Key Takeaways:
- Michael Burry might be over 40% down on the stock market short bet worth $1.6 billion.
- It is not a fact that Scion Asset Management still holds the position.
- Scion’s 3-year returns stand at just under 200%.
YEREVAN (CoinChapter.com) — Michael Burry, the founder of Scion Asset Management, correctly predicted the US housing bubble collapse before the 2008 financial crisis. He is reportedly down 42% on his Put positions on the US stock market.
Michael Burry might have changed his position by now
In mid-August, the investor revealed via regulatory 13F filings that his company bought put options for the SPDR S&P 500 ETF Trust (SPY), an exchange-traded fund (ETF) that tracks the US stock index S&P 500. Scion Asset Management also bought put options for the Invesco QQQ Trust Series 1 (QQQ) ETF, which tracks the Nasdaq-100 index.
The filing listed the combined value of these put options at close to $1.8 billion.
Thus, considering the stocks’ year-to-date increase, the question remains if Burry is down on his positions. Some estimations assume a 42% for the investor as of Aug 28, considering he “likely spent around $26.5 million to build his $1.6 billion (notional) short position.”
13Fs don’t provide the strike and exp for the options. So, I assumed 20% OTM [out of the money] puts that expire 1 year out. 13F was for Q2 so I used the VWAP [Volume Weighted Average Price] on the midpoint of Q2, May 17, for the entry price.
calculated an a widely-followed stock trader known as Gurgavin on X.com (Twitter)
Meanwhile, according to the calculations above, it is unclear whether Burry’s Scion still holds the short positions, as certain information will be available in three months.
Is Scion prepared for the “market crash”?
In detail, Burry was bearish on US stocks for over two years. In June 2021, the investor said the market was experiencing the “greatest speculative bubble of all time in all things.” By early 2023, his position had not changed, as he tweeted an ominous “SELL” without explanation.
However, Burry back-tracked from his original statement, tweeting, “I was wrong to say sell” by the end of March when the S&P 500 shot up over 8%.
Notably, the S&P 500 and Nasdaq 100 have notched gains year-to-date, up nearly 16% and 38%, respectively. Despite the short positions, Scion has collected handsome returns on its stock investments.
According to a hedge fund tracker, HedgeFollow, the company’s top 20 holdings, such as Expedia Group Inc, Charter Communications, and CVS Health Corp, brought in just under 200% in cumulative returns in 3 years.
Moreover, the company’s top 20 holdings, which account for 90% of the company’s holdings overall, have outperformed the S&P 500 stocks.
Burry’s on-point prediction of the 2008 collapse does not mean he is right about the 2023 stock crash. Additionally, it is not certain that Scion still holds the abovementioned position. However, the hedge find is the 9th in the US by 3-Year Annualized Weighted Return and is unlikely to go belly up over a notional bet.
