Bullish China Shopping: What Stocks Did Michael Burry Buy in Q3?

Every three months, investors get a peek under the hood of hedge funds.

This article will examine what Michael Burry ­— who rose to fame by predicting, shorting and profiting from the 2008 sub-prime US mortgage crisis — was buying and selling in Q3 2024, based on the 13F form his fund filed with the US Securities and Exchange Commission.  

Burry, the founder and hedge fund manager of Scion Asset Management, has long been regarded as one of the best value investors around. As of September 30, his portfolio had more than doubled in value compared to three months earlier, to $129.75m. 

He ended Q3 with exposure to eight stocks, down from 10 stocks at the end of Q2. 

The Exits 

Starting with the sells, Burry liquidated holdings in both cancer biotech BioAtla [BCAB] and real estate firm Hudson Pacific Properties [HPP].

Burry initiated a position in BioAtla in Q2 of this year, with the purchase of 633,959 shares for approximately $868,000. 

This may seem like a strange stock for him to have invested in, considering the risks associated with small-cap biotechs, and could represent a speculative punt on the healthcare sector. It is likely he made a loss on the investment, however, as the BCAB share price was trading at a lower level in the July–September period than the April–June period. 

Burry first bought into Hudson Pacific Properties in 2023, accumulating more than 400,000 shares across Q2 and Q3, before selling the lot in Q4. He then restarted his position in Q2 of this year with the purchase of 1,144,435 shares for approximately $5.5m. The HPP share price has been on a downward trend in 2024, declining 57.89% year-to-date through November 29 and 13.38% in the past six months. 

The Reductions

Moving on to the stakes cut in Q3, the only stocks that saw reductions were property ​​insurance provider American Coastal Insurance [ACIC] — previously known as United Insurance Holdings and traded under the ticker UIHC — and luxury goods resale platform The RealReal [REAL]. 

Burry reduced his position in United Insurance Holdings by 60%, offloading 151,892 shares, and halved his RealReal stake by selling 500,000 shares. The positions were worth approximately $1.13m and $1.57m respectively as of September 30. 

Burry started building his stake in American Coastal Insurance in Q4 2023. He may have decided to reduce his exposure after seeing the stock hit a 52-week high on May 21. 

The RealReal was first added to Burry’s portfolio in Q1 2023, during which the struggling retail company appointed a new CEO to lead a turnaround. The share price has seen a significant rise over the past couple of years and this recovery may have prompted Burry to pare his stake. 

It will be interesting to see whether he has decided to sell more or buy again after The RealReal announced the abrupt replacement of its CEO at the end of October. 

The Increases 

Burry’s holding in hair care brand Olaplex [OLPX] increased by less than 1% in Q3 with the addition of 4,750 shares, taking the total number held to 1 million shares, worth approximately $2.35m. Burry first initiated a position in Q2, possibly as a bet on the company’s turnaround strategy. The stock is up 62.18% since its 52-week low set on April 23, although down 10.23% in the past month after Q3 sales declined and the full-year outlook was lowered. 

Burry also bumped up his stake in health insurance provider Molina Healthcare [MOH] by 22%, adding 5,470 shares and taking the total number held to 30,000, worth $10.34m. Higher premiums for Medicaid plans boosted the company’s Q2 earnings. 

Another stock that Burry first bought into in Q2 was fintech Shift4 [FOUR]. The stake was increased by 50%, or 50,000 shares, in Q3 and is worth approximately $13.29m.

Bullish China Shopping

The three other stocks in which Burry increased his investment in Q3 were the Chinese tech giants Alibaba [BABA], Baidu [BIDU] and JD.com [JD]. The three stakes are together worth approximately $54.39m and account for 41% of his portfolio. 

Burry doubled his JD.com holding and increased positions in Alibaba and Baidu by 29% and 67%, respectively. 

Positions in Alibaba and JD.com had previously been liquidated in Q2 2023, before being added to the portfolio again in the following quarter. Burry has been building his position in Baidu since Q1 2024.

This doubling down on China came around the time Beijing announced a set of aggressive measures to revive its flailing economy and stimulate growth. This spurred a rally in Chinese equities in September, with the Hang Seng index, where all three firms have a listing, enjoying its best month since November 2022. 

Chinese equities have since pulled back amid concerns that Beijing is not actually doing enough to support the economy. 

Burry may be long on China, but he is also clearly aware of the macroeconomic risks at play, which could explain why he decided to add some puts to his portfolio to offer his Chinese tech holdings some protection. These options include 168,900 Alibaba shares, 83,300 Baidu shares and 500,000 JD.com shares.

The call to hedge his exposure to the three stocks was made before the US election, but Burry was most likely mindful that Trump could win a second term and may announce new tariffs on Chinese goods that could potentially weigh on Alibaba and JD.com. 

However, the big question is whether Burry has decided to reduce these stakes in Q4, keep them unchanged, or even add to them, in light of Trump’s win and talk of a tariff war. 

The next 13F form, which will be filed in February 2025, will tell investors more, and could give an indication as to how optimistic he is on China’s growth in the near term. 

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