- The investor Michael Burry rose to fame by shorting mortgage securities ahead of the 2008 housing meltdown.
- His wager was heavily featured in Michael Lewis’ bestselling book “The Big Short,” and Christian Bale portrayed Burry in the 2015 film adaptation.
- Burry currently has several active investments in small- and medium-sized Japanese companies, Bloomberg reported Wednesday.
- The Japanese stocks he chose have “significant cash or stock holdings” he wants to see used for share buybacks or acquisitions, Bloomberg found.
- Burry recently warned against passive investment being a “bubble” that keeps capital away from growth stocks and consolidates investment in large-cap companies.
- Here are the eight Japanese companies targeted by Burry, ranked in descending order of market cap.
- Visit the Markets Insider homepage for more stories.
The famous investor Michael Burry is targeting small- and medium-cap Japanese companies as he shifts his strategy to international value stocks, according to a new Bloomberg report.
Burry made waves when he bet against mortgage-backed securities ahead of the 2008 housing crisis. The hugely profitable trade was depicted in Michael Lewis’ bestseller “The Big Short,” which saw a film adaptation in 2015 with Christian Bale playing Burry.
Michael Burry recently warned passive investment is a “bubble” that keeps small-cap companies struggling for cash. The manager is now “100% focused on stock-picking” after exiting investments in farmland and water, Bloomberg reported. He recently disclosed major stakes in US and South Korean value stocks through his hedge fund, Scion Asset Management.
Burry is also specifically focused on Japanese stocks, particularly those with large cash reserves, Bloomberg found. The investor says he’s encouraging companies to utilise their holdings, a move that could draw increased interest from international investors.
“I want to see evidence that the company is investing to grow the business, buying back stock, paying dividends, or making accretive acquisitions,” Burry wrote in an email to Bloomberg.
Here are eight Japanese companies Burry has stakes in, by descending market cap:
Market cap (USD): 982.15 million
Year-to-date performance: down 8%
The company leases construction machinery and tools.
“They run a tight ship from a credit perspective, and maintain their equipment for high resale at auction,” Burry told Bloomberg.
Market cap (USD): $US578.48 million
Year-to-date performance: up 52%
Burry called Tosei an “opportunistic player in urban real estate,” praised its management, and noted the company is “executing in every facet of the business.”
Market cap (USD): $US334.34 million
Year-to-date performance: down 1%
Altech “will benefit from recent immigration reforms as it expands into agriculture and patient care areas,” Burry told Bloomberg. The company provides mechanics and engineers for-hire to a growing portfolio of industries.
Market cap (USD): $US277.53 million
Year-to-date performance: up 3%
The car mirror company forecasts growth and stock buybacks, but it won’t be enough help the shares recover from a 35% drop in 2018, Burry said.
“Situations like that call for more dramatic action, and I’d like to see large tender offers for one-third or more of the shares, large special dividends. I just have not seen that, and there is a long way to go.”
Nippon Pillar Packing
Market cap (USD): $US254.22 million
Year-to-date performance: down 9%
Burry forecasts the stock surging on “a high beta to the sector as the inventory of tech components is finished off and growth resumes.” Nippon produces mechanical seals, gaskets, and packing supplies, according to Bloomberg.
Market cap (USD): $US195.15 million
Year-to-date performance: down 49%
The company “should pay down debt to improve cash flow and to put it in a position for another acquisition,” Burry told Bloomberg. Sansei makes elevators and theme park rides.
Market cap (USD): $US129.64 million
Year-to-date performance: down 3%
Yotai produces materials used in electric furnaces, and should buy back stock with its 4.4 billion yen reserves, Burry said.
Market cap (USD): $US116.63 million
Year-to-date performance: up 64%
The producer of chip-making tools “needs to invest in its business to develop the potential of the markets it serves,” Burry told Bloomberg.
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