Dr. Michael J. Burry’s hedge fund holdings were disclosed on Feb. 15 for the first time in over two years. The investing legend was one of the first people to recognize the massive risk in the pre-2007 sub-prime real estate market — the then unknown money manager bet over $1 billion that sub-prime would implode. He made himself and investors in his Scion Hedge Fund hundreds of millions.
Burry’s 13F filing reveals the long positions his fund held at year end.
According to Michael Lewis who profiled Burry in 2010’s The Big Short (made into a 2015 movie with Burry played by Christian Bale), between its inception in 2000 and June 2008, Scion capital recorded net returns of 489.34%. The S&P 500 returned about 3% over the same period.
Michael Burry’s hedge fund returned 493.34% from inception to 2008.
But Burry, who has Asperger syndrome, struggled with client interaction after his huge success, and shut down Scion Asset Management in 2008 to focus on private investing.
Burry’s hedge fund reopened in 2013, now called Scion Asset Management, but has flown mostly under the radar, leaving investors to wonder what the flawed genius was investing in. Scion did file 13Fs from the 4th quarter of 2015 through the 3rd quarter of 2016, as required by the SEC when fund holdings top $100 million. But nothing since.
So Scion Asset Management’s 13F filing on Feb. 14 for the 4th quarter of 2018 is something of a surprise. Burry disclosed $103,528,000 13F assets under management, just above the threshold for filing.
Michael Burry’s hedge fund may hold short positions not disclosed in the Q4 13F.
Note that short positions and many derivatives are not required to be filed in 13Fs, so we don’t know to what extent Burry was short as the stock market tanked in December.
Here were Scion Asset Management’s 13F Holdings as of Dec. 31, 2018:
|Stock||Symbol||Shares Held||Market Value||% of Portfolio||Ranking||% Ownership|
|Corepoint Lodging inc||CPLG||904,984||11,086,000||10.7082%||1||1.5184%|
|Alexander & Baldwin Holdings inc||ALEX||500,356||9,197,000||8.8836%||2||0.6946%|
|Five Point holdings llc||FPH||1,323,626||9,186,000||8.873%||3||0.9088%|
|Walt Disney co. (the)||DIS||80,000||8,772,000||8.4731%||4||0.0054%|
|Tailored brands inc||TLRD||638,005||8,702,000||8.4055%||5||1.2783%|
|Alphabet inc. class a||GOOGL||8,000||8,360,000||8.0751%||7||0.0011%|
|Cliffs Natural Resources inc.||CLF||1,041,934||8,012,000||7.739%||8||0.3496%|
|Gamestop corp. class a||GME||536,862||6,775,000||6.5441%||9||0.5266%|
|Sportsmans warehouse holdings inc||SPWH||1,217,869||5,334,000||5.1522%||10||2.8362%|
|Western digital corp||WDC||100,000||3,697,000||3.571%||12||0.0346%|
|Altaba inc. (yahoo)||AABA||58,225||3,374,000||3.259%||13||0.0097%|
|Mohawk industries inc.||MHK||18,809||2,200,000||2.125%||16||0.0253%|
Michael Burry’s hedge fund’s #1 position was CorePoint Lodging
Michael Burry’s hedge fund’s largest holding at year end was CorePoint Lodging Inc. (CPLG), a REIT that focuses on the hotel/motel industry. The stock trades for half of listed book value. Burry is a serious devotee of Ben Graham’s value investing style, and has said in the past that “All my stock picking is 100% based on the concept of margin of safety.” Apparently CorePoint fits that bill.
CPLG has not moved much since its year-end close of $12.25, trading at $12.97 as of Feb. 14. An article in Seeking Alpha on Feb. 8 states that: “CorePoint presents a very good opportunity for investors to profit up to 100% in the near future based on improved operating performance in 2019 as well as a stock price that is in closer alignment with the true value of its assets.”
Scion’s #2 holding as of Dec. 31 was Alexander & Bladwin, a Honolulu-based providers of shipping services in the Pacific. ALEX has rallied since year-end, trading 32% higher.
Burry’s 3rd largest position at year-end was Five Point Holdings (FPH), another REIT.
Scion’s #3 position was Five Point Holdings
Five Point’s year-end letter to shareholders said that “Outside of the Financial Crisis, the only period where the discount to NAV has exceeded 25% (as it did at the end of the 2018 calendar year) was from August to October in 2011 amidst the US debt ratings downgrade and European Sovereign crisis…the year following proved to be a prescient time to be invested. The Fund provided a total return of 36.01% for the 2012 calendar year when including dividends.” Looks like another deep-value play.
Another position, Tailored Brands (TLRD), formerly The Men’s Wearhouse, remains mired near year-end levels. While Sportsman’s Warehouse (SPWH) is up 34.65% year-to-date.
Disney (DIS), Facebook (FB) and Google (GOOGL) are among a group of large-cap, liquid stocks held by Scion.
According to WhaleWisdom.com’s Backtester, the long portion of Scion Asset Management’s portfolio is up 28.8% year-to-date vs 10.1% for the S&P 500 Total Return Index.
Disclaimer: Do not construe anything written in this post or this blog in its entirety as a recommendation, research, or an offer to buy or sell any securities. Everything in this post is meant for educational and informational purposes only. I or my affiliates may hold positions in securities mentioned in the article.