We recently compiled a list of the Michael Burry's Top 10 Stock Picks Heading into 2025.In this article, we are going to take a look at where Hudson Pacific Properties, Inc. (NYSE:HPP) stands against Michael Burry's other stock picks.
Established in May 2013, Scion Asset Management is a renowned and well-regarded California-based hedge fund founded by Michael Burry. The investment management firm focuses on long-term capital appreciation via fundamental research. The company targets undervalued or misunderstood investment opportunities globally. Michael Burry, a renowned figure in the financial world, shot to fame after his accurate predictions during the 2008 financial crisis. The hedge fund manager has a bachelor's degree in economics from the University of California, Los Angeles. Also, he pursued an M.D. from Vanderbilt University School of Medicine.
After Michael Burry founded Scion Capital and predicted the late 2000s housing bubble burst, he rolled out Scion Asset Management in 2013, rebranding the prior fund.
Michael Burry Goes Long on China
As of now, Michael Burry remains optimistic about the Chinese economy, with Scion Asset Management significantly investing in renowned and well-established Chinese companies. Over the past few weeks, the Chinese stock market has seen a significant rally, with the Hang Seng Index increasing by ~17% and the SSE Composite Index rising by more than ~18% over the past month. Market experts believe that these increases primarily stemmed from the stimulus measures announced by the government.
As per the hedge fund's 13F filing for the quarter that ended June 30, Michael Burry significantly increased his ownership in the Chinese tech companies, while liquidating his investments in gold and other companies belonging to solar, energy, and other sectors. The renowned investor also entered several new positions in sectors such as financial services, healthcare, beauty, and real estate industries. Over the past few weeks, there has been growing optimism about the Chinese economy.
BBVA Research believes that the Chinese economy has been witnessing structural rebalancing amid adjustments in real estate. Thanks to the large-scale stimulus package, the company expects that the economy will bottom out in the near term. Moving forward, the firm believes that the US and Europe's rate cut cycle offers policy room for China's easing measures. As and when the large China-US rate reversion sees normalization, there can be increased capital inflows and stronger RMB.
The prolonged rebound in China after the COVID-19 pandemic, offset by other sectors such as manufacturing and real estate, significantly dragged down China's stock valuations, making it attractive for investors.
Peeking into Michael Burry's Concentrated Portfolio
'Big Short' investor's noteworthy move in Q2 2024 was a significant rise in his stake in a Chinese e-commerce giant. This stock is now the largest holding of the portfolio. Even though the Chinese regulatory landscape continues to evolve, it is demonstrating signs of easing. Therefore, market experts opine that this can help create a more favorable environment for Chinese technology companies.
Beyond e-commerce, the hedge fund manager's Q2 2024 portfolio focuses on strategic allocation throughout varied sectors. Scion Asset Management appears to be going long on the payment processing sector also. Since the investment firm has a diversified portfolio, experts believe that the company is well-placed to navigate any short-term economic headwinds.
Our Methodology
To list Michael Burry's Top 10 Stock Picks Heading into 2025, we sifted through Scion Asset Management’s latest 13F Holdings. From the list, we selected the top 10 stock picks, and the same are ranked in ascending order of the fund’s stakes in them.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An office tower in a bustling downtown, home to a growing REIT.
Hudson Pacific Properties, Inc. (NYSE:HPP) is a real estate investment trust, that serves dynamic tech and media tenants in global epicenters.
Hudson Pacific Properties, Inc. (NYSE:HPP) remains optimistic about the gradual strengthening of West Coast office markets, mainly in San Francisco. The company continues to explore strategic alternatives, which include asset sales, in a bid to improve its portfolio quality. Also, the focus is on acquisitions of higher-performing assets. Wall Street experts opine that tenant demand for Hudson Pacific Properties, Inc. (NYSE:HPP) should be aided by AI companies and professional services.
Hudson Pacific Properties, Inc. (NYSE:HPP)’s balance sheet emphasizes deleveraging and it anticipates that improved studio cash flow should strengthen leverage metrics. The company continues to attract tenants with prebuilt space and is experiencing growth in the AI-related tech pipeline. It focuses on improving office retention rates and has coverage on lease expirations.
In the recent earnings call, Hudson Pacific Properties, Inc. (NYSE:HPP) highlighted that discussions on asset sales are ongoing and several assets are being identified for potential disposition. Notably, efficiency measures and cost-saving initiatives are being implemented in a bid to improve studio margins.
With more than 500,000 square feet of office leases signed in Q2 2024, the company saw a strong start to the year. It expects that its strong leasing execution will continue for the remainder of the year and its leasing pipeline remains healthy.
As per Wall Street, the shares of Hudson Pacific Properties, Inc. (NYSE:HPP) have an average price target of $5.25.
Overall HPP ranks 6th on our list of Michael Burry's top stock picks. While we acknowledge the potential of HPP as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than HPP but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
