'Downgrade Game' investor names a stock to hold for a lifetime
Michael Burry believes there will still be opportunities for investors to buy Samsung stock at an attractive price
Samsung's market value surpassed $1 trillion in May amid the AI boom / Photo: Sybillla / Shutterstock.com
Investor Michael Burry, who became the prototypical character in the movie "Downgrade" about the mortgage crisis, sees Samsung Electronics as a long-term asset that may never be sold. He wrote about it in his blog Cassandra Unchained on Substack.
The company's stock has appreciated 470 times since the 1998 crisis, posting an average annual return of about 24.6 percent, Burry wrote. Samsung Electronics is now the "homecoming queen," he said. The stock surged more than 15% in May amid the AI boom, and its market value has surpassed $1 trillion. But last year, the company's shares traded near the book value of tangible assets, Burry writes. He used the opportunity to buy Samsung securities - and made the company one of the three largest positions in his then-underperforming Scion Asset Management fund.
"As soon as Samsung Electronics stock drops to net tangible asset value, take it right away. Period. No extra analytics. Okay, figure out the business one time. And then just buy that stock at net asset value for the rest of your life."
Over the past 30 years, Burry says, Samsung has given the opportunity to buy common stock at tangible book value eight times. Samsung remains a cyclical company, the investor writes, so its stock has returned to this level many times before and, in his estimation, will return again.
That said, Samsung's securities recovered sharply after the 1998 Asian currency crisis, and Burry's assessment is that the price went forward too quickly.
"But even after this rally, the stock proved to be a great long-only investment, albeit one that yielded slightly less - 15% per annum. Perhaps it was better to wait until the price touched net book value again. If you buy from that point, the average annualized return up to today again jumps above 20%. It is always wise to get into a security on downturns, at the balance sheet line, even if the plan is to hold it for the long term"
This article was AI-translated and verified by a human editor
