Over the years I have developed an impressive rolodex of a handful of investors who have handsomely outperformed the market. I keep in close contact with these investors and frequently exchange stock ideas with them. When I have a good idea I shoot them a text to continue to build goodwill and develop our working friendship. This has paid off nicely over the years as they have kindly shared their top ideas with me, which typically have generated outsized returns for my portfolio.
This list of investors and their frequent stock ideas is my favorite way to generate investment ideas. I love it when other smart guys do a bunch of work on a company and then get excited to tell me why it is their favorite idea. Let someone much smarter than me do hundreds of hours of work on a company so I can ride their coattails and ride off into the profit sunset with them.
Now what if I told you that you could ride the coattails of other smart investors like Warren Buffett, Bill Ackman and Michael Burry. Would you follow these legends into stocks and coattail off their hard work and research? I’m sure the answer is yes for everyone reading this. Which is good news, because you literally can coattail investors like Michael Burry into his best ideas.
Given the SEC rules on institutional investors and investing funds, when a intuitional investor like Michael Burry buys a stock, he is required to file a regulatory report on how much he owns and what price he bought it for. I’ve been tracking these regulatory reports on a monthly basis. And when someone like Burry files a position on a new stock, I get interested. Very interested.
Michael Burry recently filed on a new name a few weeks ago and I have been hard at work trying to understand his rational for buying the company. After spending countless hours on the name, I figured out the thesis and took a position.
If the thesis works out the stock could be a multi-bagger. The stock is down 90% over a five-year period and is almost a penny stock. There is a ton of debt on the balance sheet but almost all of it is termed out and at a fixed rate for a long duration. There is a new management team that is rapidly cutting costs and selling assets. The team is shoring up the balance sheet and making sure the corporation can survive through an extended downturn.
A lot of bad news has came out on the stock over the past year. The valuation has dropped to basement level lows. The equity is priced like bankruptcy is imminent. But I think the market has it all wrong. Any good news will send the equity flying upwards. That is why I started buying shares. And it is also why I think Michael Burry became a major investor.
In this research report I will layout the entire thesis on why I think this stock could be worth much more than the current valuation over the next 12-18 months. Names like this excite me. They are levered to the gills so any good news and a return of historical cash flows can send the equity flying.
Lets’ dig in….
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