Stock Market Crash Michael Burry: Michael Burry, the renowned investor famously depicted in “The Big Short” for his accurate prediction of the 2008 housing market crash, has invested over $1.6 billion in anticipation of a Wall Street downturn.
According to filings released by the Securities and Exchange Commission on Monday, Burry is making bearish wagers against the S&P 500 and Nasdaq 100. His investment firm, Scion Asset Management, has acquired put options valued at $866 million against an S&P 500 tracking fund and $739 million in put options against a Nasdaq 100 tracking fund.
Burry’s commitment to betting on a market decline is substantial, accounting for more than 90% of his portfolio, as per the filed documents.
Despite this firm stance, Burry’s sentiment towards the stock market has displayed some wavering throughout the year. In January, he cryptically tweeted “Sell” to his 1.4 million followers, but by the end of March, he reversed his position, admitting, “I was wrong to say sell.”
Year-to-date, the S&P 500 and Nasdaq 100 have recorded significant gains of nearly 16% and 38%, respectively.
Notably, during the mid-2000s, Burry achieved prominence for his successful bet against the housing market, reaping substantial profits from the subprime lending crisis and the subsequent collapse of major financial institutions in 2008. This episode was chronicled in Michael Lewis’s best-selling book “The Big Short: Inside the Doomsday Machine,” later adapted into a film in which Christian Bale portrayed Burry.
Repositioning Away from Regional Banks and Chinese Stocks
Scion Asset Management is undergoing a shift in its holdings, divesting from several regional banks. Notably, it sold off its 150,000 shares in First Republic Bank (FRC) and holdings in Huntington Bank PacWest (PACW) and Western Alliance (WAL). The timing of these sales in relation to JPMorgan Chase’s acquisition of First Republic Bank in May remains unclear.
Additionally, Burry has reversed his position on Chinese stocks, selling his shares in JD.com (JD) and Alibaba (BABA) during the second quarter of the year.
Selected Investments and Past Performance
Among Scion’s current portfolio, approximately 6% consists of long positions. During the second quarter, Burry’s exposure to the travel and healthcare sectors increased, with investments made in Expedia Group (EXPE), MGM Resorts (MGM), CVS (CVS), and Cigna (CI). Burry also acquired $4.7 million worth of shares in CNN’s parent company Warner Bros. Discovery (WBD) and invested $3.3 million in the online second-hand retailer, The RealReal (TRR).
While Burry’s optimistic bets hold significance, his bearish predictions often draw greater attention within financial circles. Although past success does not guarantee future returns, Burry boasts a strong investment track record. An analysis by Sure Dividend indicates that traders who followed Scion’s disclosed investments over the past three years (from May 2020 to May 2023) would have achieved annualized returns of 56%, surpassing the S&P 500’s annualized returns of approximately 12% during the same period.
