Heritage Capital | May 17th, 2024

Today's insights are courtesy of Heritage Capital Group, a 3rd generation family office with over $750 million and 6 million square feet of assets under management. For the first time in their history, they are offering the opportunity for accredited investors to join them in their next acquisition.

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GOOD MORNING

Here's everything you need to know today: Michael Burry, known for his prescient bet against the housing bubble, has made strategic shifts in his portfolio for Q1 2024. Burry has reduced his holdings from 25 to 16, with notable investments in Chinese tech giants Alibaba, JD.com, and Baidu, and a significant position in physical gold. These moves suggest a defensive strategy, possibly anticipating economic uncertainty.

Meanwhile, Walmart continues to defy economic challenges, reporting strong Q1 performance with revenue of $161.51 billion, exceeding expectations. The retail giant's adaptability and focus on affordability have driven growth, attracting a diverse customer base and boosting e-commerce sales.

Additionally, inflation remains a hot topic as the Consumer Price Index shows a 19.4% increase since President Biden took office. This figure is set to be a major point of contention in the upcoming 2024 election, with Republicans highlighting the economic pressures on voters.

Let’s dive into more detail below.

TRADING

Michael Burry's Q1 Portfolio Reveals Increased Chinese Tech Holdings, New Gold Investments, and Some Other Surprises

Michael Burry's Q1 2024 portfolio shows a shift to Chinese tech giants and gold, reducing holdings from 25 to 16

BREAKING NEWS
Michael Burry, the famed investor who made a fortune betting against the housing bubble in the 2000s, has made some notable moves in his portfolio, adding new positions and exiting others. In the first quarter of 2024, Burry slashed his holdings from 25 to 16, reducing his portfolio's size while increasing its overall value. He has upped his stakes in existing Chinese tech giants, added a new position in Baidu, and purchased physical gold, potentially signaling a shift towards a more defensive investment strategy.

WHAT HAPPENED
Burry's latest portfolio update reveals a strategy concentrating on high-conviction bets, particularly in the Chinese tech sector and gold. He has increased his holdings in Alibaba and JD.com, two of his most prominent positions while initiating a new position in Baidu, another leading Chinese internet company. In addition to these tech holdings, Burry has invested in the Sprott Physical Gold Trust, suggesting a potential hedge against economic uncertainty or market volatility. He also added several new energy holdings, including BP and First Solar. Notably, Burry has exited several positions, including Amazon, Alphabet, and Warner Bros. Discovery, highlighting his focus on streamlining his portfolio and prioritizing investments aligned with his current outlook.

Our chart illustrates Burry's top 10 holdings as of Q1 2024. JD.com and Alibaba dominate his portfolio, followed closely by HCA Healthcare and Citigroup, highlighting his focus on the healthcare and financial sectors. His investment in the Sprott Physical Gold Trust, his fifth-largest holding, is notable, signifying his potential concern regarding macroeconomic risks.

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INFLATION

Trump and the GOP Smell Blood as Inflation Under Biden Nears 20% During His Presidency

With Trump and Biden neck-and-neck in recent polls, inflation threatens to alienate key voter demographics

BREAKING NEWS
Despite cooling slightly in April, inflation under President Biden has surged by nearly 20%, a figure poised to be a significant hurdle in the upcoming 2024 election. This stark reality provides potent ammunition for Republican challengers like Donald Trump, who are eager to capitalize on economic anxieties. While economists cite various contributing factors, the persistent inflationary pressure threatens to overshadow Biden's campaign.

WHAT HAPPENED
The Consumer Price Index released on Wednesday revealed that prices have climbed over 19.4% since Biden took office, nearing the psychologically significant 20% mark. This cumulative increase starkly contrasts the 7.8% rise during Trump's presidency. While economists attribute these discrepancies to factors like COVID-19 disruptions and supply chain bottlenecks, the GOP aggressively highlights the 20% figure to sway voters concerned about their wallets.

The latest inflation data has sparked a fierce political debate, with Republicans seizing the opportunity to criticize the Biden administration's economic policies. They argue that the steep price rise directly results from excessive government spending and a lack of fiscal discipline. On the other hand, Democrats point to the unprecedented challenges posed by the pandemic and the need for robust economic support to prevent a prolonged recession. As both sides vie for public opinion, the inflation issue will likely remain a central theme in the lead-up to the 2024 election.

