Famous 'Big Short' Investor Michael Burry Is Betting Big Against Chip Stocks Like Nvidia and AMD
Michael Burry was among a small minority of investors who predicted the housing market collapse that preceded the Great Recession. The S 500 fell by more than 50% as those events unfolded, erasing trillions of dollars in wealth. But Burry turned a tidy profit. He pocketed $100 million and made another $700 million for hedge fund clients by betting against subprime mortgage bonds. Those events inspired the 2015 film The Big Short.
Burry turned his attention to soaring semiconductor stocks in the third quarter. His hedge fund, Scion Asset Management, purchased $47 million in put options -- contracts that confer the right to sell a security at a specific price within a certain time frame -- on the iShares Semiconductor ETF (NASDAQ: SOXX). That index fund tracks 30 chipmakers and semiconductor equipment suppliers, including Nvidia (NASDAQ: NVDA) and Advanced Micro Devices (NASDAQ: AMD).
The iShares Semiconductor ETF has gained 47% year to date, more than doubling the return of the S 500. Those gains come amid a flurry of enthusiasm surrounding artificial intelligence (AI), but Burry clearly sees substantial downside. The put options Scion purchased account for nearly half of its portfolio.
Source Fool.com
