Back in March 2024 – at the very end of the first quarter (Q1) of 2024 – Advance Auto Parts (NYSE: AAP) appeared to be one of the best holdings in the portfolio of ‘The Big Short’ investor Michael Burry.
At that time, AAP shares were up 36% in the year-to-date (YTD) chart and had made approximately $3 million for the famous trader.
By press time on August 28, things had changed significantly as the automotive aftermarket parts provider’s stock retraced almost 50% through Q2 and the first two months of Q3 of 2024 in a series of plunges.
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Fortunately for Burry, the latest update to his portfolio revealed that he has sold his entire stake in Advance Auto Parts, thus saving himself from at least a part of AAP’s stock market downfall.
How much did Michael Burry save by selling AAP stock in Q2, 2024?
Indeed, while it is impossible to tell at which point during the second trimester of 2024 he sold the shares, he may have evaded as much as $3 million in losses had he sold already in early April when the price was still near $80.
In contrast, AAP’s price today, at press time, stands at $47.67, and was at approximately $63 on the final day of June – the last date on which the sale could have occurred.
Additionally, even if ‘The Big Short’ investor sold only at the tail end of the second quarter – a time when the stock had already declined by $20 from its yearly highs – he would have still managed to avoid $1 million in losses that would have occurred had it kept the stock past the disappointing earnings report, published in late August, that drove the price down below $50.
Did Michael Burry turn a profit on his AAP stock investment?
Elsewhere, it is certain that Burry not only evaded the loss by making the well-timed sale but also picked the right time to purchase the original 70,000 AAP shares.
In the final trimester of 2023, the time Scion Asset Management took a position in Advance Auto Parts, the stock was trading in the range between roughly $48 and $65. This means that, unless the American investor sold at AAP’s Q2, 2024 lows and bought in Q4, 2023 highs, he turned a profit on the trade.
Again, however, it is not possible to determine the hedge fund manager’s exact returns as the 13-f filings only reveal which trades occurred within a quarter and not their precise timing.
Similarly, the profitability of the 15,000 AAP shares purchased during the first quarter of 2024 is uncertain as the stock reached its yearly highs within the trimester and was below them for the entirety of Q2 – the time of the sale.
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