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Michael Burry, the investor whose successful bets against the US housing market in 2008 were recounted in the movie "The Big Short," is closing his hedge fund, Scion Asset Management.
In a letter to investors dated October 27, a copy of which was seen by Reuters, Burry said he would liquidate the funds and return capital, "but for a small audit/tax holdback" by the end of the year. A person directly familiar with the matter confirmed the contents of the letter.
"My estimation of value in securities is not now, and has not been for some time, in sync with the markets," Burry said in the letter.
Burry could not be immediately reached for comment,
The Securities and Exchange Commission's database showed Scion's registration status as "terminated" as of November 10. Deregistering would imply the fund is not required to file reports with the regulator or any state.
Investment funds that manage more than $100 million of capital are required to register with the SEC.
Bets by Scion, which managed $155 million in assets as of March, have long been dissected for hints of looming bubbles and signs of market froth.
In a post on X on Wednesday, Burry said, "On to much better things Nov 25th." Scion Asset Management did not immediately respond to a Reuters request for comment.
Burry has stepped up criticism of technology heavyweights, including Nvidia and Palantir Technologies , in recent weeks, questioning the cloud infrastructure boom and accusing major providers of using aggressive accounting to inflate profits from their massive hardware investments.
In his post on X, Burry said he spent about $9.2 million buying up about 50,000 put options on Palantir, which he said would allow him to sell the stock at $50 apiece in 2027. Put options convey the right to sell shares at a set price in the future and are typically bought to express a bearish or defensive view.
Palantir's shares were trading at $178.29 on Thursday, giving the company a market value of $422.36 billion.
BEARISH AI BETS
Last month, Burry posted an image of his character from "The Big Short" movie and warned of bubbles, saying, "Sometimes the only winning move is not to play."
"Burry's decision feels less like 'calling it quits' and more like stepping away from a game he believes is fundamentally rigged," said Bruno Schneller, managing director at Erlen Capital Management.
Burry has argued that as companies such as Microsoft Alphabet-owned Google, Oracle (ORCL.N) and Meta pour billions into Nvidia chips and servers, they are also quietly stretching out depreciation schedules to make earnings look smoother.
Between 2026 and 2028, those accounting choices could understate depreciation by about $176 billion, inflating reported profits across the sector, he estimated.
AI-related stocks have accounted for 75% of the S&P 500 index's returns since November 2022, when launched ChatGPT, JPMorgan Asset Management wrote in September.
"Don't count him out, just expect him to operate off the grid for a while. He may simply pivot to a family-office setup and run his own capital," said Schneller.
Burry's short position against subprime mortgage securities during the housing market crash was chronicled in Michael Lewis's book "The Big Short" and its film adaptation.
Burry's profile on X, titled "Cassandra Unchained," is seen as a nod to the Greek mythological figure cursed by Apollo to deliver true prophecies that no one would believe.
Scion ended last year with shares in American Coastal, Bruker, Canada Goose (GOOS.TO), HCA Healthcare (HCA.N), Magnera (MAGN.N), Molina Healthcare (MOH.N), Oscar Health (OSCR.N) and VF Corp (VFC.N) but ended those bets earlier this year. During the quarter ended June 30, Scion was more bullish on companies across different sectors and geographies, after betting against Chinese companies previously as the Trump administration considered imposing tariffs.
ROUGH RIDE FOR SHORT SELLERS
The latest move from Burry, who launched Scion Asset Management in 2013, comes at a time when several high-profile investors are facing pushback due to their bearish views on the markets.
Hindenburg Research shuttered earlier this year after a string of high-profile calls, including bets against India’s Adani Group and U.S. electric-truck maker Nikola.
Veteran short seller Jim Chanos, best known for his bets against energy trader Enron months before the company's bankruptcy, has sparred with Michael Saylor's bitcoin holding company Strategy (MSTR.O). Chanos has argued that Strategy's valuation premium was unjustified, which drew a sharp response from Saylor.
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