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Michael Burry is Betting Against Cathie Wood’s Fund, Tesla and Selling These 7 Other Stocks

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·9 min read
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In this article, we discuss the stocks that Michael Burry is betting against and selling. If you want to skip our detailed analysis of these stocks, go directly to Michael Burry is Betting Against Cathie Wood's Fund, Tesla and Selling These 2 Other Stocks.

Michael Burry, the investor who rocketed to fame on Wall Street by betting against the housing bubble that led to the financial meltdown in 2009, recently revealed another bearish bet against perhaps the most successful exchange traded fund of the past year or so - the ARK Innovation ETF (NYSE: ARKK) owned and managed by Cathie Wood of ARK Investment Management. Burry, who manages Scion Asset Management, oversees more than $2 billion in assets with the top holdings concentrated in the consumer goods and technology sectors.

According to regulatory filings - mandated by law for hedge funds managing over $100 million in assets and due 45 days after the end of each fiscal quarter - Scion Asset Management owned PUT options against 235,500 shares of ARK Innovation ETF (NYSE: ARKK) that are worth close to $31 million. This holding was a new addition to the portfolio of Scion in the second quarter compared to the filings for the first quarter. Burry, who is often the subject of criticism due to his frequent market crash predictions, recently predicted the 'mother of all crashes.'

Burry took aim at soaring valuations in his prediction and has historically not been an admirer of investing in technology companies. ARK Innovation ETF (NYSE: ARKK), after peaking seven months ago, has since fallen over 25%. The fund, which returned 152% to investors last year, is the subject of short-selling attempts by other hedge funds too. According to a report in The Wall Street Journal, Laurion Capital Management, GoldenTree Asset Management, Moore Capital Management and Cormorant Asset Management all hold bearish positions on the fund.

Cathie Wood, who champions the disruptive innovation investment strategy that has won the hearts of retail investors - an important market force in recent months - and made her one of the most popular hedge fund managers, took to social networking platform Twitter to outline her position on her ARK Innovation ETF (NYSE: ARKK), saying that she believed that Burry did not completely understand the fundamentals that were creating explosive growth and investment opportunities in the innovation space.

It remains to be seen whether the bet Burry has made against ARK Innovation ETF (NYSE: ARKK) pays off in the long run. His hedge fund is not afraid of taking tech-related risks, as some critics point out. Some of the top holdings in the portfolio of Scion Asset Management at the end of the second quarter of 2021 were Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), among others. The success of Burry over the years has been an exception for the industry that is reeling from the unstoppable force of tech disruption.

The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.

Michael Burry of Scion Asset Management

Our Methodology

With this context in mind, here is our list of the stocks that Michael Burry is betting against and selling. These were ranked according to the investment portfolio of Scion Asset Management at the end of the second quarter of 2021.

The first/top three stocks in our list are the ones that the fund has PUT options against. The others are the stocks in which the hedge fund sold off its entire stake in the second quarter of 2021 compared to the regulatory filings for the first quarter of the year.

10. Occidental Petroleum Corporation (NYSE: OXY)

Number of Hedge Fund Holders: 57

Occidental Petroleum Corporation (NYSE: OXY) is placed tenth on our list of stocks that Michael Burry is betting against and selling. It operates as an energy firm and is based in Texas. The Burry-led firm has sold off its entire stake in Occidental Petroleum Corporation (NYSE: OXY), according to latest data.

On July 23, investment advisory Piper Sandler maintained a Neutral rating on Occidental Petroleum Corporation (NYSE: OXY) stock and raised the price target to $38 from $30, noting that the second quarter earnings were positive for the petroleum sector as a whole.

At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $3.6 billion in Occidental Petroleum Corporation (NYSE: OXY), up from 52 the preceding quarter worth $3.4 billion.

Unlike Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), Occidental Petroleum Corporation (NYSE: OXY) is one of the stocks that Michael Burry is selling.

9. NOW Inc. (NYSE: DNOW)

Number of Hedge Fund Holders: 22

NOW Inc. (NYSE: DNOW) is ranked ninth on our list of stocks that Michael Burry is betting against and selling. The company operates in the energy and industrial sector and is headquartered in Texas. Scion Asset Management sold off its entire stake in NOW Inc. (NYSE: DNOW) during the second quarter of 2021, regulatory filings show.

