Michael Burry's Controversial Bet for 2024.

Well, Michael Barry is back. He has just released his latest 13F filing, and in it, it shows that he has been on quite the buying spree in Q4 of 2023. He opened 18 new positions, added to two, reduced in five, and sold four. So, in this video, we're going to go through exactly what Michael Bar has bought and sold and whether we can take anything away from his latest 13F.

Also, very quickly, if you don't know what a 13F filing is, it is an SEC filing that all fund managers with over 100 million in assets under management have to file every quarter. What it does is it shows everything in their stock portfolios. By looking from quarter to quarter, you can then get a sense of what they've added to, reduced, any new buys they've made and also what they've sold out of. The only catch we do have to wait 45 days after the end of the quarter for the 13F filings to be released.

This one always, always, always comes up in the comments: no, I promise I'm not late; we all just have to wait for this information, unfortunately. But the wait is now over, and Bar's 13F shows that he has been very active indeed.

So, starting with what he bought and sold, and we'll talk about what he bought first. As I said, 18 new stocks this quarter, but what I'm most interested in are his two biggest holdings at the moment. In the number two spot, we have JD.com at 6.11% of the portfolio, and then just trumping that at 6.15% of the portfolio, we have Alibaba. He added 60% to his JD positioning in Q4 and 50% to his Alibaba stake. So, he is certainly not afraid to hold the Chinese tech giants.

For those that don't know, JD and Alibaba are both massive e-commerce sites over in China, kind of like what Amazon is in the US. But they've both been suffering quite a bit over the past few years. As you can see, Alibaba stock peaked at around $310 per share back in 2020 and has been on the decline ever since. And JD is much the same story, with their peak at around $110 in February of 2021. In fact, from their peaks, both Alibaba and JD shares have lost approximately 34% of their value, so it's not a little decline; they have both suffered heavily.

And this is predominately due to the macroeconomic factors over in China. Unlike most of the rest of the world, China has not implemented huge stimulus post-COVID, and what this has led to is a very sluggish economy that's currently struggling with a consumer spending crisis, which in turn is causing deflation. Chinese citizens are struggling, the property sector is suffering, so house prices are down, and the value of people's investments has fallen.

What the data is showing is that people are still spending on services, but they are not buying goods if they can help it. That's particularly problematic for companies like JD.com and Alibaba because selling goods is their entire business. So, it's a very interesting situation where, despite JD and Alibaba being good companies themselves, just because the macroeconomic factors are really crummy right now, they're suffering a lot.

This has actually led a few long-term-minded super investors to buy into these beaten-down Chinese tech stocks. Remember, it started with Charlie Munger when he bought Alibaba. Then it was Guy Spier and Monish Pabrai. Then he switched to Tencent. Howard Marks owns JD, and now, of course, Michael Barry has stepped in and bought both.

This is a really interesting play for Michael Barry because, of course, we all know he loves to bounce in and out of stocks and look for short-term opportunities. But I think if you're going to own Chinese companies, you really have to look long-term because a lot of these stocks' potential recoveries are going to revolve around the macroeconomic environment of China improving.

Call me crazy, but I do actually think these two investments reveal Michael Bar's long view on China. Yes, we could very well see these stocks disappear from his portfolio next quarter; he might have already sold these stocks for all that I know. But have a look at the history of his stock portfolio. Yes, it's random, yes, it changes all the time, but when you start following these investors for long enough, you start to see that there are repeat offenders in here. For example, if we highlight Geog Group, sure, it's choppy, but there is a history.

Despite all this chopping and changing over the last year, Michael Barry has more often than not held both JD and Alibaba in his portfolio. My best conclusion for these two investments is that yes, Barry is unpredictable, and he bounces in and out of companies like a short-term trader. But I wouldn't be surprised if there is some longer-term thesis in his mind when it comes to the Chinese e-commerce stocks.

So, that's my take; take it with a grain of salt, but that's what makes most sense in my brain. Also, just before we move on, I did just want to let you know that I am actually firing up my Instagram page again. I've really ignored it over the past few years, but if you did want to come over and see more news, more short-form content, and also keep up to speed with everything going on in the market, please come over and add me. I'm new.money.official. Come over and say hi; send me a message, and I'll try and get back to you guys.

But with that said, going back to Bar's stock portfolio, he added to the Chinese tech stocks, and then from there, his next biggest holdings are actually new buyers. HCA Healthcare comes in at 5.72% of his portfolio, Oracle holds 5.57%, then we see Citigroup at 5.44%, CVS Health at 5.43%, a 33% reduction in Nextstar Media Group down to 5.39%.

But then a few of the stocks that I wanted to alert you guys to at the number eight and number ten positions are Google at 5.17% and Amazon at 4.82%. I believe, in the case of Amazon, this is the first time it's showed up in Bar's 13F filings. Google is a bit more of a common sight, although he still hasn't really owned it regularly since before the pandemic.

