Michael Burry Just Sold His ENTIRE Stock Portfolio...

Over the past few months, Michael Burry has been one of the most talked about investors, and it's fair enough too. The guy is certainly not afraid to share his thoughts and opinions on the state of the economy on his Twitter page, interestingly titled "Cassandra," a Trojan priestess that uttered only true prophecies but was never believed. Hmm. Anyway, it's fair to say the news out of Michael Burry's mouth recently hasn't really had the most optimistic sentiment you've ever heard. Over the past few months, he's repeatedly hinted at a monster stock market crash and believes we're really not even in the thick of it yet.

But what's even more interesting than his tweets is the fact that Michael Burry, being an investor with over 100 million in assets under management, has to file a 13F filing every quarter, revealing what he's been doing with his own portfolio. As you might have already seen, his most recent 13F, filed a few weeks ago, has definitely caught the eye of the investing world. So, in this video, let's talk about exactly what Michael Burry's been saying on Twitter over the past two weeks, and then let's look into his 13F filing to see what we can take from it.

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So, we all know the story up to this point. Michael Burry, the perma-bear, tweeting about how he was right about inflation, how the market was destined to fall off a cliff thanks to the Fed's mismanagement, and how it's going to get a lot worse than anyone was ever expecting. But over the past few months, the market is up by quite a bit. At the time of recording, the S&P 500 is up around 17% from its low in June. For a lot of doomsday prognosticators, this would normally cause them to go back into hibernation, but we're seeing none of that from Burry. In fact, he is doubling down on his prediction that the stock market is going to get a hell of a lot worse, repeatedly calling the current market performance a short-term bear market rally.

Have a look at this: on the 22nd of July, he noted the similarity in bounces during the tech bubble crash and right now. On the 11th of August, he tweeted, "A Nasdaq bull market because it's up 20% off its low? Who makes this stuff up? After 2000, the Nasdaq did that seven times as it fell 78% to its 2002 low." He added to that argument on the 15th of August saying, "The S&P 500 completed a 22% two-month rally, and the Nasdaq a 43% rally. The S&P would fall another 42% and the Nasdaq another 48% by the bottom post WorldCom in late 2002."

And also have a look at the news clipping he attached to that tweet. This is back on the 22nd of May 2001 about a third of the way to the bottom of that crash. “They feel the bottom is in place,” said Brian G. Belsky. “Investors in general know they have to be aggressive to try and buy back tech stocks in particular ahead of the positive news.” Or how about this one? “It's just a classic case of anticipating events out into the future,” said Larry Watchtool, a market strategist at Prudential Securities. Well, those guys certainly got their pants pulled down. But it is pretty interesting comparing that sentiment to today because a lot of the news articles I'm reading at the moment are hinting that the worst is over and we're just back to a bull market. So clearly Michael Burry doesn't think so.

Interestingly, his latest 13F filing backs up his words. And for those wondering, what the heck is a 13F filing? It's simply a filing made by big-name money managers 45 days after the end of a quarter, and it shows us their stock portfolio at the close of that aforementioned quarter. So all the big names like Warren Buffett, Charlie Munger, Bill Ackman, Monash Prabhakar, Guy Spier—they all file one. And obviously, for the purposes of this video, so does Michael Burry.

And guess what? In Q2, Michael Burry's 13F showed he sold out of literally every single position that he held at the end of Q1. At the end of Q1, he held 11 stocks, including big names like Google, Meta, Stellantis, Booking Holdings, Warner Brothers Discovery, Bristol Myers Squibb, among others. He even held a put option position against Apple. But by the end of Q2, literally every single one of those positions was cut, and now just a very small new investment in Geo Group replaced them.

There's your headline: Michael Burry just sold everything! Doom! Fear! Run for your lives! But to be honest, this does fit perfectly with what he's been saying about the stock market and the economy over the past three months. He's been saying he thinks the market is heading south, so if he genuinely believes that, then it does make sense that he's liquidated his investments and gone back to cash. His actions do align with his words, which is more than can be said for a lot of the names out there.

But what does this mean for us everyday investors? This is something I really want to explore in this video. So I've seen a lot of people recently saying they too are selling down their portfolios because of Michael Burry. Look at some of these headlines: "Michael Burry is selling everything. Should you?" "Michael Burry makes a shocking decision." "Big short investor Michael Burry dumps entire portfolio." It's understandable why a lot of people get caught up in the fear and look to sell. There's even a Twitter account gaining popularity at the moment called Michael Burry Stock Tracker with 44 and a half thousand followers promoting the idea of simply copying the trades that Michael Burry makes. Honestly, I really don't like to see that stuff.

