In today’s top stories, The Big Short’s Michael Burry (pictured) reveals a short position against Apple, Elon Musk’s Twitter deal is put on ice and growth ETFs see a turnaround in fortunes. Hedge funds were also in the spotlight, with Warren Buffett’s Berkshire Hathaway buying a stake in Citigroup. Meanwhile, Tiger Global, Third Point and Bridgewater Associates all exited tech positions.
Burry shorts Apple
The ‘Big Short’ investor Michael Burry has announced he’s shorting Apple [APPL], with 2,060 put options against 1,000 Apple shares as of the end of March. At the time it had a value of $36m, but assuming he has held onto these put options, then his bet will likely be profitable as the Apple share price is down roughly 17% since the start of April.
Buffett’s banking bet
In a surprise move, Berkshire Hathaway [BRK-B] has taken a $2.9bn stake in Citigroup [C]. Banking stocks had been a favourite of Buffett’s, but the theme has been on the back burner amid recession worries. His firm started unloading JPMorgan [JPM] and Goldman Sachs [GS] in 2020 and a regulatory filing on 16 May revealed it had exited Wells Fargo [WFC]. Buffett also purchased $2.61bn of Paramount [PARA] last quarter.
Musk mulls lower Twitter offer
Twitter [TWTR] has given back all of the gains it had made since Elon Musk disclosed his stake on 4 April. His $44bn bid to buy the social media giant is now on hold due to concerns about the volume of fake accounts. Speaking at the All In Summit in Miami on Monday, Musk admitted that a deal lower than the $54.20 he offered was not “out of the question.” The share price closed at $37.39 on 16 May..
Growth ETFs see inflows
The market may not have reached its bottom yet, but some buyers are trickling back into growth stocks. According to a Barron’s report, US small-cap growth ETFs saw a net inflow of $130m last week, with $30m into the iShares Russell 2000 Growth [IWM] alone. But the positive sentiment could be temporary, Truist’s Keith Lerner told the publication. Growth ETFs have averaged a weekly outflow over the past several weeks.
Tiger cuts its losses
The value of Tiger Global’s public stock positions dropped from $46m to roughly $26m in Q1, according to new regulatory filings. The firm has decided to cut some of its losses, exiting 83 stocks including Netflix [NFLX] and Adobe [ADBE] and reduced its stake in Uber [UBER]. Meanwhile, Bridgewater exited Tesla [TSLA] and Third Point exited Alphabet [GOOGL] in Q1.
Despite shortages to critical components in networking equipment, Cisco’s [CSCO] hardware sales, including switches, have remained robust. Its secure and agile networking segment saw revenue rise 7% year-over-year to $5.97bn. Although the share price is down 22% year-to-date, the company’s purchase of Acacia Communications, which makes high-speed optical interconnect technology, is expected to help drive long-term growth.
Royal Mail [RMG.L] is locked in a pay dispute with the union representing its 115,000 members and this is weighing down the company ahead of full-year results on 19 May. Whether its earnings deliver will partly depend on ecommerce and parcel demand. “We’ll also have an eye on parcel volumes, which have come down somewhat from pandemic highs,” says Laura Hoy, analyst at Hargreaves Lansdown.
Disclaimer Past performance is not a reliable indicator of future results.
CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.
CMC Markets does not endorse or offer opinion on the trading strategies used by the author. Their trading strategies do not guarantee any return and CMC Markets shall not be held responsible for any loss that you may incur, either directly or indirectly, arising from any investment based on any information contained herein.
*Tax treatment depends on individual circumstances and can change or may differ in a jurisdiction other than the UK.