Michael Burry, who now runs Scion Asset Management, has been skeptical about the market’s rapid climb for several years now.
Recently, Burry disclosed a large bearish position in one of the hottest artificial intelligence stocks.
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Michael Burry of Scion Asset Management made a name for himself as one of the few investors who spotted the housing bubble of the mid-2000s before it popped, triggering first the mortgage crisis and then the Great Recession. He and his fund at the time reaped hundreds of millions of dollars in profits after purchasing credit default swaps on mortgage-backed securities that paid out when the value of those securities cratered. Burry, along with a handful of other investors who saw the mortgage crisis coming, was a subject of the bestselling book The Big Short, which was later made into a movie of the same name.
Burry has been bearish about the U.S. stock market broadly for several years now. But in his recent call, the former Stanford neurology resident seems more bearish than he has in the past — or at least, he’s being more outspoken about it. And in the third quarter, Burry made a big bet against a high-flying artificial intelligence stock that is up by more than 1,290% in the past five years.
In a recent 13F filing, Scion Asset Management disclosed that in the third quarter, the fund purchased 5 million put options with a notional value slightly over $912 million on AI data analytics company Palantir (NASDAQ: PLTR). Scion also purchased 1 million puts on Nvidia. The firm further sold many of its holdings from the second quarter and purchased several new long positions as well. Burry has frequently changed the composition of Scion’s portfolio in recent years.
He has been on and off of X, posting infrequently, sometimes when he is concerned about the state of the market. Interestingly, though, he seems a lot more outspoken lately. He’s posted several tweets in recent weeks to assert that the market is in a bubble.
One of these tweets included several charts. One chart showed that cloud growth has slowed in recent years compared to the years prior; another showed that U.S. technology capital expenditure growth has reached a level not seen since the dot-com bubble; and the third showed how spending from Nvidia and OpenAI is fueling much of the AI sector.
I find it interesting that Scion submitted its 13F to the Securities and Exchange Commission before the required deadline. Banks, brokers, and institutional-scale investment managers like Burry must report on the contents of their portfolios as of the end of each quarter, no later than 45 days after the end of that quarter. For the third quarter, that would be Nov. 14. Many funds and managers wait until the very last day before they give the public that glimpse into their portfolios. For instance, Warren Buffett’s Berkshire Hathaway never seems to file its 13Fs before the day of the deadline. Scion also filed its 13F on the same night Palantir reported earnings, another interesting coincidence.
