ASX 200 to fall, what stocks did Michael Burry and Warren Buffett buy last quarter

ASX 200 futures are trading 37 points lower, down -0.51% as of 8:20 am AEDT.

The S&P 500 tumbled in the last thirty minutes of trade, mega cap tech stocks like Amazon and Alphabet continue to outperform, Home Depot posts its worst sales growth since 2009, Resources stocks were heavy overnight - with BHP ADRs down 2.3% and the latest 13F updates from big names like Michael Burry, Bill Ackman and Warren Buffett.

Let's dive in.

S&P 500 SESSION CHART

MARKETS

• S&P 500 lower, falling sharply before close to finish at worst levels
• Big tech offered support, notably Alphabet (+2.6%) and Amazon (+2.0%)
• Markets still struggling for direction, with no +/-1% week in the last six – which marks the longest sideways movement since 2019
• BofA fund survey shows sentiment deteriorated in May, with investors flocking to cash on rising recession and credit fears (Bloomberg)
• BofA Global Fund Manager Survey shows cash levels up 0.1 percentage point to 5.6% while allocation to bonds is the highest since March 2009
• Richmond Fed's Barkin says financial instability concerns should not prevent Fed from raising rates (FT)
• Cleveland Fed’s Mester says she did not feel the Fed had reached a holding place yet and looking for more evidence that inflation is coming down (Reuters)

STOCKS

• Berkshire discloses stake in Capitol One, exits US Bancorp, TSMC, RH (Reuters)
• JPMorgan's Dimon says "unlikely" his bank will acquire another struggling lender (CNBC)
• Comcast says company likely to sell 33% stake in Hulu to Disney in 2024 (CNBC)

Earnings

Home Depot (-2.2%): Slightly better-than-expected EPS but comparable missed, down 4.5% vs. the 1.6% decline expected – which marked the largest year-on-year decline since 2009. Lowered full-year guidance, now expects comparable sales down 2-5% compared to prior flat guidance.

• "We saw more pressure across the business … we believe the underperformance this quarter relative to our expectations, lumber deflation and continued uncertainty around underlying demand, warrants a more cautious sales outlook for the remainder of the year ..." – COO Ted Decker

ECONOMY

• US consumer spending appears solid early in second quarter (Reuters)
• China economic activity data misses expectations across the board (FT)
• German ZEW shows investor outlook weakens amid rising recession risks (Bloomberg)
• UK labour market eases amid jump in claimant count (FT)
• Australian consumer confidence tumbles following surprise May rate hike (Reuters)
• RBA debated pausing in May but resumed hikes given upside risks to inflation (Bloomberg)
  
  

Deeper Dive

Sectors to Watch

It was generally a heavier overnight session, with all our US-listed sector ETFs lower, led by Resources.

• Iron Ore: Iron ore futures were mostly intact but US-listed BHP and Rio Tinto fell 2.3% and 2.4% overnight.
• Uranium: Uranium is doing a classic and pulling back sharply after a strong move out in the last 1-2 weeks. The Global X Uranium ETF fell 2.5% overnight and down 5.4% in the last four sessions. This could see some negative flow for local names like Paladin Energy, Boss Energy and Deep Yellow.
• Gold: Gold prices tumbled 1.4% overnight from US$2,015 to US$1,990. Large cap names like Evolution Mining and Northern Star have mostly recovered back up to recent highs. Will they whipsaw back down after the sharp move in overnight gold prices?

Whale Filings: Burry, Ackman, Druckenmiller and Buffett

Michael Burry's latest 13F is out and here are the key highlights:

• Largest position: JD.com
• Sold out of: MGM Resorts International, SkyWest, Qurate Retail and Wolverine World Wide
• Largest new positions: Signet Jewelers, New York Community Bancorp, Zoom, Capital One and Sibanye Stillwater
• Total positions: 21
• In a nutshell: He likes energy and finance

Bill Ackman's Perishing Square accumulated an almost $1.1bn stake in Alphabet, including:

• 8.1 million class C shares (no voting rights)
• 2.2 million class A shares (voting rights)

Stanley Druckenmiller filed his Q1 13F form as well, with notable changes including:

• Top positions: Coupang (13.1%), Nvidia (9.5%), Microsoft (9.1%), Eli Lilly (9.0%) and Lamb Weston Holdings (8.9%)
• Top buys: Microsoft, Nvidia, Iqvia, Alphabet and Amazon
• In a nutshell: Ramping up on tech and AI exposure

Buffet's Berkshire Hathaway's 13F highlights:

• Bought: Capital One Financial, Diageo
• Raised stake: Apple, Occidental Petroleum and HP
• Reduced: Activision Blizzard, General Motors, Chevron, Amazon, McKesson
• Exited: RH

Tech Concentration: Signal or Noise

There's a lot of talk about a handful of mega cap tech stocks buoying the market.

A glass half empty view would suggest that breadth is weak and there are problems underneath the hood. But if you listened to the same warnings back in 2020-21, you would have missed a big chunk of gains.