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The Hedge Fund Manager From "The Big Short" Owns Apple, Bank of America, and Citigroup

By John Maxfield - Apr 2, 2016 at 7:20AM

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Michael Burry is back in the game and is buying some of today's most popular stocks.

If you've read the book or seen the movie The Big Short, then you know that Michael Burry is a pretty darn good investor. The doctor-turned-hedge-fund-manager made gobs of money during the financial crisis by betting against subprime mortgages. He closed his hedge fund in the wake of the crisis, but is now back in the game.

As an acquaintance of mine on Twitter pointed out, Burry's new fund, Scion Asset Management, which opened in 2013, recently released its first 13-F. It lists 14 stock holdings, including Apple (AAPL 4.08%), Bank of America (BAC 0.95%), and Citigroup (C -0.87%). Here's the full list with the size and value of Scion's positions as of the date of filing:

Company

Shares

Value (in thousands)

NexPoint Residential Trust

670,800

$8,781

Apple

75,000

$7,895

Theravance Biopharma 

436,626

$7,156

IBM

50,000

$6,881

First Solar

100,000

$6,599

Mens Wearhouse (now trading under the name Tailored Brands)

400,000

$5,872

ACE (recently merged with Chubb)

50,000

$5,843

Community Health Systems

200,000

$5,306

Citigroup

100,000

$5,175

HCA Holdings

75,000

$5,072

Bank of America

300,000

$5,049

Bank of New York Mellon (BK 1.80%)

100,000

$4,122

PNC Financial (PNC 1.21%)

40,000

$3,812

CNX Coal Resources

256,345

$2,376

Data source: Scion Asset Management's 2015 Q4 13-F.

Three things jumped out to me when I first saw this.

The first is that Burry is invested heavily in financial stocks; they make up roughly a third of Scion's portfolio. This includes Bank of America and Citigroup, both of which are trading for substantial discounts to their respective book values. But it also includes the likes of PNC Financial and Bank of New York Mellon. The former is run by one of the up-and-coming stars of the industry, William Demchak, while the latter has arguably the greatest competitive moat in the financial industry (see this article I wrote about the Bank of New York Mellon).

Image source: iStock/Thinkstock.

Beyond his holdings of Bank of America and Citigroup, Burry has taken a number of other contrarian positions. Shares of IBM have been hammered over the past few years, as the technology giant seeks to transform itself into an even greater force in the world of consulting. First Solar is dealing with aggressive competition from China that's kept its stock roughly 75% below its all-time high. And Men's Wearhouse, now known as Tailored Brands, is struggling to digest its, by some accounts, "catastrophic" acquisition of Jos. A Bank in 2014.

Then, of course, there's Apple. I don't know the rationale behind Burry's position in Apple, though it certainly doesn't amount to a contrarian investment along the same lines as, say, Men's Warehouse and First Solar. That aside, it's hard to deny that Apple's investors could reap substantial gains in the years ahead as the iPhone maker continues to aggressively return capital to shareholders by way of dividends and share buybacks.

In sum, while individual investors should never blindly follow hedge fund managers into positions, it's nevertheless worth noting when a guy with Burry's record of success takes interest in particular stocks.

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Stocks Mentioned

Citigroup Inc. Stock Quote
Citigroup Inc.
C
$53.62 (-0.87%) $0.47
Apple Inc. Stock Quote
Apple Inc.
AAPL
$149.64 (4.08%) $5.86
Bank of America Corporation Stock Quote
Bank of America Corporation
BAC
$37.02 (0.95%) $0.35
The Bank of New York Mellon Corporation Stock Quote
The Bank of New York Mellon Corporation
BK
$46.48 (1.80%) $0.82
The PNC Financial Services Group, Inc. Stock Quote
The PNC Financial Services Group, Inc.
PNC
$175.05 (1.21%) $2.10

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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