Michael Burry Disclosed Put Options Worth an Estimated $1.1 Billion Against Nvidia and Palantir Before Closing His Hedge Fund. Was That Bearish Bet Ahead of Its Time?
Burry could have another "big short" in his portfolio.
Overview
Michael Burry bought his first credit default swaps on subprime mortgage bonds for his Scion Asset Management hedge fund in 2005. He continued to buy those contracts, which offered limited downsides but huge upsides if he was right, even as the trade moved against him. In the end, he turned out to be right about the mortgage-bond crisis he saw coming, and those trades generated hundreds of millions of dollars for his investors.
Burry closed Scion last year, returning invested capital to shareholders. He now manages his own money and writes a newsletter with updates on his portfolio.
Details
Before closing Scion, the fund held put options on Palantir (NASDAQ: PLTR) and Nvidia (NASDAQ: NVDA), two tech stocks that Burry sees as overvalued. He continues to hold those options in his personal portfolio. The trade has a similar setup to the "big short" that made him famous. Will it turn out the same way?
Source
Originally published at www.fool.com.