Michael Burry dumped just about everything in Q3 to guard against the ‘mother of all crashes’ — but he did purchase 3 interesting new holdings
Hedge fund manager Michael Burry of “The Big Short” fame has been a busy man lately.
In addition to his non-stop shadowing (and shading) of Tesla CEO Elon Musk on Twitter, Burry has also been selling off shares. A lot of them.
In Q3 of 2021, he reduced his common stock holdings from $137 million to $42 million.
That’s because Burry believes the stock market is way overheated. “All hype/speculation is doing is drawing in retail before the mother of all crashes,” Burry wrote in a now-deleted tweet from earlier this year.
Burry also closed out his big bearish bets on Tesla and Cathie Wood’s ARK Innovation ETF.
But the investor still owns stock in a half-dozen companies. Let’s highlight three of his most recent purchases and find out what the man who shorted the U.S. housing market — and won — sees in them.
Getting a piece of any one of them might only cost you a bit of extra cash.
Lockheed Martin (LMT)
Aerospace and defense giant Lockheed Martin has struggled to maintain altitude this year, but contrarian income investors might want to take a closer look.
Lockheed’s stock has been all over the place, partially because of growth concerns. When your biggest client is the U.S. government, whose defense spending is only increasing in the single digits, getting Wall Street excited about your long-term prospects can be difficult.
But Lockheed’s financials and existing revenue stream are both strong. Moreover, its 3.3% dividend yield is one of the highest of any industrial stock on the S&P 500.
And when was the last time you heard of the U.S. cutting its arms budget?
Burry owned 30,000 Lockheed shares as of Sept. 30, worth an estimated $10.3 million.
Now Inc. (DNOW)
An industrial small-cap alternative to Lockheed is an under-the-radar company called Now Inc.
Now is a global industrial supplies company that distributes, maintains and repairs oil drilling equipment, so it’s no surprise that Now has benefitted mightily from the ongoing rally in the energy market.
The company’s stock is up more than 70% over the past year.
Over the past three years, Now has generated average annual free cash flow production of roughly $208 million.
But Now should have some long-term appeal, too, as the company has plans to diversify into growing sectors like renewable energy and carbon capture.
Burry seems to be high on what Now is offering. He owned 150,000 shares in the company as of Q3 2021.
Scynexis is a biotechnology company that specializes in developing treatments for difficult to treat fungal infections, including those that regularly threaten the lives of hospital patients.
Prescriptions of Scynexis products are increasing, and a growing number of insurers are covering the costs.
Clinical tests show the company’s next big offering, ibrexafungerp, to be effective in treating a wide range of potentially deadly infections.
It may sound niche, but Scynexis’s technology, financials and upward trajectory were enough to entice Burry into buying more than 174,000 shares.
Scynexis shares are up 18% over the past year.
There’s more to invest in than stocks
If Burry is correct, and the market is headed for a historic meltdown, you might want to diversify outside of stocks.
Putting your money into real physical assets, like gold or real estate, can help shield your portfolio from extreme market volatility.
But there’s another category of real asset a lot of investors don’t realize they have access to: contemporary art, which has outperformed the S&P 500 by a whopping 175% since 1995.
You don’t have to don a tux and outbid a roomful of millionaires to own a piece of rapidly appreciating modern art.
A popular new investment platform allows you to buy shares in masterpieces by Claude Monet, Andy Warhol and even Banksy.
They won’t wind up on your wall, but they’ll look pretty sweet in your portfolio.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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