Renowned money manager Michael Burry, famed for his portrayal in ‘The Big Short’, has upheld his bearish options stance against the broad S&P 500 and Nasdaq 100 Index. As reported by Reuters on August 14, Burry’s Scion Asset Management held bearish put options against popular exchange-traded funds (ETFs) during the second quarter.
Scion Asset Management’s actions during the quarter included purchasing put options with a notional value of $739 million against the Invesco QQQ Trust ETF and put options with a notional value of $886 million against the SPDR S&P 500 ETF. These options provide the right to sell shares at a predetermined price in the future, often utilized to express a bearish or defensive outlook.
While the specific prices and present values of the options remain undisclosed due to regulatory filings not mandating their disclosure, it’s noteworthy that the cost of the put options can be a fraction of their notional value.
The exact nature of Burry’s positions, whether held individually or as part of broader trading strategies involving other contracts, remains unclear. Michael Burry gained fame for his prescient bets against the U.S. housing market prior to the 2008 financial crisis. His book ‘The Big Short’ was published in 2010, with a movie adaptation following in 2015.
Amidst this bearish positioning, the S&P 500 has registered an approximately 17% increase year-to-date, while the Nasdaq 100 has surged by nearly 39% over the same period. This rally has been fueled by substantial gains in mega-cap companies like Nvidia and Meta Platforms.
Scion Asset Management’s recent securities filings also indicated changes in their portfolio. The fund liquidated stakes in Chinese e-commerce giants JD.com and Alibaba Group Holdings, as well as regional banks such as PacWest and Western Alliance Bancorp that were previously favored in the first quarter.
The firm of Michael Burry also disclosed its sale of 150,000 shares of First Republic Bank, although it did not specify whether this occurred prior to the company’s collapse on May 1. Within its long positions, Scion Asset Management notably doubled its stake in the online luxury goods market player RealReal Inc, which has experienced nearly a 100% gain year-to-date. Additionally, new stakes were taken in iHeartMedia, HanesBrands, and Warner Bros. Discovery, among others. While some of these investments have faced fluctuations, Burry’s continued investment activities reflect his ongoing influence within the market.
