After “shorting” and making huge losses half a year ago, the latest move of “big bears”: heavy positions, increased shorting of US chip stocks, including Nvidia

wallstreetcn ·  11/15/2023 18:28

Source: Wall Street News

Six months ago, Michael Burry, who suffered huge losses due to shorting, admitted that he should not shout the slogan for selling. Six months later, this well-known Wall Street short continued to rapidly rotate his entire investment portfolio, buying Chinese securities that had previously been cleared and shorting chip stocks.

According to the latest 13F documents, in the third quarter, Burry cleared a total of 25 existing positions, including the previous three cash positions Expedia, Charter, and Generac, and added a number of small stocks, such as Stellantis, Nexstar, etc., but these new stocks did not perform well in the third and fourth quarters. He also carried out a safe haven operation on the booking website Booking Holdings, and bought put options while holding stocks.

Other than thatBurry bought JD and Alibaba again. Obviously, he is still looking forward to a rebound in China's stock market. It is worth mentioning that JD and Alibaba held the largest shares of Burry in the first quarter, and in the second quarter, Burry sold them again.

More importantly, he bought SOXX (US semiconductor ETF) put options on a large scale and shorted chip stocks. This may have been influenced by his short views on chip stocks such as Nvidia.

However, in hindsight, this was still a failed transaction. The SOXX index later surged and rebounded to a level higher than when Burry bought put options, mainly benefiting from the sharp rise in Nvidia's stock price.

Heavy stock holdings in China in the first quarter

In the first quarter of this year, Burry maintained the trend of rapid rotation of the entire investment portfolio and cleared his remaining 2022 holdings, sold off all of his holdings in companies such as Black Knight, Wolverine World Wide, MGM, and Qurate, reduced his holdings in GEO Group, the largest previously held real estate operator, and redistributed earnings to 3 areas:

Increased holdings in China Securities, and JD and Alibaba became the largest holdings;

Establishing new positions in energy companies such as Coterra, NOV, and Devon;

Most notably, of its 21 positions, 7 are bank stocks. With the exception of Wells Fargo, most of them are troubled small regional banks and/or credit card companies, such as CapitalOne, Alliance West Bank, West Pacific Bank, First Republic Bank, and Huntington National Bank. All of these banks were hit hard by the March banking crisis.

This is already beginning to suggest that “big short” Burry may be adjusting his market views and investment direction.

Large-scale short selling in the second quarter, loss clearance

Back in August, Burry's Eagle Rock Asset Management made drastic adjustments to the investor's personal portfolio.

First, Burry cleared most of his first-quarter holdings and sold his previous two largest holdings, JD and Alibaba, as well as 13 other stocks, including Zoom, Sibanye, Investments, energy companies Coterra, NoV, and Devon, and all banks he bought during the three-month banking crisis, including Capital One, Wells Fargo, Alliance West Bank, Westpac Bank, and First Republic Bank.

At the same time, he also bought a bunch of stocks. As of June 30, Burry's largest cash holdings were Expedia ($10.9 million), Charter Communications ($9.2 million), and Generac ($8.2 million), respectively, but the latter's market value plummeted by nearly one-third after the release of its disastrous second-quarter earnings report. Other companies that Burry bought include Cigna, CVS, MGM, and Stellantis.

However,The most interesting thing is not the single stock that Burry trades, but his ETFs and derivatives trades.

Burry carried out a large-scale short sale in the second quarter of 2022, but by the third quarter, the investment had been liquidated at a loss.

At the end of June 2022, Burry held a large number of SPY (S&P 500 ETF) and QQQ (Nasdaq 100 ETF) put options. The total nominal value of these put options was as high as 1.6 billion US dollars. By the third quarter, Burry had closed positions and liquidated these Spy and QQQ put options.

However, when Burry closed his position, the S&P index did not fall below the level of June 30. This means that Burry has lost money on this short bet. Maybe the option expires and becomes worthless, or Burry is forced to close the position and stop loss at a low price.


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