Scion Asset Management, the investment firm overseen by Michael Burry of The Big Short fame, has made a major portfolio shift by exiting its stakes in Chinese tech giants Alibaba Group Holding and JD.com Inc. This move comes as a surprise considering that the two companies accounted for 20% of Scion’s portfolio and were its top equity holdings just three months ago.
According to a regulatory filing on Monday, Scion liquidated holdings in a total of 15 companies in the second quarter. This includes banks that it had previously acquired, but had suffered due to the failure of several lenders. In light of these developments, Scion’s top holding now is Expedia Group Inc., with the hedge fund investing $10.9 million in 100,000 shares.
The firm made other notable additions to its portfolio as well, including shares of Charter Communications Inc. and CVS Health Corp. Scion started 25 new positions last quarter, reflecting a significant revamp of its portfolio. It’s worth noting that all of Scion’s top 15 holdings at the end of June were new positions.
One interesting development that caught the attention of the financial community on Monday was the speculation that Burry was making a multibillion-dollar bet against the stock market. This was based on the news that Scion had bought put options on the largest exchange-traded funds (ETFs) tracking the S&P 500 and Nasdaq 100. However, a closer look reveals that the wager is more nuanced than initially thought.
Scion’s filing shows long put option positions of 20,000 contracts in these two ETFs, which equate to 2 million shares each. While this might seem like a significant short bet on the broader US stock market, the actual investment and premium paid would likely be much smaller depending on the strikes and months of the specific options traded.
Michael Burry gained fame for his prediction of the 2008 housing crash and has since developed a large social media following for his insights into looming risks. In January, he forecasted another inflation spike and stated that the US was already in a recession.
Scion Asset Management, headquartered in Saratoga, California, had $233.3 million of assets under management as of the end of last year. The firm’s latest regulatory filing comes as thousands of institutional investors, including hedge funds, pension funds, and endowments, are required to report certain US equity holdings to the Securities and Exchange Commission by the end of Monday.
Source: Bloomberg
