August 2023
More than $1.6 billion has been wagered on a Wall Street disaster by Michael Burry, the “Big Short” investor who rose to fame for correctly predicting the historic collapse of the housing market in 2008.
The S&P 500 and Nasdaq 100 are the targets of Burry’s bearish wagers, according to SEC documents made public on Monday. In order to sell an asset at a specific price, Burry’s fund, Scion Asset Management, purchased put options worth $866 million against a fund that tracks the S&P 500 and put options worth $739 million against a fund that tracks the Nasdaq 100.
More than $1.6 billion has been wagered on a Wall Street disaster by Michael Burry, the “Big Short” investor who rose to fame for correctly predicting the historic collapse of the housing market in 2008.
The S&P 500 and Nasdaq 100 are the targets of Burry’s bearish wagers, according to SEC documents made public on Monday. In order to sell an asset at a specific price, Burry’s fund, Scion Asset Management, purchased put options worth $866 million against a fund that tracks the S&P 500 and put options worth $739 million against a fund that tracks the Nasdaq 100.
Burry was well-known for betting against the housing market in the middle of the 2000s, and he made a tidy profit in 2008 when several significant financial institutions collapsed due to the subprime lending crisis. A movie based on Michael Lewis’ best-selling book “The Big Short: Inside the Doomsday Machine” starred Christian Bale as Burry and detailed the event.
Burry’s fund also sold its 150,000 shares of First Republic Bank and its holdings in Huntington Bank PacWest and Western Alliance as part of this divestiture. It’s unclear if these sales occurred prior to or following JPMorgan Chase’s acquisition of First Republic Bank in May.
Burry also reversed course on Chinese stocks – selling his shares of JD.com and Alibaba in the second quarter of the year.
Burry and his Scion team are placing bets on a few names.
He extended his exposure to the travel and healthcare sectors in the second quarter of the year by buying shares of Expedia Group, MGM Resorts, CVS, and Cigna. About 6% of the company’s stock portfolio is long.
Burry also invested $3.3 million in online second-hand shop The RealReal and $4.7 million worth of shares in Warner Bros. Discovery, the business that owns CNN.
However, Michael Burry’s negative forecasts frequently receive more attention than his bullish wagers in the financial community.
Burry has a solid track record of investments, even though one large payout does not guarantee future returns. According to a Sure Dividend analysis, investors who had followed Scion’s investments throughout the previous three years, from May 2020 to May 2023, would have earned annualized returns of 56%. The S&P 500 experienced annualized returns of nearly 12% during the same time frame.
