Michael Burry’s Scion Asset Management exited its stakes in Alibaba Group Holding Ltd. and JD.com Inc. in the second quarter, ditching the stocks just months after doubling down on them.
That’s a stark turnaround, considering the two Chinese tech giants comprised 20% of the firm’s portfolio and were its top two equity holdings at the end of March.
Scion liquidated holdings in 15 companies in the second quarter, according to a regulatory filing Monday, including banks that it had scooped up in the preceding period as the failure of several lenders battered the financial sector. They include First Republic Bank, which was rescued by JPMorgan Chase & Co., and PacWest Bancorp, which is being acquired by Banc of California.
Expedia Group Inc. emerged as Scion’s top holding, with the hedge fund acquiring 100,000 shares worth $10.9 million as of midyear. The firm also added shares of Charter Communications Inc. and CVS Health Corp., among the 25 new stakes the fund started last quarter amid a significant portfolio revamp. Scion’s top 15 holdings at the end of June are all new positions.
Financial social media was abuzz Monday with talk that Burry was making a multibillion-dollar bet against the stock market by buying put options on the biggest exchange-traded funds tracking the S&P 500 and Nasdaq 100. A closer look, however, shows the wager is more nuanced.
Scion’s filing shows long put option positions of 20,000 contracts in the two ETFs — equating to 2 million shares each. That was amplified on social media into a huge short bet on the broader US stock market.
The notional value of those shares was $886,560,000, based on SPDR S&P 500 ETF Trust’s closing price on June 30. But depending on the strikes and months of the particular options traded, the size of the actual investment and premium paid would be much smaller. The same is true for the 20,000 puts on Invesco QQQ Trust Series 1, which show a notional value of $738,840,000.
Burry, who rose to fame after predicting the 2008 housing crash, developed a large social media following for his predictions of looming risks. In January, he forecast another inflation spike and said the US was already in a recession.
Scion, based in Saratoga, California, had $233.3 million of assets under management at the end of last year.
Monday is the deadline for thousands of institutional investors, including hedge funds, pension funds and endowments, to report certain US equity holdings to the Securities and Exchange Commission through quarterly 13F filings.
--With assistance from Elena Popina.