UPDATED Mar 27, 2024
A lot has happened in the first quarter of 2023! AI took the world by storm, Credit Suisse and several large US banks went under and China relaxed some of the strict zero-Covid measures that were curtailing economic growth throughout 2022.
Michael Burry’s Scion Asset Management were quick to act and have made some notable additions to its portfolio, capitalizing on some opportunities that arose due to the tricky macroeconomic climate. Burry, famed for his prediction of the 2008 housing market crash and subsequent big short, has shown renewed faith in two specific areas: the sustained growth of Chinese markets and the resilience of regional banks.
Data from China’s National Bureau of Statistics noted 4.5% growth in GDP. A figure that eclipsed forecasts which was likely helped by retail sales jumping 10.6% and industrial output rising 3.9%. These figures paint the picture that the growth story in China may be far from over.
On the other side of the Pacific, Burry has taken new positions in several regional banks, a move that comes on the heels of the recent collapses of First Republic Bank, Silicon Valley Bank, and Signature Bank. These were the second, third, and fourth largest bank failures in US history, respectively.
This bold move demonstrates Burry’s belief in the strong underlying value and potential recovery within the regional banking sector following a heavy sell-down from the market. His approach is a good reminder for investors to think long term and find high quality companies at fair prices.
Now let’s take a look at some of these latest additions to the Scion Asset Management portfolio.
7 companies
JD.com, Inc. provides supply chain-based technologies and services in the People’s Republic of China.
Leading Chinese e-commerce giant poised for growth amid technological innovation.
Trading at 42.5% below our estimate of its fair value
Earnings are forecast to grow 13.7% per year
Earnings grew by 132.8% over the past year
No risks detected for JD from our risks checks.
Alibaba Group Holding Limited, through its subsidiaries, provides technology infrastructure and marketing reach to help merchants, brands, retailers, and other businesses to engage with their users and customers in the People's Republic of China and internationally.
World-class tech conglomerate capitalizing on diverse sectors within the booming Chinese market.
Trading at 49% below our estimate of its fair value
Earnings are forecast to grow 12.69% per year
Earnings grew by 205.3% over the past year
No risks detected for BABA from our risks checks.
New York Community Bancorp, Inc. operates as the bank holding company for Flagstar Bank, N.A.
Resilient regional bank with conservative lending practices.
Earnings are forecast to grow 100.37% per year
Highly volatile share price over the past 3 months
Shareholders have been diluted in the past year
Capital One Financial Corporation operates as the financial services holding company for the Capital One, National Association, which engages in the provision of various financial products and services in the United States, Canada, and the United Kingdom.
Major U.S. bank with robust financial health.
Trading at 22.2% below our estimate of its fair value
Earnings are forecast to grow 7.87% per year
No risks detected for COF from our risks checks.
Western Alliance Bancorporation operates as the bank holding company for Western Alliance Bank that provides various banking products and related services primarily in Arizona, California, and Nevada.
High-performing regional bank with strong growth prospects and strategic acquisitions.
Trading at 58.5% below our estimate of its fair value
Earnings are forecast to grow 17.33% per year
Profit margins (27.8%) are lower than last year (42.2%)
Banc of California, Inc. operates as the bank holding company for Banc of California that provides various banking products and services to small, medium-market, and venture-backed businesses in California.
Regional bank looking out for clients’ deposits.
Trading at 55.6% below our estimate of its fair value
Earnings are forecast to grow 110.81% per year
No risks detected for PACW from our risks checks.
Huntington Bancshares Incorporated operates as the bank holding company for The Huntington National Bank that provides commercial, consumer, and mortgage banking services in the United States.
Customer-centric regional bank exhibiting strong fundamentals and potential for growth post-merger.
Trading at 47.4% below our estimate of its fair value
Earnings are forecast to grow 7.94% per year
Significant insider selling over the past 3 months
New Money may hold positions in the companies mentioned. Simply Wall St has no position in any of the companies mentioned.