Michael Burry, famed for 'The Big Short', makes substantial wager amounting to almost half his portfolio against Nvidia shares.
Grim-Reaper-of-Wall-Street Michael Burry, the legendary hedge fund manager who forecasted the 2008 housing crash, has struck again, this time taking a sizable short position against tech titan Nvidia (NASDAQ: NVDA).
According to his latest 13F filing, Burry's Scion Asset Management has wagered a whopping $97.5 million on Nvidia's potential plummet by amassing 900,000 put contracts[1]. This trade now forms a striking 49% of his disclosed portfolio[1], unquestionably demonstrating Burry's high-stakes conviction that the AI chipmaker is primed for a tumble.
With Nvidia currently trading at record highs[2], many on Wall Street remain bullish. However, Burry's formidable put position indicates he perceives the fervor around Nvidia to be unrealistic[1].
This bold bet isn't limited to Nvidia. The filing also unveils put options on several major Chinese tech companies, including Alibaba, Pinduoduo, JD.com, Trip.com, and Baidu. Collectively, these positions amount to a staggering $88 million in market value[1], signaling Burry's skepticism about the Chinese equity market's outlook. Whether this worry stemming from China's faltering economic recovery, looming regulations, or geopolitical tension with the West is yet to be determined[1].
Interestingly, Scion's short on JD.com comprises 400,000 contracts, while Pinduoduo and Alibaba each account for 200,000 contracts[3]. Trip.com and Baidu make up the remaining less-substantial positions.
Burry's Nvidia short echoes broader concerns about a speculative AI bubble. Many market watchers, including trend forecaster Gerald Celente, have cautioned of an impending "dot-com-style" bust instigated by excessive enthusiasm in AI, affecting players like Nvidia[4].
While Nvidia consistently delivers impressive earnings and maintains its standing as a market leader in AI[4], Burry's trade exemplifies a contrarian stance: that the stock has soared past its fundamental worth and is due for a revaluation.
Unlike his infamous short against subprime mortgages, a trade that was heavily criticized at the time but ultimately proved prescient, it's unclear whether Burry is again ahead of the market. As earnings season approaches, the fate of AI stalwarts like Nvidia will be under constant scrutiny.
Insight: Burry has a history of bets against companies and markets, such as his short position against Alibaba (BABA), Baidu (BIDU), and JD.com (JD), which he once held[1][4]. Additionally, he has been focusing on shorting the broader market[2][5].
Caution: Investing carries risks, and readers are advised to consult a financial professional before making any investment decisions based on this article. The featured image in this article is purely illustrative and does not accurately represent the physical appearance of the individuals mentioned.
Bitcoin's recent surge has drawn the attention of renowned financier Michael Burry, who is known for his bold investments and predictions. Reminiscent of his 2008 hedge fund decision to short subprime mortgages, Burry is now considering entering the cryptocurrency market, with potential interests in Bitcoin and other digital assets, as a means of finance investing leveraging technological advancements.
While Burry's short position against Nvidia has generated headlines and sparked concerns about the sometimes unrealistic valuations within the tech sector, it remains to be seen if he will apply his contrarian approach to Bitcoin and other digital assets. The ever-evolving nature of finance and technology opens up intriguing possibilities for Burry and others who seek to capitalize on the latest trends and Kings of the digital economy.
