Why Michael Burry Is Betting Big on Just ONE Secretive Stock


  • Michael Burry has one stock in his 13F portfolio: Geo Group (GEO).
  • The fund manager sold off 12 other companies during the second quarter.
  • Shares of GEO stock closed about 10% higher on the news.
Michael Burry - Why Michael Burry Is Betting Big on Just ONE Secretive Stock

Source: JosephRouse / Shutterstock

Shares of Geo Group (NYSE:GEO) are at the center of attention after Michael Burry’s Scion Asset Management reported the company as its only second-quarter 13F holding, selling off all other stocks. Today is the deadline for institutional investors to file their Q2 13F, which provides retail investors with a snapshot of stocks institutions own as of June 30.

During the quarter, Burry dumped his stakes in 12 companies, including Google (NASDAQ:GOOG, NASDAQ:GOOGL), Booking (NASDAQ:BKNG) and Bristol-Myers Squibb (NYSE:BMY). His entire GEO stock stake of 501,630 shares was bought during the second quarter, worth about $3.3 million at the end of Q2. Meanwhile, Scion holds stocks in its 13F portfolio for an average of six quarters.

Geo operates as a real estate investment trust, or REIT, that specializes in prison properties and is the world’s second-largest private “prison company.” Let’s get into the details.

Michael Burry Bets Big on GEO Stock

Geo is active in three continents and operates more than 100 private prisons and mental health facilities. However, the U.S. is the company’s largest market and provides about 90% of its revenue. In addition, Geo’s revenue has shrunk at a compound annual growth rate (CAGR) of about 2% from 2018 to 2021.

During Q2, the company reported revenue of $588.2 million, up 4% year-over-year (YOY) from $565.4 million. Furthermore, earnings per share (EPS) tallied in at 69 cents, beating the consensus forecast of 58 cents by about 19%. In the past four quarters, Geo has beaten EPS estimates every time.

Executive Chairman George Zoley added:

“Our diversified business units have delivered robust results over the last two years, which has allowed us to reduce our net recourse debt by approximately $375 million since the beginning of 2020, significantly deleveraging our balance sheet.”

Burry’s significant sales during Q2 echoes his bearish stance. At the end of Q1, Scion had $165 million worth of 13F assets under management, compared with about $3.3 million as of the end of Q2.

In a since-deleted tweet, Burry tweeted last Sunday, “Can’t shake that silly pre-Enron, pre-9/11, pre-WorldCom feeling.” These three events contributed to a 75% decline in the Nasdaq between 2000 and 2002.

Finally, Burry may hold other stocks in his portfolio, as the 13F does not require disclosure of foreign stocks or short positions.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2022/08/why-michael-burry-is-betting-big-on-just-one-secretive-stock/.

©2023 InvestorPlace Media, LLC