yield! Why is the Imperial Brands share price so weak?
Is now the time to buy this FTSE 100 outperformer on the dip?
3 stocks Warren Buffett has NOT been buying (and 2 he has)
Buying 2,000 shares in this FTSE 100 company could generate annual income of £366
Stephen Wright has no position in any of the shares mentioned. The Motley Fool UK has recommended Zoom Video Communications. 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.