Michael Burry bets against Palantir and Nvidia stocks, but his strategy raises questions.
Michael Burry, the famous hedge fund manager from the movie "The Big Short," is predicting the end of the boom for two of the era's favorite stocks. However, his moves appear to contradict him, creating inconsistencies in his strategy.
Scion Asset Management, Burry's firm, has bought put options on 5 million shares of Palantir (PLTR), valued at approximately $912 million, and on 1 million shares of Nvidia (NVDA), valued at approximately $187 million, according to the company's Q3 2023 filings released to the US Securities and Exchange Commission (SEC).
Put options allow the buyer to sell a stock at a lower price (the strike price) until a set date (expiration). Typically, such positions are taken when the buyer expects the stock price to fall.
Without diversification
Scion's 13-F filing with the SEC, submitted about a week before the deadline, shows that these two positions represent 80% of the company's portfolio and therefore constitute a significant bet against the overly popular AI (Artificial Intelligence) market.
Burry's skeptical stance towards the frenzy around artificial intelligence was also evident in a recent social media post, where he pointed out the cyclical capital expenditure (capex) in the AI sector.
Scion's other positions
Other Scion positions include a $153 million bet with call options on Pfizer, as well as a $61.5 million position with call options on Halliburton.
Shares of Nvidia, which produces AI chips, and Palantir, an AI-focused software company, hit all-time highs on Monday, with gains of 48% and 305% respectively over the past year.
However, many analysts have warned that Palantir, in particular, is extremely overvalued. The company announced its results on Monday with a P/E (price-to-earnings ratio) for 2025 slightly over 300, according to FactSet data.
Despite announcing results that exceeded estimates, Palantir shares fell 4% before the start of Tuesday's session, while Nvidia shares saw a slight decline.
Contradictions in Burry's strategy
The Scion Asset Management filing does not specify the details of the put options purchased, yet market observers on social media focused on some large transactions recently made in long-term contracts, expiring in 2026.
This timeline could align with Burry's famous bets against subprime assets before the 2007-08 financial crisis, when he realized that the market might take some time to collapse.
However, Burry's move might be considered a contradiction to what he said the previous week. In a post, he hinted that there is a stock market bubble but stated that "sometimes, the only correct move is not to play at all."
Burry's latest move, however, shows that he remains "in the game" with great zeal, betting on the decline of these technology giants, despite his personal doubts about the excess in the AI market.
Regardless of his strategy, it is clear that Burry remains one of the most controversial and interesting figures in the stock market — just as during the great crisis of 2008.
Caution, markets will "deflate" – Goldman Sachs and Morgan Stanley see 10% to 20%
Following an impressive rally that propelled indices to all-time highs, the two largest Wall Street investment banks warn that the period of uninterrupted rise is coming to an end.
Goldman Sachs and Morgan Stanley estimate that over the next 12 to 24 months, international stock markets may undergo a correction of the order of 10% to 20%, as excessive optimism and high valuations give way to a more realistic assessment of risks. However, the heads of the two investment banks emphasize that such a decline does not signal a crisis but a normal "breather" within a long-term upward cycle, centered on the opportunities emerging in Asia, and particularly in China, Japan, and India.
Stocks worldwide have surged, recording all-time highs, fueled by AI-related earnings and expectations of interest rate cuts. In the last month, key US indices have hit new records, Japan's Nikkei 225 and South Korea's Kospi posted new highs, while the Chinese Shanghai Composite reached its highest level in a decade, amid a de-escalation of US–China tensions and a weakening dollar.
"It is likely that there will be a correction of the order of 10% to 20% in stock markets over the next 12 to 24 months," said Goldman Sachs CEO David Solomon, at the Global Financial Leaders’ Investment Summit in Hong Kong. "Markets run, and then they take a step back for investors to re-evaluate."
However, Solomon noted that such pullbacks are a normal element of long-term bull markets, emphasizing that the investment bank's standing recommendation to its clients remains to stay invested and to re-examine their portfolio allocation, not to try to "time" the market. "A 10% to 15% correction happens frequently, even during periods of positive market cycles," he said. "It is not something that changes your fundamental or structural conviction as to how you want to allocate your capital."
At the same time, Morgan Stanley CEO Ted Pick, speaking on the same panel, stated that investors should welcome periodic corrections, viewing them as a healthy development and not a sign of crisis. "We should also welcome the possibility of corrections, of the order of 10% to 15%, that are not caused by some macroeconomic shock," he specifically said.
IMF warnings
The positions of Solomon and Pick follow recent warnings from the IMF about a potential sharp correction, while Fed Chairman Jerome Powell and Bank of England Governor Andrew Bailey have also expressed concern about the "inflated" stock valuations.
Optimism for Asia
However, Goldman Sachs and Morgan Stanley identified Asia as a region with positive prospects for the coming years, thanks to recent developments such as the US–China trade agreement. Goldman estimates that international fund managers will continue to show interest in China, highlighting that it remains one of the world's "largest and most important economies."
Morgan Stanley maintains a positive outlook for Hong Kong, China, Japan, and India, due to their distinct growth stories. Corporate governance reforms in Japan and infrastructure development in India stand out as multi-year investment themes.
