Michael Burry sees an opportunity in beaten-down software stocks.
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The prominent investor, whose bet against the subprime mortgage market was chronicled in the book and film The Big Short, continues to make contrarian moves in the stock market. In his latest substack post, Burry highlights that he has been buying unloved software stocks as their share prices have fallen.
Burry notes that he has taken positions in Autodesk (ADSK) and Veeva Systems (VEEV), and added to an existing holding in Adobe (ADBE). Each of the three stocks is down more than 20% this year as fears of disruption from artificial intelligence (AI) has led investors to dump software names.
Burry’s Contrarian Moves
In his substack newsletter, called “Cassandra Unchained,” Burry writes that he sees an excellent opportunity to buy high-quality software stocks as the market has punished the group collectively since the start of the year, stressing that the current selloff is overdone.
“The credit side for software is not large enough to continue driving these stocks lower for much longer,” wrote Burry. The investor previously highlighted his position in ADBE stock, saying that fears of AI disruptions had become irrational and pushed valuations down to more attractive levels.
Comparing Software Stocks
Below is a chart comparing the three software stocks purchased by investor Michael Burry. As one can see, each stock has upside potential exceeding 30%, which reflects now much each security has been beaten down this year.
