When Michael Burry makes a stock market bet, the financial world takes notice. Recently, the famed investor who predicted the housing market crash of 2008 has been making more moves. In early October, Burry tweeted that he had been feeling “greedy” during the raging bear market. His recent investments back up that claim.
Burry has been on a buying spree lately, purchasing companies across a variety of sectors. Most recently, he took a large position in Qurate Retail (NASDAQ:QRTEA, NASDAQ:QRTEB), a small-cap company that operates in the retail and media spaces. Since news broke of his new $5 million stake, Qurate Retail stock has been rising.
Let’s take a look at the company and what Michael Burry’s investment means for shares.
Why Is Michael Burry Betting on Qurate Retail Stock?
Qurate Retail isn’t the only investment from Michael Burry this week. Seeking Alpha reports that his firm, Scion Asset Management, also recently purchased shares of space and defense tech producer Aerojet Rocketdyne (NYSE:AJRD) as well as Charter Communications (NASDAQ:CHTR) and Liberty Latin America (NASDAQ:LILA).
These three stocks as well as Qurate Retail stock have all been rising today since pre-market trading, although the latter has far outperformed the others. Currently, QRTEA is up 20% for the day while QRTEB is up more than 40%. Seeking Alpha notes that QRTEA ended the third quarter as one of Burry’s top holdings.
Granted, Burry’s investment isn’t Qurate Retail’s only news today. The company recently announced an upcoming quarterly cash dividend regarding its Series A cumulative redeemable preferred stock:
“The per share amount of the quarterly cash dividend will be $2.00, payable in cash on December 15, 2022 to stockholders of record of the Preferred Stock at the close of business on November 30, 2022.”
That said, Michael Burry making a large scale bet on this little-known penny stock is likely doing more to drive up prices than a dividend payout. As InvestorPlace contributor Muslim Farooque notes, QRTEA has fallen out of favor with Wall Street due to fluctuations. That may be part of why a contrarian investor like Burry is drawn to the shares. However, a closer look at this dynamic company reveals that it has plenty to offer.
Qurate Retail’s holdings include several leading retail and e-commerce outlets, including Zulily. But the company is perhaps best-known for television shopping networks QVC and HSN, both pioneers in the home-shopping field. And as Farooque reports, the company’s three-year growth plan could be exactly what Qurate Retail needs to signal a turnaround. InvestorPlace contributor Thomas Niel also says the company’s pivot to streaming and e-commerce could send it soaring.
In any case, Burry clearly sees potential here. That may be linked to the company’s adaptability.
The Bottom Line
Of course, it’s true that penny stocks always carry a certain amount of risk due to their unstable nature. But Michael Burry isn’t one to make irresponsible bets. Burry clearly sees something big ahead for Qurate Retail stock, particularly as it boasts a much smaller market capitalization than the other subjects of his recent bets. Both QRTEA and QRTEB stock are worth watching as Qurate Retail continues to work towards a more profitable business model.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Samuel O’Brient 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.