'Big Short' investor prefers prisons to traditional stocks - media

While markets may crash, Michael Burry appears to believe that crime and punishment will always exist.



Michael Burry, a US hedge fund manager who rose to prominence with timely bets against the housing market ahead of the 2008 financial crisis, has sold his entire stock portfolio and replaced it with a stake in a prison company, according to Reuters, citing SEC stock filings.


GEO Group is a publicly traded company that operates over 100 private prisons and mental health facilities in North America, Australia, South Africa, and the United Kingdom. Burry's position in GEO Group is worth approximately $3.9 million, according to the report.


GEO's stock rose 12% on Monday, the biggest one-day gain since last June. Overall, the company's stock, which has a market value of about $852 million, is down 1.6% year to date. Some analysts, however, believe GEO has a healthy enough cash flow and balance sheet "to merit a speculative investment."


"GEO Group is arguably a classic example of a cigar butt as defined by Warren Buffett... an approach to investing in which you try to find a kind of pathetic company but it sells for such a low price that you believe there is only one good puff left in it." In other words, a cigar butt isn't a good company, but the valuation is so low that a value investor has a good chance of profiting from the favorable risk/reward skew," a Seeking Alpha analyst wrote.


Burry sold stocks in Facebook parent Meta Platforms, tech behemoth Alphabet, insurance company Cigna Corp, and pharmaceutical firm Bristol-Myers Squibb.


Burry expressed his concerns about what the stock market might face in a Tweet on Sunday. He wrote that he "can't shake that silly pre-Enron, pre-9/11, pre-WorldCom feeling," referring to events in the early 2000s that resulted in a 75% drop in the Nasdaq Composite Index. The Nasdaq is one of the three most widely followed stock market indices in the United States. On Monday, it was down about 16.3% year to date.


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