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Why Did Michael Burry Exit HCA in Q1 2025?
Michael Burry’s portfolio moves always spark personal intrigue–especially when they run counter to what seems like obvious macroeconomic logic. Case in point: after initiating a position in HCA Healthcare (NYSE: HCA) in Q4 2024, Burry fully exited the stake just one quarter later in Q1 2025. The sale came right before the stock rallied–puzzling, given my understanding of HCA’s profile as a non-cyclical, inflation-resilient, and tariff-insulated operator in a slowing macroeconomic environment.
So why did Burry bail?
Let’s try to figure this out.
HCA in a Slowing Economy
On the surface, HCA looked like a textbook defensive Burry long heading into 2025:
- Defensive Business: HCA is a pure-play hospital operator. Inpatient and emergency care demand tends to hold up even during recessions. As GDP contracted -0.3% in Q1 2025 (first negative print since early 2022), healthcare remained one of the few resilient sectors.
- Tariff-immune: Services-based model with domestic operations. No real exposure to global supply chains or cross-border trade frictions, making it well-suited for an environment with sticky inflation and rising geopolitical tension.
- Rate-sensitive balance sheet: HCA carried ~4.5x net leverage as of YE 2024–moderately levered for a stable cash-flow generator. With markets broadly expecting the Fed to begin gradual rate cuts by late 2025 or early 2026 (primarily subject to the Fed killing off inflation, so this is admittedly an evolving situation), Burry may have initially seen HCA as a pointed future beneficiary of falling debt servicing costs, among the other listed factors.
- Inflation pass-throughs: Hospitals are labor-intensive, but HCA has a strong history of managing wage pressure through scale and payer mix. Commercial payers account for a significant portion of revenue and are typically renegotiated annually.
- Strong FCF conversion: HCA has historically converted over 80% of adjusted EBITDA to free cash flow, supporting buybacks and deleveraging–both tailwinds in a volatile macro backdrop.
In other words, HCA checks all the boxes for a classic “macro shield”–the kind of stock Burry would normally hang on to during an uncertain, potentially turbulent economic backdrop.
So Why Did He Sell?
Let’s break down the most objective and likely reasons behind Burry’s sudden, initially confusing exit:
1. Position Rebalancing for Concentrated Shorts
Burry significantly ramped up his short exposure in Q1 2025–namely in NVDA (~48%) and Chinese tech names (~44% combined). His portfolio went from mildly contrarian to deeply asymmetric–a move that likely required reallocating capital.
Given his preference for lean, high-conviction bets, HCA may have been sold to fund higher-opportunity trades, even if he remained fundamentally positive on the business–this is the first reason that crossed my mind.
2. Valuation Already Re-Rated
By Q4 2024, HCA was no longer “cheap.” After trading near 10x EBITDA and 13x forward earnings during 2023’s volatility, HCA rerated to ~16x forward EPS by early 2025–back near historical averages. Burry may have viewed this as a fully priced defensive with limited upside.
3. Upcoming Earnings + Seasonal Headwinds
Hospitals often experience Q1 softness due to seasonality (e.g. post-holiday procedural delays, flu-related cost spikes). With medical cost inflation still uncertain, Burry may have viewed Q1 earnings risk/reward as unattractive in the near term–especially if labor issues or Medicaid reimbursement noise flared up–this is a fairly myopic reason, and I don’t think Dr. Burry would put too much weight on this, but it is still nevertheless possible.
4. Sector Rotation + Opportunity Cost
In Q1 2025, the market narrative shifted sharply back to AI and tech momentum, driven by blowout results from NVDA, MSFT, and META. Defensive names like HCA underperformed on relative flows. Burry likely calculated that capital deployed into shorting frothy trades (like NVDA at 30x sales) would yield greater asymmetry than clinging to a modestly valued defensive.
But the Trade Worked–Just Not for Him
Since Burry’s Q1 2025 exit, HCA has outperformed. It delivered solid Q1 earnings, reaffirmed guidance, and demonstrated margin resilience amid cost pressure–all of which boosted investor confidence.
But at the end of the day, that’s Burry:
He doesn’t aim for perfect timing–he aims for maximum risk-reward skew, even if that means leaving some money on the table.
In this case, his exit was likely tactical–not an indictment of the business.
Final Thought
While HCA fits the mold of a defensive winner in a slowing economy, Burry’s sell likely had less to do with HCA’s fundamentals and more to do with portfolio mechanics and conviction hierarchy.
He needed to bet big where he saw the biggest mispricings. And in Q1 2025, that meant allocating away from “good businesses at fair prices”–and toward shorting what he believed were great narratives at absurd valuations.
In short? It wasn’t a knock on HCA. It was a statement on everything else and a seasoned sharp-shooter finding a large opportunity in the crosshairs.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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