"It is difficult not to be excited about Hong Kong, China, Japan, and India — four very different narratives, but all part of the broader Asian story," Ted Pick said, particularly pointing to the sectors of artificial intelligence, electric vehicles, and biotechnology in China.
www.bankingnews.gr
Scion Asset Management, Burry's firm, has bought put options on 5 million shares of Palantir (PLTR), valued at approximately $912 million, and on 1 million shares of Nvidia (NVDA), valued at approximately $187 million, according to the company's Q3 2023 filings released to the US Securities and Exchange Commission (SEC).
Put options allow the buyer to sell a stock at a lower price (the strike price) until a set date (expiration). Typically, such positions are taken when the buyer expects the stock price to fall.
Without diversification
Scion's 13-F filing with the SEC, submitted about a week before the deadline, shows that these two positions represent 80% of the company's portfolio and therefore constitute a significant bet against the overly popular AI (Artificial Intelligence) market.
Burry's skeptical stance towards the frenzy around artificial intelligence was also evident in a recent social media post, where he pointed out the cyclical capital expenditure (capex) in the AI sector.
Scion's other positions
Other Scion positions include a $153 million bet with call options on Pfizer, as well as a $61.5 million position with call options on Halliburton.
Shares of Nvidia, which produces AI chips, and Palantir, an AI-focused software company, hit all-time highs on Monday, with gains of 48% and 305% respectively over the past year.
However, many analysts have warned that Palantir, in particular, is extremely overvalued. The company announced its results on Monday with a P/E (price-to-earnings ratio) for 2025 slightly over 300, according to FactSet data.
Despite announcing results that exceeded estimates, Palantir shares fell 4% before the start of Tuesday's session, while Nvidia shares saw a slight decline.
Contradictions in Burry's strategy
The Scion Asset Management filing does not specify the details of the put options purchased, yet market observers on social media focused on some large transactions recently made in long-term contracts, expiring in 2026.
This timeline could align with Burry's famous bets against subprime assets before the 2007-08 financial crisis, when he realized that the market might take some time to collapse.
However, Burry's move might be considered a contradiction to what he said the previous week. In a post, he hinted that there is a stock market bubble but stated that "sometimes, the only correct move is not to play at all."
Burry's latest move, however, shows that he remains "in the game" with great zeal, betting on the decline of these technology giants, despite his personal doubts about the excess in the AI market.
Regardless of his strategy, it is clear that Burry remains one of the most controversial and interesting figures in the stock market — just as during the great crisis of 2008.
Caution, markets will "deflate" – Goldman Sachs and Morgan Stanley see 10% to 20%
Following an impressive rally that propelled indices to all-time highs, the two largest Wall Street investment banks warn that the period of uninterrupted rise is coming to an end.
Goldman Sachs and Morgan Stanley estimate that over the next 12 to 24 months, international stock markets may undergo a correction of the order of 10% to 20%, as excessive optimism and high valuations give way to a more realistic assessment of risks. However, the heads of the two investment banks emphasize that such a decline does not signal a crisis but a normal "breather" within a long-term upward cycle, centered on the opportunities emerging in Asia, and particularly in China, Japan, and India.
Stocks worldwide have surged, recording all-time highs, fueled by AI-related earnings and expectations of interest rate cuts. In the last month, key US indices have hit new records, Japan's Nikkei 225 and South Korea's Kospi posted new highs, while the Chinese Shanghai Composite reached its highest level in a decade, amid a de-escalation of US–China tensions and a weakening dollar.
"It is likely that there will be a correction of the order of 10% to 20% in stock markets over the next 12 to 24 months," said Goldman Sachs CEO David Solomon, at the Global Financial Leaders’ Investment Summit in Hong Kong. "Markets run, and then they take a step back for investors to re-evaluate."
However, Solomon noted that such pullbacks are a normal element of long-term bull markets, emphasizing that the investment bank's standing recommendation to its clients remains to stay invested and to re-examine their portfolio allocation, not to try to "time" the market. "A 10% to 15% correction happens frequently, even during periods of positive market cycles," he said. "It is not something that changes your fundamental or structural conviction as to how you want to allocate your capital."
At the same time, Morgan Stanley CEO Ted Pick, speaking on the same panel, stated that investors should welcome periodic corrections, viewing them as a healthy development and not a sign of crisis. "We should also welcome the possibility of corrections, of the order of 10% to 15%, that are not caused by some macroeconomic shock," he specifically said.
IMF warnings
The positions of Solomon and Pick follow recent warnings from the IMF about a potential sharp correction, while Fed Chairman Jerome Powell and Bank of England Governor Andrew Bailey have also expressed concern about the "inflated" stock valuations.
Optimism for Asia
However, Goldman Sachs and Morgan Stanley identified Asia as a region with positive prospects for the coming years, thanks to recent developments such as the US–China trade agreement. Goldman estimates that international fund managers will continue to show interest in China, highlighting that it remains one of the world's "largest and most important economies."
Morgan Stanley maintains a positive outlook for Hong Kong, China, Japan, and India, due to their distinct growth stories. Corporate governance reforms in Japan and infrastructure development in India stand out as multi-year investment themes.
"It is difficult not to be excited about Hong Kong, China, Japan, and India — four very different narratives, but all part of the broader Asian story," Ted Pick said, particularly pointing to the sectors of artificial intelligence, electric vehicles, and biotechnology in China.
www.bankingnews.gr
Σχόλια αναγνωστών