- Wednesday, October 16, 2024
Renowned investor Michael Burry has set his sights on semiconductor stocks, narrowing his bearish call on U.S. stocks overall. In his latest quarterly filing, Burry's Scion Asset Management revealed that it purchased put options against the iShares Semiconductor ETF (ticker: SOXX) with a notional value of $47.4 million. Put options grant the holder the right to sell the security at a predetermined price within a specified timeframe.
This move goes against the current market trend, as semiconductor stocks have been touted as beneficiaries of the growing investment in artificial intelligence. The iShares Semiconductor ETF is dominated by top holdings such as Nvidia (NVDA), Advanced Micro Devices (AMD), and Broadcom (AVG), all of which have experienced substantial gains this year due to the excitement surrounding AI.
Despite the optimism surrounding these stocks, Burry remains skeptical and has taken a contrarian stance. It is worth noting that previously, he had also bet against Tesla (TSLA) and Cathie Wood's flagship ARK ETF (ARKK).
As of Tuesday's close, the iShares Semiconductor ETF has surged by an impressive 46% year-to-date. In premarket trading on Wednesday, it showed a slight increase of 0.5%. Burry's put trade aligns with his consistent skepticism towards high-flying technology plays.
A More Conservative Stance from Burry
Prominent investor Michael Burry has recently taken a more conservative approach, deviating from his previous bearish outlook on the market as a whole. In a recent filing, Burry indicated that he has closed out larger put option positions tied to ETFs tracking the Nasdaq 100 and S&P 500. This move contrasts with the stance that his firm, Scion Asset Management, had announced in their prior quarterly filing.
While Burry's bet against semiconductor stocks is partly dependent on the progress of artificial intelligence (AI), there are broader indications of fragility within the sector. Several chip makers that cater to the automotive and industrial markets have recently issued warnings about prolonged weak demand.
Although Burry and Scion have not publicly commented on these latest developments, it is worth noting that the quarterly reports are not due until 45 days after the quarter ends. Therefore, it remains unclear whether Scion still holds the position or how it has performed thus far. It is important to note that the amount paid for the put option is likely to be significantly smaller than its notional value.
Michael Burry gained widespread recognition following his portrayal by Christian Bale in the movie "The Big Short," which chronicled his successful bet against the housing market prior to the 2007 subprime mortgage collapse.
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