Michael Burry, whose rise to prominence began with his uncanny prediction of the 2008 housing market crash, a feat immortalized in the book and film adaptation, "The Big Short" - is now bearish again.
What’s happening?
- Burry is making headlines once again, this time for his bearish outlook on the market.
- We look into Burry's investment portfolio with his top holdings freshly extracted from his latest 13F filings.
Fun Fact:
Like Bill Gates, Burry has invested in US farmland with a focus on water resources, recognizing the critical importance of water scarcity and its potential impact on the global economy.
Michael Burry's Bearish Positioning
His portfolio is valued at a commanding $1.73 billion. At the heart of his current strategy is a substantial 'Big Short' position, this time targeting the U.S. stock market.
Just a month ago, Burry made waves by shorting U.S. equities, purchasing 40,000 put options contracts tied to SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ) – two major exchange-traded funds (ETFs). These positions, together, make up over 93% of his portfolio, with SPY accounting for 51% and QQQ for 42.5%.
Michael Burry’s current holdings
The top 20 securities held by Burry’s hedge fund Scion Asset Management are as follows:
|
Security |
Ticker |
Shares |
Value |
% Portfolio |
|
Spdr S&P 500 ETF Trust PUT |
SPY |
2,000,000 |
$886,560,000 |
51.04% |
|
Invesco Nasdaq Trust PUT |
QQQ |
2,000,000 |
$738,840,000 |
42.54% |
|
Expedia Group Inc. |
EXPE |
100,000 |
$10,939,000 |
0.62% |
|
Charter Communications Inc. |
CHTR |
25,000 |
$9,184,250 |
0.52% |
|
Generac Holdings Inc. |
GNRC |
55,000 |
$8,202,150 |
0.47% |
|
Cigna Group |
CI |
27,500 |
$7,716,500 |
0.44% |
|
Cvs Health Corp |
CVS |
100,000 |
$6,913,000 |
0.39% |
|
Mgm Resorts International |
MGM |
150,000 |
$6,588,000 |
0.37% |
|
Stellantis N.v. |
STLA |
325,000 |
$5,700,500 |
0.32% |
|
Vital Energy Inc. |
VTLE |
125,000 |
$5,643,750 |
0.32% |
|
Signet Jewelers Ltd |
SIG |
85,000 |
$5,547,100 |
0.31% |
|
Warner Bros Discovery Inc |
|
375,000 |
$4,702,500 |
0.27% |
|
Geo Group Inc |
GEO |
600,000 |
$4,296,000 |
0.24% |
|
Liberty Latin America Ltd. |
LILA |
450,000 |
$3,879,000 |
0.22% |
|
Nextier Oilfield Solutions Inc. |
NEX |
400,000 |
$3,576,000 |
0.20% |
|
Therealreal Inc. |
REAL |
1,500,000 |
$3,330,000 |
0.19% |
|
Star Bulk Carriers Corp |
SBLK |
184,740 |
$3,269,898 |
0.18% |
|
Crescent Energy Co |
CRGY |
243,963 |
$2,542,094 |
0.14% |
|
Nexstar Media Group Inc. |
NXST |
15,000 |
$2,498,250 |
0.14% |
|
Comstock Resources Inc |
CRK |
200,000 |
$2,320,000 |
0.13% |
Source: Insidermonkey.com
Why is Burry Bearish?
Burry's bearishness is influenced by his assessment of the Federal Reserve's rate hikes and their yet-to-be-seen real effects on the economy. Historically, rapid rate hikes by the Fed have often preceded economic downturns, and he remains wary of this possibility.
Burry has also expressed concerns about the sustainability of the recent market rally, fueled in part by the AI hype, which has driven technology stocks to new highs. He, like some other analysts, views this AI-led boom as a potential bubble that could burst.
The Burry Investment Strategy
Burry's investment decisions are characterized by his contrarian approach, seeking out market anomalies and discrepancies. In his eyes, the market may be underestimating certain risks or overestimating the sustainability of current trends, leading him to make bold bets against prevailing market sentiment.
How Burry Could Get it Wrong
As a contrarian, the biggest risk is often timing. The success of Burry's short positions in major ETFs like SPY and QQQ depends on the precise timing of market corrections, which can be notoriously difficult to predict accurately. Burry was famously bearish on Tesla but was unable to capitalise on what was eventually a correct prediction because he was too early to the trade.
The market's strong momentum and the availability of cheap hedging options, as indicated by low put premiums, suggest that many investors remain optimistic, potentially creating headwinds for Burry's short positions.
In Summary
Michael Burry's current bearish stance and his significant short positions in SPY and QQQ raise intriguing questions about potential market implications. Both of these ETFs have seen significant gains in 2023, with SPY up over 17% and QQQ soaring by more than 40%.
