Scion Asset Management, the firm led by “Big Short” investor Michael Burry (Trades, Portfolio), disclosed in a regulatory filing that its top trades during the first quarter included new buys in Signet Jewelers Ltd. (SIG, Financial), New York City Bancorp (NYCB, Financial) and Capital One Financial Corp. (COF, Financial). The firm also exited its holdings of Black Knight Inc. (BKI, Financial), Wolverine World Wide Inc. (WWW, Financial) and MGM Resorts International (MGM, Financial), three of its new buys from the fourth quarter of 2022.
Prior to founding the California-based firm in 2013, Burry recognized and invested in the subprime mortgage crisis in 2008, making a large, short bet in collateralized mortgage obligations. The guru’s long-term bet was featured in “The Big Short.”
Scion applies a value-focused strategy. As of March, the firm’s $107 million 13F equity portfolio contains 21 stocks, with 17 new stocks and a quarterly turnover ratio of 85%, approximately 15% higher than the turnover ratio from the fourth quarter of 2022. The top four sectors in terms of weight are consumer cyclical, financial services, technology and energy, representing 29.72%, 28.62%, 11.36% and 8.98% of the equity portfolio.
Investors should be aware 13F filings do not give a complete picture of a firm’s holdings as the reports only include its positions in U.S. stocks and American depository receipts, but they can still provide valuable information. Further, the reports only reflect trades and holdings as of the most-recent portfolio filing date, which may or may not be held by the reporting firm today or even when this article was published.
Signet Jewelers
Scion purchased 125,000 shares of Signet Jewelers (SIG, Financial), allocating 9.09% of its equity portfolio to the position. The position represents the firm’s third-largest holding after JD.com Inc. (JD, Financial) and Alibaba Group Holding Ltd. (BABA, Financial).
Shares of Signet Jewelers averaged $74.18 during the first quarter; the stock is modestly overvalued based on its price-to-GF Value ratio of 1.21 as of Thursday.
The jewelry retail company has a GF Score of 73 out of 100 based on a momentum rank of 10 out of 10, a rank of 3 out of 10 for growth and GF Value and a rank of 7 out of 10 for profitability and financial strength.
The company’s positive investing signs include an interest coverage ratio that outperforms approximately 81% of global competitors and an operating margin that has increased by approximately 23% per year on average over the past five years.
New York City Bancorp
The firm invested in 850,000 shares of New York City Bancorp (NYCB, Financial), giving the position 7.19% equity portfolio weight. Shares averaged $9.02 during the first quarter; the stock is modestly undervalued based on its price-to-GF Value ratio of 0.73 as of Thursday.
The New York-based chartered bank has a GF Score of 67 out of 100 based on a GF Value rank of 8 out of 10, a rank of 5 out of 10 for momentum and profitability and a rank of 3 out of 10 for financial strength and growth.
The bank’s low financial strength stems from several warning signs of high leverage, including a cash-to-debt ratio that underperforms approximately 55% of global competitors and a debt-to-equity ratio that underperforms approximately 82% of global competitors.
Capital One
Scion purchased 75,000 shares of Capital One (COF, Financial), giving the position 6.74% equity portfolio weight. Shares averaged $104.67 during the first quarter; the stock is significantly undervalued based on its price-to-GF Value ratio of 0.69 as of Thursday.
The McLean, Virginia-based financial services holding company has a GF Score of 84 out of 100 based on a GF Value rank of 10 out of 10, a growth rank of 9 out of 10, a profitability rank of 7 out of 10 and a rank of 4 out of 10 for momentum and financial strength.
Capital One’s high growth rank is driven by several positive investing signs, which include a five-star business predictability rank and three-year revenue and earnings growth rates that outperform more than 65% of global competitors.
Warren Buffett (Trades, Portfolio)’s Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial) invested in 9.922 million shares of Capital One during the first quarter, giving the position 0.29% equity portfolio weight.
Black Knight
Having established a holding of 150,000 shares in Black Knight (BKI, Financial) during the fourth quarter of 2022, Scion sold the entire holding during the first quarter. The transaction reduced the equity portfolio by 19.90%. Shares averaged $59.84 during the first quarter. Based on GuruFocus estimates, the firm took a loss of approximately 1.55% on the stock.
The Jacksonville, Florida-based data and analytics technology company has a GF Score of 72 out of 100 based on a GF Value rank of 10 out of 10, a financial strength rank of 4 out of 10, a momentum rank of 1 out of 10 and a rank of 7 out of 10 for growth and profitability.
Wolverine World Wide
Having purchased 356,101 shares of Wolverine World Wide (WWW, Financial) during the fourth quarter, Scion sold the entire position during the first quarter, trimming 8.36% of its equity portfolio. Shares averaged $15.24 during the first quarter. Based on GuruFocus estimates, the firm gained approximately 14.67% on the stock.
The Rockford, Michigan-based active footwear and apparel company has a GF Score of 77 out of 100 based on a momentum rank of 10 out of 10, a GF Value rank of 8 out of 10, a profitability rank of 7 out of 10 and a rank of 4 out of 10 for growth and financial strength.
MGM Resorts International
Having purchased 100,000 shares of MGM Resorts International (MGM, Financial) during the fourth quarter, the firm sold all the shares during the first quarter, reducing its equity portfolio by 7.21%. Shares averaged $41.55 during the first quarter. Based on GuruFocus estimates, the firm gained approximately 19.98% on the investment.
The Las Vegas-based casino resort company has a GF Score of 76 out of 100 based on a momentum rank of 10 out of 10, a GF Value rank of 9 out of 10, a financial strength rank of 2 out of 10 and a rank of 6 out of 10 for profitability and growth.
