Michael Burry’s Top 4 Stock Picks: Lululemon and Fannie Mae
Michael Burry, renowned for his role in “The Big Short,” has recently shared his top stock picks after dissolving his hedge fund’s outside cash. He expressed his frustrations with SEC regulations, opting instead to communicate freely through his Substack, “Cassandra Unchained.” In a post last Wednesday, he disclosed his interest in four specific stocks.
Michael Burry’s Top Stock Picks
- Lululemon Athletica (LULU): A leading retailer of athletic apparel, known for high-quality yoga pants.
- Molina Healthcare (MOH): Focuses on providing affordable health insurance and services to low-income and senior citizens.
- Shift4 Payments (FOUR): A fintech company offering payment processing solutions for various businesses.
- Fannie Mae (FNMA): A government-sponsored enterprise that guarantees a substantial volume of mortgages, facilitating easier home purchases for Americans.
Investment Insights
Burry indicated that these stocks are suitable for a minimum holding period of three to five years. He emphasized that the market cap range of $2 billion to $12 billion presents fertile investment opportunities. It is during this time of year when many stocks may be undervalued due to tax-loss selling and window dressing by fund managers.
Despite the challenges, Burry has observed significant declines year-to-date among his chosen stocks. Lululemon shares have dropped by 52%, Molina’s by 49%, and Shift4’s by 32%. However, these companies are currently trading at attractive valuation multiples, with Lululemon and Molina valued at under 15 times their projected earnings for the year.
Fannie Mae’s Unique Position
In contrast, Fannie Mae’s shares have seen a dramatic increase, approximately tripling this year. This surge is largely driven by speculation regarding potential privatization and the lifting of federal conservatorship. Such changes could open opportunities for a standard market listing.
Burry’s Broader Investment Strategy
Burry is known for his bargain-hunting approach, frequently identifying undervalued stocks. He has increasingly focused on smaller, distressed equities. His portfolio updates indicate an interest in going against popular trends, such as betting on the decline of AI-centric companies, including Palantir, while maintaining a position in Molina.
This recent update marks an important moment for Burry as he shares insights and strategies after stepping away from the traditional confines of hedge fund investments. As he continues to explore and disclose his investment philosophy, investors are keen to observe the outcomes of his choices.
