Michael Burry's Top 3 Defensive Picks Amid Market Volatility

Michael Burry, a finance expert and star of "The Big Short," has shifted his portfolio to focus on quality companies that can weather economic storms. He initiated new positions in three companies in Q2, including UnitedHealth (UNH), which is the nation's largest health insurer. Despite regulatory scrutiny and public criticism, UNH's dominant market position and essential services make it a defensive play during economic uncertainty. Burry also acquired shares of ExxonMobil and Alphabet, which demonstrate his focus on established companies with strong fundamentals.

Legendary investor Michael Burry, known for his prescient predictions in "The Big Short," has shifted his investment strategy to focus on quality companies that can withstand economic storms. In Q2, Burry's hedge fund, Scion Asset Management, initiated new positions in three companies, including UnitedHealth Group (UNH), ExxonMobil (XOM), and Alphabet Inc. (GOOGL), reflecting his confidence in their long-term prospects.

UnitedHealth Group, the nation's largest health insurer, has been navigating a complex landscape of challenges and opportunities. Despite regulatory scrutiny and public criticism, UNH's dominant market position and essential services make it a defensive play during economic uncertainty. The company's diversified operations across health insurance and healthcare services provide a robust foundation for growth.

Burry's bullish stance on UNH comes as the company faces significant headwinds in its Medicare Advantage business and regulatory scrutiny. The company's first-quarter results for 2025 fell short of expectations, prompting a suspension of guidance for the year. However, UnitedHealth maintains strong fundamentals with a P/E ratio of 13.15 and robust free cash flow yield [2].

The return of Stephen Hemsley as CEO is seen as a strategic reset, focusing on margin improvement over growth in its Medicare Advantage book by 2026. The leadership transition is viewed by some analysts as a positive step towards addressing current issues and repositioning the company for future success.

While UnitedHealth faces significant hurdles in its Medicare Advantage business, its Optum segment continues to be a key differentiator. The company's overall EBITDA remains substantial, though OptumHealth has experienced margin pressures. The company's ability to improve margins in this segment will be crucial for its overall financial performance and growth prospects.

Adding to UnitedHealth's challenges is the ongoing regulatory scrutiny, including a reported Department of Justice investigation into allegations of overbilling. While the company has faced similar investigations in the past without significant long-term impact, the current probe adds an element of uncertainty to UnitedHealth's near-term outlook.

Despite the current challenges, many analysts maintain a positive long-term outlook for UnitedHealth. The company's scale, diversified operations, and strong market position are seen as key strengths that will help it navigate the current headwinds. Analysts anticipate a potential return to double-digit earnings growth by 2026, driven by improvements in Medicare Advantage rates and the company's ability to adjust its strategies in response to market changes.

Michael Burry's focus on established companies with strong fundamentals, such as UnitedHealth, ExxonMobil, and Alphabet Inc., reflects his confidence in their ability to weather economic storms. These companies' dominant market positions and robust financial positions make them attractive investments during periods of economic uncertainty.

References:

[1] https://dailyhodl.com/2025/08/21/big-shorts-michael-burry-pours-383030000-into-a-bullish-bet-on-four-stocks-including-one-major-dow-30-play/
[2] https://www.investing.com/news/swot-analysis/unitedhealths-swot-analysis-stock-faces-challenges-amid-margin-pressures-93CH-4197246