After warning of a bubble, "The Big Short" reveals latest positions: 80% short on Palantir and Nvidia

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After Warning of a Bubble, "The Big Short" Positions Exposed: 80% Betting Against Palantir and Nvidia

Michael Burry, the investor made famous by the movie "The Big Short," is turning his warnings about the AI bubble into action. The latest regulatory filings show that about 80% of the positions managed by his Scion Asset Management are concentrated on shorting Palantir and Nvidia, two iconic companies of the AI boom, attracting significant market attention due to the scale of the bet.

According to a previous article by WallstreetCN, Burry recently posted a cryptic message on social media platform X, referencing classic films "WarGames" and "The Big Short," saying: "Sometimes we see bubbles. Sometimes we can act. Sometimes the only winning move is not to play." He then hinted that AI investment returns were too low, similar to the excessive fiber optic capital expenditures during the internet bubble era, predicting that many leading companies in today's AI craze would eventually collapse.

The 13F filings released two weeks ago confirm that Burry is indeed "taking action." He holds put options on Palantir with a notional value as high as $912 million (equivalent to 5 million shares), and put options on Nvidia with a notional value of $186 million. However, the filings did not disclose the actual premium paid for these options, their strike prices, or expiration dates.

This bet is facing significant paper losses. As of September 30, the benchmark date for the 13F filing, both stocks have risen sharply, meaning Burry's short positions have already suffered substantial losses, unless he has closed out his positions. Whether his aggressive short strategy can replicate the success of the 2008 subprime mortgage crisis remains in doubt.

Concentrated Shorts on AI Leaders

According to Scion Asset Management's position filings, its portfolio shows a marked split. Part of it is composed of relatively small traditional holdings, including companies like Bruker, Lululemon, SLM, and Molina Healthcare.

The other half is entirely made up of options positions, the most notable of which are puts against Palantir and Nvidia. These two bets represent the vast majority of the portfolio, indicating that Burry is focusing his efforts on shorting what he sees as the "AI bubble." It is worth noting that the filing did not disclose the actual purchase costs, strike prices, or expiration dates of these options—critical details that will determine the ultimate profit or loss of these trades.

Burry's strategy mirrors his legendary move ahead of the subprime crisis. At that time, he shorted the U.S. real estate market precisely using credit default swaps (CDS). Now, he is once again targeting assets seen as symbols of "market mania," aiming to replicate his historic success.

After issuing a public warning about the bubble, Burry is proving his stance with real action, which some market watchers see as a market top signal. Just like in the past, he is attempting to "hit a home run on the bubble's fence."

Timing Remains Key

Although Burry's short actions have drawn market attention, investors should remain cautious. History shows that even if one's direction is correct, timing is critical.

Looking back at his trades before the 2008 financial crisis, Burry actually established his short positions about two years in advance. Although he ultimately achieved huge success, the high cost of maintaining his CDS positions almost drove him to the brink during that time. Entering too early can bring huge carrying costs and pressure.

Moreover, Burry's market timing in recent years has not always been accurate. For example, he warned the market risk in January 2023 with a single word—"Sell"—but the market then soared in a powerful rally. This latest short faces a similar challenge; since the September 30 filing disclosure, the share prices of Palantir and Nvidia have already put his short positions at a loss.

Risk Warning and DisclaimerThe market carries risks; investments should be made cautiously. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of any individual user. Users should consider whether any opinions, views, or conclusions in this article are suitable for their particular circumstances. Investing based on this information is at your own risk. ```