Latest news with #BigShort
Globe and Mail
19-05-2025
- Business
- Globe and Mail
After Nearly Dumping His Entire Portfolio and Buying Puts on Nvidia, Did Famed Investor Michael Burry Just Pull Off Another "Big Short?" It Certainly Looks That Way.
If you've seen the movie The Big Short, which is based on the novel by Michael Lewis and features acclaimed actors Steve Carrell, Christian Bale, Ryan Gosling, and Jeremy Strong, then you probably know who Michael Burry is. The former Stanford neurology resident rose to prominence while posting stock ideas online during the early days of the internet. His ideas were so good that he eventually left the medical field to launch his own fund. Prior to the Great Recession, Burry correctly bet against the housing market, making hundreds of millions in profits for his fund, Scion Capital. Now, Burry runs another fund called Scion Asset Management, which happened to sell nearly all of its stocks in the first quarter, while also buying put options. Did Burry just pull off another "big short" trade? It certainly looks that way. Burry timed the tariff-induced sell-off perfectly Burry never runs too large of a portfolio, typically holding about a dozen stocks, plus or minus a few. In the first quarter, he sold nearly all of his holdings. He had been quite bullish on China, owning large Chinese stocks like Alibaba, Baidu, and PDD Holdings. But after selling these stocks, he also purchased put options on these names. Put options are similar to call options but in the opposite direction, essentially betting that a stock price will decline. Burry also purchased put options on Nvidia. Now, keep in mind that the 13F filing with the Securities and Exchange Commission only shows us Scion's positions at the close of trading on March 31. We have no idea at what point during the first quarter Burry sold or at what price. However, it's quite possible that Burry saw rising trade tensions between the U.S. and China and decided to get ahead of a potential marketwide sell-off caused by tariffs. If this was the case, then Burry pulled off another "big short" trade and timed it perfectly because the market absolutely collapsed in early April after President Donald Trump's "Liberation Day," falling nearly 20% from highs made in February. Nvidia, at one point this year, traded 30% lower and was down much more from highs made during the year. Nvidia not only got hit by the trade war but also after the Trump administration placed export restrictions on certain semiconductor chips to China. Nvidia does a substantial amount of business in China, but the stock has recovered a lot since the U.S. and China announced a 90-day pause on higher tariff rates against one another. NVDA data by YCharts. Interestingly, Burry's lone remaining long position is the multinational cosmetics company Estée Lauder, which is down over 50% in the last year (as of May 16). Scion actually doubled its position in the company in the first quarter. It's not uncommon for Burry to take long positions in deep-value stocks like he did with GameStop right before the meme stock blasted into orbit in what turned into an epic retail trading frenzy. Is Burry going long-term bear? We really won't know the answer to this question until we see Scion's 13F for the current quarter sometime in July. However, it's quite possible that Burry was only short-term bearish and saw the trade war coming. Burry has done this before. In the second quarter of 2022, right after the Federal Reserve began its intense interest rate hiking campaign, Scion also sold all of its stocks except one. By the third quarter, Scion had begun accumulating stocks again. It would, of course, be quite impressive if Burry sold all of his stocks in the first quarter and then bought the dip after the market sold off intensely right before Trump announced a pause on elevated tariff rates. I wouldn't put it past the legendary investor. Burry could also be more long-term bearish, as he studies economic data closely, which indicates a potential slowdown in consumer spending and the overall economy. I think the big takeaway is that we don't quite know how Burry is positioned for the rest of the year just yet in terms of being bearish or bullish. However, it definitely looks like Burry pulled off another "big short" trade. Don't miss this second chance at a potentially lucrative opportunity Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $351,127!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $40,106!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $642,582!* Right now, we're issuing 'Double Down' alerts for three incredible companies, available when you join Stock Advisor, and there may not be another chance like this anytime soon. See the 3 stocks » *Stock Advisor returns as of May 19, 2025
Globe and Mail
16-05-2025
- Business
- Globe and Mail
