Michael Burry Ends $155M Hedge Fund, Exits Market
Synopsis
Michael Burry, famous for predicting the 2008 housing crash shown in "The Big Short" movie, is closing his hedge fund Scion Asset Management. He told investors his estimation of value in securities does not sync with the markets anymore. Burry spent $9.2 million on put options betting against Palantir stock. He has criticised big technology companies for using aggressive accounting to inflate profits. The SEC shows Scion's registration was terminated on November 10. Burry posted that he is moving on to better things starting November 25.
Michael Burry gained fame for calling the housing market collapse in 2008; a movie, "The Big Short," dramatised how he made so much money betting against housing prices. Now, Burry is shutting down his hedge fund, Scion Asset Management. He notified investors of the decision in a letter dated October 27. Burry said he will liquidate the funds and return the money to investors by the end of the year, except for a small amount kept back for audits and taxes.
Why Burry Is Shutting Down
In his letter to investors, Burry explained that his view of what investments are worth does not match what the markets think anymore. He said this has been true for some time now. When an investor thinks stocks are overpriced but the market keeps pushing prices higher, it's hard to make money. Burry has been warning people about bubbles in the stock market recently.
The Securities and Exchange Commission's database shows Scion's registration status changed to "terminated" on Nov. 10. That means the fund is no longer required to file reports with the government. Investment funds managing more than $100 million are required to register with the SEC. Scion was managing $155 million in assets as of March, so they were required to register. Now that registration is terminated.
Burry's Bets Against Technology Companies
Burry has been critical of large technology companies. In the last few weeks, he has commented on Nvidia and Palantir Technologies. He questions whether or not an investment boom in cloud computing infrastructure is a reality. He claims major tech companies are deploying aggressive accounting to make their profits look higher than they actually are.
Burry posted on X that he'd spent about $9.2 million buying put options on Palantir. He bought about 50,000 put options that would let him sell Palantir stock at $50 per share in 2027. Put options are bets that a stock price will go down. Right now, Palantir shares trade at $178.29, giving the company a market value of $422.36 billion. He thinks it will drop dramatically.
Bruno Schneller is the managing director at Erlen Capital Management. He says it feels a lot less like a retirement than it does like Burry's stepping away from a game he believes is rigged. Schneller does not count Burry out yet. He thinks Burry will be operating off the grid for a while now and may just switch into a family office setup in which he runs his own money.
What Did Burry Do Before
Burry founded Scion Asset Management in 2013. His short position against subprime mortgage securities during the housing crash was the subject of Michael Lewis's book "The Big Short" and later a movie based on the bestseller. His profile on X is titled "Cassandra Unchained," after a figure in Greek mythology. Cassandra, a princess of Troy, was cursed by Apollo to utter true prophecies that nobody would ever believe. Burry seems to identify with this because he often warns people about problems, but they just ignore him.
Scion ended last year holding shares in several companies, including American Coastal, Bruker, Canada Goose, HCA Healthcare, and VF Corp. But the fund sold all those positions earlier this year. During the quarter that ended June 30, Scion bought stocks in different sectors and countries after previously betting against Chinese companies.
This was happening as the Trump administration considered putting tariffs on Chinese goods. Now Burry is closing the fund completely and returning money to investors. Several other investors who bet against stocks are also facing difficulties. Hindenburg Research shut down earlier this year after making bets against companies like India's Adani Group.
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