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New York investor Michael Burry bets more than $1.6 billion on a Wall Street crash

New York
CNN

Michael Burry, the famous investor who accurately predicted the housing market collapse in 2008, has placed a staggering bet of over $1.6 billion on a crash in the Wall Street market. His bearish bets are specifically targeted towards the S&P 500 and Nasdaq 100, as revealed by Security Exchange Commission filings released on Monday. To achieve this, Burry’s fund, Scion Asset Management, purchased $866 million worth of put options against an S&P 500 tracking fund, and $739 million worth of put options against a Nasdaq 100 tracking fund. This indicates that Burry is using more than 90% of his portfolio to capitalize on a potential market downturn, as indicated by the filings.

However, it is worth mentioning that Burry’s stance on stock picks has been somewhat inconsistent this year. In January, he tweeted “Sell” to his 1.4 million followers, but by the end of March, he had another change of heart, admitting that he was wrong to say sell.

Despite Burry’s bearish bets, the S&P 500 and Nasdaq 100 have both experienced significant gains so far this year, with nearly 16% and 38% increases, respectively.

Much like his previous success in predicting the housing market crash, Burry’s fund has also decided to divest from regional banks, including the sale of its 150,000 shares in First Republic Bank. There is some uncertainty regarding the timing of these sales in relation to JPMorgan Chase’s takeover of First Republic Bank in May.

Burry has also taken a different approach towards Chinese stocks, as he sold his shares in JD.com and Alibaba during the second quarter of the year.

However, Burry and his team at Scion have identified a few stocks they are betting on. Around 6% of the company’s stock portfolio is focused on long positions, and in the second quarter, they increased their exposure to the travel and healthcare sectors, purchasing shares in Expedia Group, MGM Resorts, CVS, and Cigna. Additionally, Burry has invested in CNN parent company Warner Bros. Discovery and online second-hand retailer The RealReal.

Burry’s bearish predictions tend to gather more attention in financial circles, although it is important to note that past success does not guarantee future returns. That being said, Burry’s investment record is strong, with traders who have followed Scion’s disclosed investments over the past three years experiencing annualized returns of 56%, compared to the S&P 500’s annualized returns of about 12% during the same period, according to an analysis by Sure Dividend.

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