Investor Michael Burry Bets Against Nvidia Stock (NVDA)
Closely followed Investor Michael Burry has bet against leading chipmaker Nvidia (NVDA). Confident Investing Starts Here: Quickly and easily unpack a company's performance with TipRanks' new KPI Data for smart investment decisions Receive undervalued, market resilient stocks straight to you inbox with TipRanks' Smart Value Newsletter Burry, who successfully bet against the subprime mortgage market and was profiled by author Michael Lewis in the book 'The Big Short,' has now turned bearish on NVDA stock. According to his latest 13-F regulatory filing with the U.S. Securities and Exchange Commission (SEC), Burry's investment firm Scion Asset Management opened put calls on Nvidia's stock during this year's first quarter. Puts are bets that a share price will decline over a period of time. Burry's bet appears to have been a successful one as NVDA stock fell 37% from January through the beginning of April. Nvidia's share price has since rebounded and its market capitalization is again above $3 trillion. It is not known if Burry continues to be short Nvidia stock or if he has ended the trade. The 13-F forms are backward looking and show the moves of investors in the previous quarter. The SEC requires all investment managers that hold over $100 million in securities to disclose their positions in quarterly filings known as 13-Fs. Bearish on China Nvidia was not the only stock that Michael Burry shorted during Q1 of this year. The well-known investor also turned bearish on Chinese stocks during the quarter, buying bearish puts on shares of Chinese stocks which he had previously been accumulating. The Chinese stocks that Burry shorted include Alibaba (BABA), Baidu (BIDU), and (JD), three of China's best known and well-regarded technology firms. The only long position remaining in Burry's concentrated portfolio is Estee Lauder Cos. (EL). The investor sold all his other stocks. Is NVDA Stock a Buy? The stock of Nvidia has a consensus Strong Buy rating among 40 Wall Street analysts. That rating is based on 34 Buy, five Hold, and one Sell recommendations assigned in the last three months. The average NVDA price target of $164.51 implies 22.01% upside from current levels.
Forbes
13-05-2025
- Business
- Forbes
Short Sellers Are Changing Up Their Strategies For 2025
The first part of May has been a particularly terrible period for short sellers, who lost $69.4 billion through May 9, according to data from Ortex. However, short sellers are having an outstanding year overall, gaining $63.1 billion year to date through May 9. March was a particularly good month, with short sellers gaining $86 billion, although they were down $14.7 billion for January. Now with more than half the year left, some short sellers are anticipating a good year for the practice, while others remain a bit tentative on the topic. Nonetheless, at least two notable short sellers are adapting their practices to today's market environment. NEW YORK, NY - NOVEMBER 23: (L-R) Byron Mann, Finn Wittrock, Michael Lewis, Jeremy Strong, Steve ... More Carell, Adam McKay, Ryan Gosling, Brad Grey, Brad Pitt and John Magaro attend "The Big Short" Premiere at Ziegfeld Theatre on November 23, 2015 in New York City. (Photo byfor Paramount Pictures) Gabriel Grego of Quintessential Capital feels the current environment is favorable versus past years like 2021, although he admits there are causes for concern. 'Higher interest rates, political and trade uncertainties, and elevated valuation multiples have made investors more cautious and receptive to well-supported short theses,' Grego said in an email interview. 'On the regulatory and legal side, however, the landscape is less clear. Recent policy shifts under the current administration have introduced some uncertainty, and it's still too early to conclusively determine their full impact on short selling.' He added that while regulators seem more market friendly in principle, practical enforcement, like the Federal Trade Commission's stance on antitrust issues, hasn't yet shown consistent support. Grego expects these regulatory issues to continue which means it's critical for short sellers to remain well informed and act prudently. 'Additional barriers include heightened litigation risk, limited stock borrow availability, the scarcity of reliable hedging instruments (crucial in today's environment of frequent short squeezes), and occasionally hostile or indifferent media,' Grego adds. 