Michael Burry bought shares of small-cap Bruker. Should we follow his example?

In late April, iconic investor and founder of Scion Asset Management Michael Burry announced on the Cassandra Unchained blog that he had purchased preferred shares of laboratory equipment manufacturer Bruker Corporation. It is Series A convertible preferred stock (ticker BRKRP) with a coupon of 6.375% and mandatory conversion on September 1, 2028.

Notably, Burry opted not for common stock but for preferred securities, which Bruker placed in September 2025 for $690 million (including the exercise of the underwriters' option). The liquidation value per preferred share is $250, and upon conversion, each paper exchanges for 6.95 to 8.52 shares of common stock, depending on the weighted average price for the 20 trading days prior to the conversion date.

Until conversion, the holder receives a cumulative quarterly dividend of $3.98 per share, with the company paying dividends without skips since the September 2025 offering. In this way, Burry receives a steady income in excess of 6% per annum in the form of dividends, while still participating in the potential growth in the value of the business.

Bruker is a manufacturer of high-tech scientific equipment founded in 1960 in Massachusetts. The company holds leading positions in nuclear magnetic resonance, atomic force microscopy and X-ray analysis.

The company's equipment is used in pharmaceuticals, biotechnology, semiconductor industry, academic research and clinical diagnostics. The company's business is structured into four operating segments - this ensures diversification in terms of product line. In addition, a significant portion of revenue is generated in Europe and Asia, which reduces the company's dependence on the budgetary policies of individual countries and mitigates regional cyclical risks.

Last year proved to be a challenging one for Bruker. At the end of the year, revenue amounted to $3.44 bln, up 2% year-on-year, but declined organically by 4%. The main pressure came from reduced academic funding in the US, tariff restrictions and currency fluctuations. Notably, Bruker is a public company with the founder's family retaining control. Prof. Günther Laukien founded the business in 1960, and today his son Frank Laukien serves as CEO. Despite widespread criticism of family governance for being overly conservative, in Bruker's case this model has ensured consistency of strategy - both in M&A and research investments - for more than six decades.

Revenue reached $977.2 million in the fourth quarter of 2025, essentially unchanged from the same period in 2024, on an organic decline of 5.1%. Adjusted earnings per share fell to $1.83 from $2.54 a year earlier, and adjusted operating margin in the fourth quarter declined to 15.7% from 18.1% a year earlier.

It is this gap between weak current performance and recovery expectations that may be the investment idea that caught Burry's attention. For 2026, management forecasts revenue in the range of $3.57-$3.6 billion (4-5% year-over-year growth) with organic growth of 1-2% and adjusted EPS of $2.1-$2.15, which implies 15-17% year-over-year growth - even though the strong dollar is "eating" some of the growth.

The key question is how the company plans to achieve such a marked improvement in operating margins - from 10% adjusted operating margin in the first quarter to about 20% by the end of the fourth quarter of 2026. After speaking with Bruker CEO Frank Laukien at the AGBT (Advances in Genome Biology and Technology) conference, Leerink Partners analysts noted his confidence in achieving the stated milestones. According to Leerink Partners analysts, the company expects additional cost savings of $20 million-$25 million on top of the previously announced $120 million, raising the total cost optimization program to $140 million-$145 million in annualized terms. In addition, the first quarter order-to-shipment ratio indicates portfolio growth, and second quarter visibility suggests a recovery in organic growth in the 3-4% range.

At the AGBT conference, Bruker presented its PaintScape platform for genome visualization at the level of individual cells. With an expected price of less than $1 million, the technology could become widespread in spatial biology labs.

Burry's decision is notable not so much for its choice of a particular issuer as for the structure of the position: mandatory convertible preferred stock provides coupon income, partially protects against further price declines, and simultaneously provides participation in a potential recovery in the value of the business.

Bruker will report on the first quarter of 2026 on Ma 6 to show whether the operating margin turnaround announced by management is starting to materialize. Investors should pay attention to order dynamics, progress on the cost reduction program and the pace of commercialization of new platforms.

The company is of interest primarily to those willing to accept medium-term volatility in exchange for upside potential, provided the macroeconomic environment does not deteriorate radically. As with most of Burry's bets, the key question is not whether he will be right, but whether those who decide to follow him will have the patience.

At the time of publication, Bruker's common stock is trading near $37 and preferred stock near $290. The company has a market capitalization of about $5.5 billion. Wall Street analysts track Bruker's common stock (ticker BRKR), not the preferred stock that Burry bought. In late March, J.P. Morgan reiterated an "above market" (buy recommendation) for Bruker stock with a $45 target price going forward through the end of December 2026. That means the stock could rise about 22% from its closing price on Ma. 4. As the key risks, analyst Casey Woodring J.P. Morgan named possible weakening of demand in China, deterioration of macroeconomic environment, risk of losing market share in the nuclear-magnetic resonance segment, as well as difficulties with integration of acquired assets.

Leerink Partners analyst Punit Sood also assigned an "above market" recommendation in a report dated February 23, 2026, noting strong order momentum, management's confidence in organic growth in the second quarter and additional cost savings potential.

According to MarketWatch, the stock has nine buy recommendations, six hold recommendations and only one sell recommendation. The average target price is $46.5, implying a potential upside of nearly 26.5%.

This material is for informational purposes and does not constitute personalized investment advice.