On July 16, investment advisory Stifel upgraded NOW Inc. (NYSE: DNOW) stock to Buy from Hold and raised the price target to $12 from $11, backing the firm for revenue growth and indicating that the recent pullback in price was a buying opportunity.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in NOW Inc. (NYSE: DNOW) with 5.3 million shares worth more than $51 million.

Unlike Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), NOW Inc. (NYSE: DNOW) is one of the stocks that Michael Burry is selling.

8. NetApp, Inc. (NASDAQ: NTAP)

Number of Hedge Fund Holders: 31

NetApp, Inc. (NASDAQ: NTAP) is a California-based technology and software firm. It is placed eighth on our list of stocks that Michael Burry is betting against and selling. Between March and June this year, Scion Asset Management sold off its entire stake in NetApp, Inc. (NASDAQ: NTAP).

On June 25, investment advisory Raymond James upgraded NetApp, Inc. (NASDAQ: NTAP) stock to Outperform from Market Perform with a price target of $100, underling the company had embarked on a revolution to embrace a multi-cloud strategy as revenue grows.

Out of the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in NetApp, Inc. (NASDAQ: NTAP) with 1.6 million shares worth more than $139 million.

Unlike Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), NetApp, Inc. (NASDAQ: NTAP) is one of the stocks that Michael Burry is selling.

7. Meredith Corporation (NYSE: MDP)

Number of Hedge Fund Holders: 22

Meredith Corporation (NYSE: MDP) is an Iowa-based media company. It is ranked seventh on our list of stocks that Michael Burry is betting against and selling. The Burry-led fund has sold off its entire stake in Meredith Corporation (NYSE: MDP), according to latest data the fund filed with the government.

On August 17, investment advisory Citi reiterated a Buy rating on Meredith Corporation (NYSE: MDP) stock and raised the price target to $54 from $51, appreciating the fourth fiscal quarter earnings of the company.

Out of the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Ariel Investments is a leading shareholder in Meredith Corporation (NYSE: MDP) with 2.7 million shares worth more than $119 million.

Unlike Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), Meredith Corporation (NYSE: MDP) is one of the stocks that Michael Burry is selling.

Here is what Ariel Investments has to say about Meredith Corporation (NYSE: MDP) in its Q4 2020 investor letter:

”Television broadcaster and magazine advertiser, Meredith Corporation (NYSE: MDP) underperformed, as Covid added to the existing challenge of generating cost synergies from the TIME acquisition. The stock was also impacted by being removed from a high dividend yield index. While we acknowledge the challenging fundamentals in its business, local news viewership is up tremendously in the midst of the pandemic and we believe MDP’s profitable local television stations provide a margin of safety1 at today’s valuation level.“

6. Ingles Markets, Incorporated (NASDAQ: IMKTA)

Number of Hedge Fund Holders: 16

Ingles Markets, Incorporated (NASDAQ: IMKTA) is placed sixth on our list of stocks that Michael Burry is betting against and selling. The firm operates a chain of supermarket stores and is based in North Carolina. According to regulatory filings, Scion Asset Management sold off its entire stake in Ingles Markets, Incorporated (NASDAQ: IMKTA) during the second quarter of 2021.

Ingles Markets, Incorporated (NASDAQ: IMKTA) was founded in 1963 and has a market cap of over $1.2 billion. It posted more than $4.6 billion in revenue last year. The 52-week price range of the stock lies between $34 and $67.

Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm GAMCO Investors is a leading shareholder in Ingles Markets, Incorporated (NASDAQ: IMKTA) with 814,550 shares worth more than $47 million.

Unlike Facebook, Inc. (NASDAQ: FB), Walmart Inc. (NYSE: WMT), Alphabet Inc. (NASDAQ: GOOG), The Kraft Heinz Company (NASDAQ: KHC), and CVS Health Corporation (NYSE: CVS), Ingles Markets, Incorporated (NASDAQ: IMKTA) is one of the stocks that Michael Burry is selling.

Click to continue reading and see Michael Burry is Betting Against Cathie Wood's Fund, Tesla and Selling These 2 Other Stocks.

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Disclosure. None. Michael Burry is Betting Against Cathie Wood's Fund, Tesla Inc (NASDAQ: TSLA) and Selling These 7 Other Stocks is originally published on Insider Monkey.