'Despite these obstacles, short selling is inherently specialized and challenging, attributes that simultaneously make it uniquely rewarding.' Danny Moses of The Big Short and Flash Boys fame notes an important regulatory change. The Exchange Act Rule 13f-2 with related form SHO, which was due to go into effect this year, is a key regulatory barrier for short sellers, he believes. It requires certain institutional managers to report short-sale information to the Securities and Exchange Commission. Investors have been given a year's reprieve as the SEC provided a temporary exemption from compliance with the rule, extending it to 2026. Moses agrees that short sellers may not be entirely out of the woods yet. He noted in a recent interview that they have many more factors to consider now when shorting stocks versus in the past. 'Investors have to consider the Reddit crowd and the 'animal spirits' on social media,' Moses explains. The movement towards not lending out securities as a way to force shorts to cover. How politically connected a certain company might be regardless of fundamentals. Will regulators turn a blind eye? Lastly, the PR associated with being a short seller can be stressful.' Many short sellers have turned their back on the practice over recent years for a variety of issues. One of the more recent was Nate Anderson, who decided in January to wind down his Hindenburg Research after finishing the pipeline of ideas they were working on. Moses cited a few reasons he thinks some are causing the slowdown. 'First of all, the size of hedge funds these days inhibits single-stock short selling given economies of scale and inability to build a meaningful short position in any small/ mid-cap name,' he said. Most of the time, the best short-selling opportunities might be in less trafficked, more obscure stocks that are not covered by dozens of Wall Street analysts.' Moses also pointed out that information today travels at the speed of light, making opportunities more fleeting. 'Short sellers can't afford to build a position as time is not on your side,' he said. 'I have seen data that suggests the most heavily shorted stocks are the worst performers over a long period of time.' Amid all the uncertainties, Moses and Grego are both adapting their strategies. Although Moses doesn't manage other people's money anymore and only trades for himself, he's much more likely to use options, mostly put spreads, to express his short positions because of how the market dynamics have changed and due to the regulatory landscape. Grego has adopted a more cautious stance over the last few years because of the growing regulatory uncertainty and greatly increased litigation rises. 'Companies are more aggressively pursuing lawsuits against short sellers, regardless of the merits, raising the inherent risks of this strategy,' he explained. 'Nonetheless, we remain convinced that ethical activist short selling continues to play a valuable role and, when carefully managed, can still yield successful and rewarding outcomes.' Although the U.S. hasn't made any moves to ban short selling recently, other countries have recently. Turkey banned short selling about a month ago, as did Thailand. South Korea recently lifted a short-selling ban that began in late 2023. Grego believes bans on short selling often result from populist pressures and 'political optics' instead of sound, economic reasoning. 'In my view, banning short selling is unequivocally misguided and detrimental, primarily harming retail investors in the long run,' he said. 'Extensive academic research consistently demonstrates that banning short selling exacerbates market inefficiencies, promotes speculative bubbles, and enables fraudulent activities, all of which inevitably lead to greater financial instability. Short selling serves as an essential market stabilizer, and removing it deprives markets of an important protective mechanism.' Moses agrees with Grego, saying that while countries ban short selling in an attempt to stabilize their markets, it removes liquidity and 'raises more alarm bells.' 'I have lived through that during the GFC, and I wouldn't rule out it happening again in the U.S.,' Moses added. Despite the international bans on shorting securities, Grego and Moses agree that the benefits of the practice outweigh the risks. Moses pointed out that short sellers often draw attention to problems at companies that regulators overlook. 'If you believe that a company is overstating their profitability with accounting gymnastics or overly optimistic forecasts, it's hard to depend on either regulators or research analysts to police that type of activity,' Moses explained. 'The idea that you need SEC/ DOJ enforcement to expose either fraud or hold companies accountable can't be your thesis.' Similarly, according to Grego, the fundamental benefits of short selling have remained the same over the years. He noted that short sellers 'provide crucial skepticism and realism to financial markets, facilitating efficient price discovery and helping to contain speculative bubbles.' 'Properly executed — ethically, professionally, and prudently — short selling acts as an essential market corrective mechanism,' Grego adds.
