Crypto News – According to securities filings made public on Monday, Michael Burry, the investment manager made famous in the book and movie “The Big Short,” had put options against the broad S&P 500 and Nasdaq 100 Index at the end of the second quarter.
Big Short Michael Burry Revealed Buying Bearish Options Against the S&P and Nasdaq 100
During the quarter, Burry’s Scion Asset Management purchased put options with a notional value of $886 million against the SPDR S&P 500 ETF (SPY.P) and separated put options with a notional value of $739 million against the well-known Invesco QQQ Trust ETF (QQQ.O).
Given that regulatory filings do not mandate the disclosure of options strikes, purchase prices, and expiration dates, it was unclear how much the fund paid to purchase the puts, which could have been a small portion of their notional value. Moreover, it was unclear what the contracts’ present value was.
It was also unclear whether the puts were held entirely or as a component of a wider trade that might have included other contracts that were sold short. This is because the filings only reveal long holdings.
Nasdaq 100 Increased This Year
In comparison to the Nasdaq 100 (.IXIC), the S&P 500 (.SPX) has increased by almost 17% so far this year. Several mega-cap businesses, including Nvidia (NVDA.O) and Meta Platforms (META.O), have experienced a few outsized increases that have driven much of the year’s surge.
Shares in Regional Banks were Liquidated
The report also revealed that the fund sold its holdings in regional banks such as PacWest (PACW.O) and Western Alliance Bancorp (WAL.N), in which it had a stake in the first quarter, as well as Chinese e-commerce companies JD.com (9618.HK) and Alibaba Group Holdings (9988.HK). Although the company mentioned that it had also sold its 150,000 shares of First Republic Bank (FRCB.PK), it did not specify if this occurred prior to the company’s bankruptcy on May 1.
According to the report, the fund added additional shares in iHeartMedia (IHRT.O), HanesBrands (HBI.N), and Warner Bros. Discovery (WBD.O), among other long positions, and more than quadrupled its stake in RealReal Inc (REAL.O), an online retailer of luxury goods that has gained about 100% for the year so far. In comparison to Warner Brothers Discovery, shares of iHeartMedia and HanesBrands have each lost more than 16% of their value so far this year.
Burry Changes His Holdings Frequently
Its holdings were made public via 13-fs periodic filings, which show its holdings as of the end of the preceding quarter but were unable to adequately reflect current levels. Even though they are retrospective, these filings are the only means for investors to see the investments made by hedge funds and other institutional investors.
When Burry, who frequently switches out his stock holdings, sold all of his long positions and made an investment in the prison company Geo Group Inc (GEO.N) last August, he attracted a lot of media attention. However, his ownership interest in the company was sold.
About Michael Burry
Prior to the 2008 financial crisis, Burry became well-known for his bets against the US housing market. The nonfiction book The Big Short by Michael Lewis was published in 2010, and the film adaptation followed two years later.
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