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EARNINGS

Walmart Exceeds Q1 Expectations with $161.51 Billion Revenue, Stock Jumps Nearly 7% in Early Trading

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BREAKING NEWS
Walmart, the behemoth of retail, has once again delivered a stellar performance, exceeding analyst expectations on revenue and earnings. This strong showing has sent the stock soaring, with an early jump of 7%, a testament to the company's resilience in a challenging economic landscape. While many retailers struggle with waning consumer spending, Walmart is bucking the trend, attracting customers across the income spectrum. This suggests that Walmart's focus on affordability and convenience resonates with consumers, driving strong growth and a robust outlook.

WHAT HAPPENED
Walmart's fiscal 2025 first quarter was a resounding success, showcasing the company's strategic prowess and adaptability. The retail giant achieved revenue of $161.51 billion, topping estimates of $159.58 billion, while adjusted earnings per share climbed to $0.60, exceeding expectations of $0.53. This growth was fueled by robust same-store sales, particularly at Sam's Club, where membership income surged by more than 13%. Meanwhile, the company's namesake stores saw a 3.8% increase in same-store sales, driven by more frequent customer visits. Walmart's e-commerce sales skyrocketed, fueled by a surge in the online marketplace and pickup/delivery services, reflecting the company's continued evolution toward digital dominance.

This strong performance is also evident by data from Placer.ai, which tracked foot traffic to various retailers. The data in our graph shows that Walmart continues to dominate the retail landscape, with a significant share of visits compared to other large retailers. This dominance is particularly pronounced in the South and Midwest regions, where Walmart enjoys a clear market leadership position. These data points clearly show Walmart's commanding presence in the retail market and its ability to attract customers in various locations across the country.

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1. Under Armour Announces Layoffs Amid North American Sales Decline

Under Armour is reducing its workforce as the company faces a sharp decline in sales within its largest market, North America. This downturn is attributed to consumers cutting back on discretionary spending on apparel and footwear due to inflation.

2. Ray Dalio Warns of Civil War Risk in the U.S.

Billionaire investor Ray Dalio, founder of Bridgewater Associates, has expressed concerns that the U.S. is approaching a potential civil war. Dalio recommends diversifying investments to stable regions such as Malaysia and Vietnam and focusing on the most secure parts of the U.S.

3. Biden Administration Boosts U.S. Solar Manufacturing

The Biden-Harris administration is taking significant steps to enhance American solar manufacturing capacity and shield it from unfair Chinese trade practices, fueled by incentives from the President’s Inflation Reduction Act.

4. EU Investigates Instagram and Facebook for Child Addiction Risks

The European Union has launched an investigation into Meta Platforms, the parent company of Instagram and Facebook, over concerns that these platforms may be causing addiction and harm to children. The investigation focuses on whether Meta is taking sufficient measures to safeguard young users.

5. Reddit Partners with OpenAI to Train AI Models on Its Data

Reddit announced a partnership with OpenAI, allowing the AI company to train its models using Reddit content. This collaboration is expected to enhance the capabilities of OpenAI's ChatGPT and other AI systems.

6. Spirit AeroSystems to Lay Off 400 Employees Amid Boeing Production Slowdown

Spirit AeroSystems plans to lay off around 400 workers in Wichita, Kansas, according to an internal memo. The layoffs are a response to high debt and reduced production rates from its primary customer, Boeing.

7. Asian Stocks Expected to Decline as Traders Rethink Rate Cuts

Asian stocks are projected to open lower as traders reconsider the likelihood of future interest rate cuts. This shift in sentiment follows a reevaluation of the optimistic response to Wednesday’s U.S. inflation data.

8. Hedge Fund Exits GameStop Bet Before 550% Spike

Paul Tudor Jones' hedge fund had call and put options on GameStop stock during the fourth quarter of 2023. However, these positions were no longer in the firm's portfolio by March, missing the stock's dramatic 550% surge.

9. Nordstrom Settles Lawsuit Over Selling Counterfeit Patagonia Products

Patagonia has agreed to settle a lawsuit against Nordstrom after accusing the retailer of selling "obvious counterfeits" of its products.

10. GTA 6 Release Date Set for Fall 2025 Amid Delay Concerns

Take-Two Interactive has announced that Grand Theft Auto 6 will be released in fall 2025. CEO Strauss Zelnick expressed confidence in meeting this new timeline, addressing questions about potential delays.

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Today's insights are courtesy of Heritage Capital Group, a 3rd generation family office with over $750 million and 6 million square feet of assets under management. For the first time in their history, they are offering the opportunity for accredited investors to join them in their next acquisition.

Learn More ➔

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