Michael Burry, of "The Big Short" Fame, Holds Bearish Options Against S&P 500 and Nasdaq 100
New York (Reuters) – Michael Burry, the renowned money manager made famous in the book and film "The Big Short," has revealed that his firm, Scion Asset Management, held bearish options against the broad S&P 500 and Nasdaq 100 Index at the end of the second quarter, according to recently released securities filings.
Burry’s firm purchased put options with a notional value of $739 million against the popular Invesco QQQ Trust ETF and separate put options with a notional value of $886 million against the SPDR S&P 500 ETF. Put options provide the right to sell shares at a predetermined price in the future and are typically utilized to express a bearish or defensive view.
The filings did not disclose the amount paid to acquire the put options or their current value, as options strikes, purchase prices, and expiration dates are not required to be disclosed in regulatory filings. Additionally, since the filings only disclose long positions, it remains unclear whether the puts were held outright or part of a larger trade involving other contracts that might have been sold short.
Burry gained fame for his successful bets against the U.S. housing market prior to the 2008 financial crisis, which were detailed in Michael Lewis’ book "The Big Short" and its subsequent film adaptation.
Reshuffling of Holdings
The filings also revealed that Scion Asset Management liquidated its positions in Chinese e-commerce giant JD.com, Alibaba Group Holdings, and regional banks such as PacWest and Western Alliance Bancorp, which the firm had invested in during the first quarter.
The firm also sold its 150,000 shares of First Republic Bank, but it did not specify whether this occurred before the company’s collapse on May 1.
On the other hand, Scion Asset Management more than doubled its stake in online luxury goods marketplace RealReal Inc, which has seen a nearly 100% increase in value year-to-date. The firm also acquired new positions in iHeartMedia, HanesBrands, and Warner Bros. Discovery, among others. Shares of iHeartMedia and HanesBrands have declined by 16% or more this year, while Warner Bros. Discovery has seen an increase of nearly 43%.
In addition, Scion Asset Management added 10,000 shares of the iShares MSCI Japan ETF, which has gained 13.5% year-to-date.
Conclusion
While the filings provide a backward-looking view and may not reflect the firm’s current positions, they offer valuable insights into the holdings of institutional investors like hedge funds. Burry’s bearish options against the S&P 500 and Nasdaq 100 suggest a cautious outlook on the broader market. Investors will be watching closely to see how these positions develop in the coming months.
Reuters’ David Randall and Saqib Iqbal Ahmed contributed to this report.
Takeaways:
- Michael Burry, known for predicting the 2008 financial crisis, holds bearish options against the S&P 500 and Nasdaq 100.
- The filings do not disclose the amount paid for the options or their current value.
- Scion Asset Management liquidated its positions in JD.com, Alibaba, PacWest, and Western Alliance Bancorp.
- The firm increased its stake in RealReal Inc and acquired new positions in iHeartMedia, HanesBrands, and Warner Bros. Discovery.
- The filings offer a backward-looking view of the firm’s holdings and may not reflect its current positions.
