Michael Burry, the investor who famously predicted the 2008 financial crisis, has closed out his short positions against the S&P 500 and the Nasdaq 100. Burry’s hedge fund, Scion Asset Management, disclosed in a regulatory filing on Tuesday that it no longer held 2 million puts on the SPDR S&P 500 ETF (SPY) and the Invesco QQQ Trust (QQQ). Burry had made a big bet against the stock market in August, with Scion buying puts totaling around $1.6 billion.
Burry’s decision to close out his short positions comes as the stock market has been on an upward tear. The S&P 500 is up about 19% year-to-date, while the Nasdaq 100 is up about 26%. He ended his bets against the S&P 500 and Nasdaq 100 last quarter, but placed a new wager against semiconductor stocks, his latest portfolio update revealed on Tuesday.
Burry’s Scion Asset Management purchased bearish put options on the SPDR S&P 500 and Invesco QQQ in the second quarter, but those positions were gone in his latest Securities and Exchange Commission filing. It was also disclosed Scion bought puts on 100,000 shares of Blackrock’s iShares Semiconductor ETF with a nominal value of $47 million. The exchange-traded fund counts Nvidia, the graphics-chip specialist whose stock price has roughly tripled this year on the back of AI excitement as its third-biggest holding. It also revealed Scion reopened long positions in JD.com and China-tech giant Alibaba (BABA) after selling out of the companies in the second quarter.
Burry’s decision to short semiconductor stocks is interesting, as the industry has been a major beneficiary of the recent rally in the stock market. However, Burry may be seeing signs that the industry is overvalued. It is important to remember that Burry is a contrarian investor, and his bets often go against the grain of the market. As such, his moves should not be taken as definitive signals of the future direction of the market. However, Burry’s track record of success suggests that his insights should be carefully considered by investors. Only time will tell whether Burry’s latest bet will be successful. However, his decision to close out his broad market shorts and open a new short position against chip stocks is a sign of his changing outlook on the economy.