Speaker 1: I’ve been going through quite a few billionaire investors portfolios recently, and I’ve noticed an alarming pattern, and that pattern is that a lot of them are selling out of their stock positions. Michael Burry, the person who became famous from shorting the 2008 housing bubble shown in the movie The Big Short, he’s actually sold out of most of his portfolio.
Let’s take a look at this in the most recent filings, if you add up all of the stocks that he sold just down that far right hand side, it comes to seventy one point five, five percent of his total stock portfolio that he has sold. That’s a lot of selling. And it is very rare that you see an investor sell out of so much of his portfolio like that. So we need a first of all, go through all of the stocks that Barry has decided to sell. And secondly, we need to figure out why has he sold so much of his stocks? This isn’t normal. So we’ll go through the stocks that he decided to sell 100 percent out of First Liberty, Sirius XM, the mass media company that was entirely sold, worth zero point two seven percent of the portfolio. Precision drilling, again, 100 percent sold, worth one point eighty seven percent of his portfolio. Oh, I see. Sold out of completely as well. Same with Altria, the tobacco company Kosovo Cryptochrome and CVS Health all completely sold out of as well worth around five percent of the portfolio. Now, the next to a very interesting Facebook. Obviously, the social media giants, Burri no longer wants to have any capital win. And this was a relatively big position with eight point five percent of the portfolio. He would have sold this between two hundred sixty dollars and two hundred ninety dollars a share. In the big one is GameStop, the stock that Berry originally saw value in at a low share price before all of the ratha drama, he sold 100 percent out of this position, one point seven million shares worth now moving on to the positions that he’s reduced, he reduced MSG networks, the radio and television company, by fifty nine point four percent discovery networks. He sold out of half of his position, Western Digital.
He reduced by 40 percent cure rate. He reduced by 36 percent. Unity reduced by twenty seven point five percent. Hoppity Realty, twenty five point nine percent designer brands. He sold out of a quarter of his stocks there or state reduced by sixteen point six seven percent. And lastly, Kimbal International, the furniture brand he sold by nine point nine percent. So there we go. Finally got through it all because there is a lot of selling by the famous investor. As we said earlier on, seventy one point five five percent of his portfolio was sold. That’s a total of 18 stocks. This is not something that you see every day. So I want to get into the underlying reasons why he sold some of the patterns that I see and also some of the tactical investments that he has made. Now, the first thing that we have to mention is the danger that he sees right now in the market. Burri sees a lot of similarities between the housing market that he shorted in 2008 and today’s market. He said index fund inflows are now distorting prices for stocks and bonds in much the same way that CDO purchases did for subprime mortgages more than a decade ago. The flows were reversed at some points and it will be ugly when they do so, basically. And the 2008 housing crash, people were able to borrow a lot of money to buy houses because of the subprime mortgages. What this did to the prices of houses was made them shoot up and things were seen. A similar thing today. And our stock market, we’re getting passive investing, short term and new investors entering the market, buying stocks, resulting in them shooting up in price. And of course, the no surprise, we’re at an all time stock market. Highs, well, surpassing prices before the pandemic. This creates, along with a couple of other factors, substantial risk of a crash, which may be the answer why Burri has sold so many stocks, he said on Twitter, Cause and effect is not always what they seem, but students of the market should study history and look for correlations or analogies with prior behaviors. Given human nature is a constants. This is very much like the bubble and synthetic asset backed CDOs before the great financial crisis. In that price setting in that market was not done by fundamental security level. Analysis, so that’s a big problem when you just have people and hedge funds with a lot of money and they just stick it into the market, but they’re not doing the fundamental analysis for each stock. I mean, how many people that you talk to actually know the intrinsic value of each stock that they own?
