Magnera Corporation: Burry's Bold Bet on Specialty Materials in a Volatile Market

Michael Burry, the legendary investor known for his contrarian bets, has once again pivoted toward the unconventional. In his Q4 2024 SEC filing, Scion Asset Management disclosed a new position in Magnera Corporation (MAGN), allocating 4.69% of its portfolio to the specialty materials firm. This move underscores Burry’s strategy to diversify beyond traditional tech giants and into sectors with untapped potential. But what makes Magnera worth the risk?

The Magnera Playbook
Magnera operates in the $50 billion global specialty materials market, serving industries as varied as consumer products, healthcare, and construction. Its products—absorbent hygiene materials, protective apparel, and industrial wipes—are embedded in everyday life, a defensive quality that aligns with Burry’s focus on “consumer and specialty stocks.” With 46 facilities worldwide and 9,000 employees, Magnera’s scale positions it to capitalize on demand for high-performance materials, particularly in emerging markets.

Yet its recent financial performance is a mixed bag. In Q2 2025, revenue surged 48% to $824 million, driven by the merger with Glatfelter (GLT). However, operating income plummeted to $4 million from $21 million year-over-year, as rising energy costs and currency headwinds offset merger synergies. The company also lowered its full-year Adjusted EBITDA guidance to $360–$380 million, down from prior targets.

The Numbers Beneath the Noise
While GAAP metrics paint a volatile picture, Magnera’s non-GAAP Adjusted EBITDA rose 17% to $89 million in Q2, fueled by the GLT merger. CEO Curt Begle emphasized that free cash flow remains a priority, reaffirming a post-merger target of $75–$95 million for 2025. This is critical: Magnera’s net debt stands at $1.7 billion, and deleveraging hinges on sustained cash generation.

The Risks—and Why Burry Might Still Win
The negatives are clear. Energy costs in Europe, which Magnera calls a “key pressure point,” could further squeeze margins. Currency fluctuations, particularly in South America and Asia, have already dented sales and EBITDA. Meanwhile, Magnera’s reliance on the merger’s synergy benefits leaves little room for error in integration.

But Burry isn’t buying Magnera’s past—he’s betting on its future. The stock trades at just 6.2x its 2025 EBITDA guidance, a steep discount to peers like Berry Global (BERY), which trades at 8.5x. If Magnera can stabilize its European operations and leverage its broad portfolio—spanning healthcare supplies to building materials—it could outperform.

The Bottom Line
Magnera’s valuation and strategic positioning suggest upside potential, but only if it executes. With $282 million in cash and a disciplined focus on free cash flow, Magnera could reduce its leverage ratio from 3.9x to a healthier 3.0x by 2026, creating shareholder value. Burry’s 200,000-share stake—valued at $3.6 million—may seem small, but it represents a deliberate shift into a niche market with low institutional ownership.

For investors willing to endure short-term volatility, Magnera’s mix of defensive products, underfollowed stock, and Burry’s imprimatur offers asymmetric reward potential. The question isn’t whether Magnera will face hurdles—it already has—but whether it can convert its global scale and merger synergies into consistent cash flow. If so, Burry’s bet could be the next chapter in his contrarian legacy.