As the quarter winds down, investors can look at 13-F filings to determine what the best minds on Wall Street are planning for the coming months. The Securities and Exchange Commission (SEC) requires these filings whenever an individual investor or fund holds a significant enough stake in any given stock, so this is a regular filing for big players like Warren Buffett.
However, most retail investors can relate only so much to Buffett, as his cash holdings (upwards of $250 billion) are the size of many economies in small countries. So, for those with less buying power looking for a quicker investment play, other investors like Michael Burry (who called the 2008 financial crisis) might play a better role when in the early wealth-building stages.
Inside Burry’s recent 13-F filings, investors can find a few interesting plays to watch out for. His main selling name was a gold commodity play in Sprott Physical Gold Trust (NYSEARCA: PHYS), which might not necessarily be a bearish view on gold prices but rather profit-taking after the metal reached an all-time high recently. His buys were found in consumer discretionary payments platform Shift4 Payments Inc. (NYSE: FOUR), topped with a real estate play in Hudson Pacific Properties Inc. (NYSE: HPP).
Sprott Physical Gold Trust Sale: Burry’s Bullish Move on the Dollar
Selling out of a gold play like Sprott Physical Gold may not be a bearish view of the commodity; it could actually be a bullish view of the U.S. dollar. Why? Gold, like oil, is quoted in dollars, so expecting a stronger currency ahead could have directly conflicted with Burry's gold holdings.
There are other bull cases for gold, however. Analysts at Goldman Sachs expect the price of gold to reach up to $2,700 an ounce by the end of 2024, a view that could be backed by the return of inflation if the Fed actually cuts interest rates by the next quarter.
However, Burry is not alone in this view, as B. Riley Wealth Advisors also sold out of the stock as recently as August 2024. By cutting over 90% of their position in the stock, this wealth advisor is now entirely out of Sprott Physical Gold Trust stock, and others followed suit.
EP Wealth Advisors also sold out of their entire Sprott Physical Gold Trust stock in August 2024. This, combined with the $79 million in net institutional outflows from the stock over the past 12 months, shows a decline in investors' confidence, so maybe Burry is right this time as well.
Shift4 Payments Gains Burry’s Confidence: A Bet on Rising Consumer Activity
Should the Fed cut interest rates as early as September 2024, as projected by the CME’s FedWatch tool, consumer activity could rebound to previous levels. This potential increase would likely benefit companies like Shift4 Payments, which facilitates transactions between products and consumers.
Once again, Burry is not alone in his choice; Wall Street analysts forecast up to 29.6% earnings per share (EPS) growth for the next 12 months in the stock, coming above competitors like PayPal Holdings Inc. (NASDAQ: PYPL), which only have a forecast for 11.1% EPS growth in the next 12 months.
Of course, this helped those at DA Davidson land on a $104 price target for Shift4 Payments, calling for up to 30% upside from where the stock trades today. Facing this much bullish evidence even sent the bears running; short interest for Shift4 Payments declined by over 5% in the past month to show signs of bearish capitulation.
Even the CEO justified buying some of his stock, as a May 2024 transaction shows he bought up to $2.5 million in the company. There must also be a good reason for markets to pay a premium for this stock, as Shift4 Payments now trades at a price-to-book (P/B) multiple of 8.1x over the business sector’s average valuation of 4.2x.
Hudson Pacific Properties: Burry’s Bold Bet on a Real Estate Revival
Most in the market are now aware of the painful state of commercial property, as remote work and hybrid settings are the new norm for most technology stocks in the United States. However, according to Hudson Pacific's investor presentation, that could soon have a new turn.
Up to 64% of CEOs now believe that work schedules will return to pre-pandemic attendance ratios by 2026. Furthermore, as of December 2023, the number of job postings for remote work on LinkedIn declined by 12% annually, which, of course, helps the rental income and valuations of office space.
Another document showing Hudson Pacific's main tenants by share would point investors in the right direction. Alphabet Inc. (NASDAQ: GOOGL) is the largest tenant, representing up to 10.2% of annualized rent. It is followed by Amazon.com Inc. (NASDAQ: AMZN), which takes up 5.5%. Netflix Inc. (NASDAQ: NFLX) takes third place with a similar 5.1%.
Knowing that these properties' rental outlook is upbeat, Wall Street analysts now forecast 55.4% earnings per share (EPS) growth in the next 12 months, beating most real estate investment trusts (REITs). More than that, analysts landed on a consensus price target of $7.3 a share, calling for as much as 39.3% upside from where it trades today.
