Michael Burry Of The Big Short Fame Is Betting Against The S&P 500 And Nasdaq
EDITOR'S NOTE: Michael Burry, famed for his subprime mortgage crisis prediction, has resurfaced with bold market moves. His hedge fund, Scion Asset Management, has taken a bearish stance on the latter half of 2023, investing in put options against the SPDR S&P 500 ETF Trust and Invesco QQQ ETF. Burry's actions reflect his skepticism towards the stock market's trajectory, while leaving industry observers intrigued by the underlying motivations driving his strategic choices. Is this a boon for precious metals and a bust for all other equities and dollar-based assets? Read on to find out.
(Kitco News) - Michael Burry became famous for his call on the subprime mortgage crisis as depicted in Michael Lewis’ book “The Big Short” and the subsequent Oscar-winning movie of the same name. Burry is now betting against the success of the stock market in the second half of 2023, according to a recent filing by his hedge fund, Scion Asset Management.
According to a Monday 13F filing by Scion, Burry has opened put options against 2,000,000 shares of the SPDR S&P 500 ETF Trust, an ETF that tracks the S&P, and he also sold most of the fund’s stakes in bank stocks during the second quarter.
Put options increase in value as the price of the underlying asset falls.
The value, strike price, and expiry of the 20,000 put contracts are unknown, but the value of the shares they are against was $886.6 million at the end of June.
Scion also holds puts against 2,000,000 shares of the Invesco QQQ ETF, which tracks the Nasdaq. These 20,000 contracts were against shares worth $738.8 million at the end of Q2.
Burry’s bearish outlook is further highlighted by the fact that the next largest investment by Scion after the put options on the SPDR and QQQ ETFs is an $11 million investment in Expedia.
Source: Kitco News
It’s important to note that this filing outlines Scion’s holdings at the end of Q2, and it's possible that the firm has already exited or modified those positions. The trades could also serve as a hedge against other bets Scion is making.
Since the start of Q3, the S&P has increased by 0.7%, and QQQ has decreased by 0.3%
Along with the put contracts, Scion also dumped its stakes in a host of banks, including First Republic Bank, Capital One Financial, Huntington Bancshares, PacWest Bankcorp, Wells Fargo, and Western Alliance. It also trimmed its holdings in New York Community Bancorp from 850K shares to 200K and exited positions in Alibaba and Devon Energy.
New stakes were taken in Charter Communications, Generac, CVS Health, MGM Resorts, Vital Energy, Stellantis and Comstock Resources.
Kitco News reached out to Burry for a comment on Scion’s recent moves, but had yet to receive a reply at the time of publication, and his X profile currently has no statements as Burry has deleted all previous posts.