Because here's the thing with Burry's 13F filings. As an investor, unfortunately, you really can't take much out of them, as he has proven time and time again that despite being value-minded, yes, he's not always focused on the long term. Heck, he's not even focused on the medium term. His positions are pretty much always focused on the short term, and the only time 13Fs are ever useful to investors is when you know the super investor in question is investing with a long-term mindset. Why? Well, remember, the 13F filing just shows us a portfolio snapshot at a certain period of time, you know: close of business on the 31st of March or on the 30th of June. If you're following the 13F of someone like Michael Burry, the portfolio might change like eight different times between those dates. Thus, the information you do get as a long-term investor could very well be full of false signals.

For all we know, Burry might have bought those Apple put options on the 31st of March and then sold them on the 1st of April. I mean, despite getting the 13F filing only recently, there's actually a decent chance that Michael Burry doesn't even hold Geo Group anymore. It's unfortunate, but it is the truth. The 13F information from people like Michael Burry actually means very little in the grand scheme of things and should definitely not be acted on. Just consider this: if you followed Michael Burry into, say, Meta on the 16th of May when his Q1 13F filing was released to the public, you'd probably be a little bit worried now since that time Meta has fallen 12.5%. That is at the time of this recording.

And now, on top of that paper loss, you've got the news that your mate Burry has now bounced out of the stock just as quickly as he got into it. What are you going to do? Do you stay true to the copycat approach and take the 12.5% loss in three months, or do you hold the stock and just hope for the best? This is exactly why when you're looking into the 13F filings of someone like Michael Burry, you have to read them with a grain of salt.

But don't get me wrong; generally speaking, 13F filings are still fantastic bits of information to have, particularly as I say if you follow the value-minded long-term investors like, say, Warren Buffett. In these instances, changes in the 13F filings are very interesting indeed. And the reason being: it's likely that that information will still be perfectly valid by the time it gets to you and for many years out into the future. I mean, have a look at the history of Warren Buffett's portfolio via his 13F filings. Look at his top ten stocks. As you can see, there is consistency in his holdings over three, five, ten years. Very little changes over time, and when something does change, the changes normally stick.

Now contrast Buffett's 13F history with Michael Burry's, and you can see there is absolutely no pattern at all to his portfolio going all the way back to Q4 2018. Thus, there's very little that we as investors can take out of the data. But beyond the short-term nature of his investing, the other reason I hesitate to use any of Michael Burry's 13F data is also because Michael Burry himself is a bit of a loose cannon and can drift from the traditional, tried and true Buffett-style investing method that we all follow. Now, don't get me wrong; he is very analytical and still very value-minded, but he also makes bets where others simply wouldn't.

For example, the one stock he did buy in Q2 was Geo Group, a private prison operator. But if we turn over to Simply Wall Street, there are certainly some notable issues for a traditional long-term value investor. Looking at their past performance, their revenue doesn't do much. Their earnings have declined, their ROE, ROA, and ROCE are all low, and their debts are high. Debt to equity is 213. Now, I'm not trying to pass judgment on this stock simply by quoting a few figures, as I understand they're also doing things like restructuring debts, and they're selling some of their prisons for quite handsome sums. And let's not forget it also trades at like five times free cash flow. But it still does show you that Burry ain't afraid to go where I'm sure a lot of other value investors wouldn't typically tread.

So while I find the guy very entertaining on Twitter in regards to his commentary on markets, he's actually not an investor that I closely follow at 13F time. And in all honesty, in another three months from now, I would not be surprised if his reported portfolio is once again completely different from the one we see now. That's just how he goes about his investing. But with that said, definitely let me know your thoughts and opinions down in the comments section below. I also wanted to give a massive shout-out to Simply Wall Street for supporting the channel with their sponsorship. It's a great platform, 100% free to use. However, if you did want to get the premium access all-areas subscription, like what I was using to make this video, you can get a 30% discount by following the link in the description.

But apart from that, guys, thank you very much for watching. Of course, leave a like on the video if you did enjoy it. If you want to see more of these videos, then be sure to subscribe. And that will just about do us for this video, guys. Thank you very much for watching, and I'll see you guys in the next video.