All too many REITs. This causes a big problem when it comes to prices because prices start becoming way higher than the value of each share. Perhaps prices are simply too high right now. And this is why Burri is predominantly sulien. But we also have to talk about the debt, because this is something that Barry refers to in his Twitter accounts. Now, what’s happening right now is we’re getting a lot of free money through stimulus checks. Now, of course, a lot of people need this, but a lot don’t. And they simply put it straight into the stock markets. The problem with this is it causes more national debt as of 2020 and debt has spiked up. It went from twenty three trillion to almost twenty eight trillion dollars owed. Now is Burri said, the current generation is overloading future generations with either too much debt or hyper inflation. So what he’s saying is we’re either going to have a big problem with paying this debt back or we simply pay it back by printing more money. However, what happens when you start printing bucket loads of money? Inflation kicks in and you risk hyperinflation. So a big debt problem or the risk of hyperinflation? Not exactly a nice recipe in the market right now. It does make things well, I guess you can say slightly dangerous. It’s very sad, though. Sign me and Monáe and Singer are so out of touch are not considering that we’ve seen this all before and not just once.
It’s not really different this time. Now, the other thing that we have to consider on why Buhriz been doing the selling is because he’s an extremely tactical investor. His approach is very much so. Buy low, sell high. So he will look to buy when that price goes below the intrinsic value, underpriced and do a lot of sulien when it goes above the value overpriced. For example, Facebook stock. He bought a lot of it in the first quarter of twenty twenty when it was cheap and the price was between one hundred and forty nine dollars to 210. So on average that’s about 180. And then he sold in the fourth quarter of twenty twenty between 250 and 290 dollars on average two hundred seventy dollars. So he’s very much into the tactical game of playing the market and it seems that he’s continuing with these tactics. As we showed you earlier on, he’s repositioned out of a lot of his stocks. He sold 18 stocks this recent quarter with seventy one point five percent of his portfolio. And he repositioned himself into a few tactical investments as well. He bought 11 different companies. Now, remember that these buys and sells are for the recent quarter that we actually have the filings for. Unfortunately, I can’t call up Michael Burry and ask, what stocks did you buy yesterday or what stocks did you buy last week? But this is the most recent information that we have on what Burri is doing. So he did buy a stake in Harris Capital, the financial solutions company, ticker symbol ARCC Sunchoke Energy. He bought as well tech assemble, sexy boy Angles Market, the supermarket chain HollyFrontier, the petroleum company Causevic. They provide detention services to help ease justice, involved individuals back into the community. They also bought Molson Coors Beverage. Next, he bought geo real estate as well. Wells Fargo, he added. So here and that’s a stock that’s a buffer actually sold, which is interesting. He bought now the distribution supply company, Lumin Technologies. And lastly, he bought it starts a bit of property and the final stock that he decided to add to. Now, one of the things that might have stood out to you was, hang on, we don’t recognize pretty much most of those companies. And that’s because Burri has only invested in the stocks that he finds value in. And these days, there aren’t that many deep value deals.
You have to go searching into the small market cap stocks. And that’s what Burri has done. Causevic has a market cap of eight hundred and seventy million G.O., 700 million sunchoke energy, 530 million a day now just over one billion. These may sound big, but they. Come in the small cap category, and it’s this category where you have less hype, investors investing and you also have less index funds tracked to these small cap companies, which means these type of companies are not as hyped up as those more popular companies. This creates opportunities and lower prices. And this is where in today’s market Burri is trying to capitalize on, because the reality is that there’s not that many opportunities available right now. In fact, you could argue that a lot of current investments there is more risk and potential reward. That’s the way the Burri feels anyway. He compared the hype around Bitcoin electric vehicles and Maime stocks to the dot com bubble and the housing bubble. He said they’re driven by speculative fever to insane heights from which the fall will be dramatic and painful. And by the way, an interesting thing is his Twitter from which we get a lot of this useful information about how he feels it’s now been deleted. It appears that the S.E.C. caught wind of his market warnings and a lot of his tweets, and they paid him a visit. He then went on to stop tweeting and he’s now deleted his account. So a lot of these warnings that I just shared in the video were not going to get any more of unlike his Twitter.
What is clear is that Burri has sold a lot of his stocks. He has made some tactical investments as well and small companies. But overall, he thinks that the market is in rough waters right now. So I’m going to be keeping a close eye on the moves that he makes in the future.