So, it's interesting to see some of these American tech stocks are creeping back into his portfolio. The reason I find this so interesting is because of the performance of The Magnificent 7 over the past year. We've seen the buzz around AI really power these seven stocks so much so that, at the start of 2024, these seven stocks were, on average, 111% more expensive than how they started 2023.

With the general consensus of The Magnificent 7, which includes both Amazon and Google now being one of speculative mania, it's interesting to see Barry actually put his money behind two of them. I can guarantee you Barry is not the guy that would ever join a speculative stock rally. In fact, a few years ago, he was extremely critical of Tesla, and he bet heavily against their stock when they went through their speculative rally.

So, I can guarantee that him buying both Amazon and Google definitely means he sees something in these stocks even at the elevated prices. Although, before you go out and buy any of these stocks, which you shouldn't be doing based on one person's opinion anyway, please remember that the only information we technically do have is that Barry bought both of these companies during Q4 of 2023.

This means, for Google, he could have bought anywhere from 123 to 142, and for Amazon, anywhere from 119 to 154. In both these cases, at the time of recording, both of these stocks trade above those ranges. So, remember, you have to be careful what you do with 13F information.

Beyond the purchases of both Google and Amazon, Barry did actually make one other move in the realm of the tech stocks, but this one won't be spotted on Data Roma, and that's because it relates to his options positions. Michael Barry, in Q4, closed out of his put option position that he started in Q3 against the iShares Semiconductor ETF (SOXX), of which the largest holding is NVIDIA. This ETF, as you might have guessed, holds American listed equities in the semiconductor sector.

Strangely enough, there is a decent possibility that Barry actually made money on this position—that is, if he closed out the position before roughly the end of October. Personally, I don't know why Michael Barry loves to make these bets against whatever the speculative rally is at the time. Like, I get it; it's generally a smart concept to bet against a bubble.

But if there's one thing that I've learned over the past 10 years, it's that speculative mania can last a very long time. There's a classic line in investing: the market can stay irrational longer than you can stay solvent. Personally, I myself wouldn't be shorting Tesla in 2020; I wouldn't be fighting against NVIDIA last year; I wouldn't be shorting the market against the surge of The Magnificent 7. But I guess that's why I'm a dude living in a small apartment, and Michael Barry is out making 800 million bucks betting against the housing market in 2008.

But anyway, they are the three main stories coming out of Michael Barry's 13F. He's still backing Chinese tech; he's also put his money behind the reasonably pricey Google and Amazon, and he did close out his bet against the semiconductor ETF. There were a lot more stocks that he messed with in his portfolio, so I will show the full list up on screen right now.

Actually, while this list is up, I do want to take the time to use this as an example of how much we can really read into Barry's portfolio. As you can see, a lot of the stocks in his portfolio now have decent significance. In fact, out of the top 10, almost all of them are 5% positions or more in the portfolio.

But I want to draw your attention now to this column where it details the estimated dollar value of the position. As you can see throughout this whole video, we're talking about positions that are maybe four, five, maybe $6 million each. While that is a lot of money in absolute terms, it isn't really in relative terms. If you have a look at Michael Barry's total portfolio size for Q4, it was just 94 million.

Even going back just a few years, we can see that at some points, his portfolio value was up around $150-$160 million. While, of course, investment returns will account for some of the change in his portfolio size, for Barry, most of the variation is actually from him changing how much money he's invested in the market at these moments in time.

If we dive into his form ADV, we can find that Barry actually manages $238 million as of the 17th of January this year. So, truth be told, he's actually only got about 40% of his assets under management invested in the stock market right now.

So, you really have to be careful when you read these 13F filings and try to step back and put together the bigger picture. For example, we mustn't forget that 13F filings are just an SEC filing, meaning that it only shows us what's in their US portfolio and tells us nothing about their international investments.

So, when you zoom out, there are limitations to looking at these filings. Don't get me wrong; I love looking into them, and they are extremely helpful, but you have to be careful to understand the full picture. While we spoke at length about Alibaba and JD, after looking at the complete picture, both of these investments combined only represent 4.9% of Barry's total assets under management.

So, while the headlines will undoubtedly say Barry is buying China, realistically, it's only a small play in his overall strategy. But with that said, guys, thanks very much for watching, and I hope you still found this video useful. If you did, please leave a like and subscribe!

We're actually about to launch a free three-part investing course over on New Money Education. If you'd like to learn how people like Michael Barry, Warren Buffett, and so on analyze and value stocks, then if you'd like to be the first to know when that goes live, please check out the links down below. It's 100% free, so definitely check it out. And with that said, I'll see you guys in the next video.