Michael Burry, the hedge fund boss featured in The Big Short, who became famous for correctly predicting the epic collapse of the housing market in 2008, has bet more than $1.6 billion on a Wall Street crash. Burry is making his bearish bets against the S&P 500 and Nasdaq 100, according to Security Exchange Commission filings released Monday.
Mr.Burry held negative options on both the S&P 500 and Nasdaq 100 at the end of the second quarter, securities filings show. He has options with a notional value of $886m (£698m) against the S&P 500. In addition, he has $738.8m (£582m) in options against the Invesco QQQ Trust ETF - a fund on the Nasdaq comprising high-profile tech firms including Apple, Microsoft, and Tesla.
While Burry’s $1.6 billion bets reportedly amount to more than 90% of his firm's portfolio, the figure his firm paid for the options could have been much lower as the SEC only reports nominal value, not actual value. According to consulting company Fintel, Burry’s firm - Scion Asset Management, based in California, reportedly has about $107 million in assets under management. The 13F SEC filing — which is required quarterly by investment managers with at least $100 million in assets under management — does not disclose when Scion will have to sell its options.
It is not immediately clear why Mr.Burry is taking such negative positions - the S&P 500 is up roughly 17% for the year to date, while the Nasdaq 100 is up almost 39% over the same period.
Mr. Burry appears to have been expecting a market collapse for much of the year. In January, he tweeted: "Sell." By March, however, he had backtracked and said he was "wrong to say sell".
The SEC filing also revealed that Burry sold his stocks in Capitol One, First Republic, PacWest Bancorp, Wells Fargo, and Western Alliance after taking a bet on them earlier this year to cash in on the regional banking crisis. Burry also sold his stakes in Chinese e-commerce behemoths Alibaba and JD.com.