Yahoo
11-05-2025
- Business
- Yahoo
Baidu, Inc. (BIDU): Among Michael Burry Stocks with Huge Upside Potential
We recently published a list of . In this article, we are going to take a look at where Baidu, Inc. (NASDAQ:BIDU) stands against other Michael Burry stocks with huge upside potential. Michael Burry, founder and manager of Scion Asset Management, is best known for predicting and profiting from the housing bubble's collapse in the mid-2000s. His bold contrarian bet was famously chronicled in the book and film 'The Big Short.' Burry's investment strategy draws heavily from the rigorous market analysis and principles outlined in Benjamin Graham and David Dodd's 1934 book 'Security Analysis.' The book championed the merits of financial statement analysis, highlighting the importance of intrinsic value and structured investment principles. That said, Burry has never shied away from putting his own distinct stamp on Wall Street's time-tested principles. By utilizing complex financial tools, such as derivative securities and short-selling, Burry has amassed a fortune, challenging conventional market wisdom. His 2001 Scion Value Fund letter provides a fascinating insight into his contrarian outlook, which prioritizes long-term value over short-term price fluctuations. Burry makes it clear that to achieve significant long-term returns, he is willing to tolerate short-term volatility. He stated: 'I will always choose the dollar bill carrying a wildly fluctuating discount rather than the dollar bill selling for a quite stable premium.' He also has no qualms about making significant investments in a few stocks that he believes are undervalued, a tactic the investor employed to strengthen Scion's holdings at the end of 2024. In the quarter that ended on December 31, 2024 just before DeepSeek's artificial intelligence breakthrough sparked a $1.3 trillion surge in Chinese tech stocks, Michael Burry offloaded some of his investments in the country's tech stocks. The moves came amid a period of high volatility for Chinese stocks, when investors appeared to be losing faith in Beijing following the implementation of a stimulus package in late September. The government's actions triggered a wild rally until early October, though momentum waned due to a property crisis, a poor economic outlook, and dissatisfaction with the scope of fiscal stimulus in the following months. For this article, we examined Scion Asset Management's Q4 2024 13F filings to list down Michael Burry's stock picks with the highest upside potential. We ranked the companies in ascending order of their upside potential. These equities are also popular among elite hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter's strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (). Michael Burry of Scion Asset ManagementBaidu, Inc. (NASDAQ:BIDU), a leading Chinese technology company, manages China's largest internet search engine. Beyond its primary search business, the company has expanded into AI-driven initiatives that include cloud computing, self-driving technology, and conversational AI models like Ernie. Macquarie analyst Ellie Jiang cut Baidu, Inc. (NASDAQ:BIDU) price target to $83 from $85, while maintaining a Neutral rating on the company. Jiang stated that while Baidu is growing the amount of AI-generated content on its search platform, the plan for monetizing these AI enhancements is still unclear. This is especially important considering the current sluggish economic climate and strong competition in China's search market. Jiang offered a conservative forecast for Baidu's advertising segment, estimating a 6% year-over-year decrease in revenue to Rmb15.9 billion in the first quarter of 2025. However, despite present obstacles, there is a positive aspect concerning Baidu's AI Cloud, which is progressing as a significant area of growth. The AI Cloud's revenue is predicted to climb by 25% year on year in the first quarter to Rmb5.9 billion, which could help ease the challenges faced by the company's advertising segment. Overall, BIDU ranks 8th on our list of Michael Burry stocks with huge upside potential. While we acknowledge the potential for BIDU as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than BIDU but trades at less than 5 times its earnings, check out our report about this . READ NEXT: and . Disclosure: None. This article is originally published at . Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
New York Post
29-04-2025
- Business
- New York Post
Goldman Sachs CEO David Solomon warns Trump's tariffs are forcing CEOs ‘to tighten their belts'
Goldman Sachs CEO David Solomon sounded alarm bells over President Trump's trade war, warning the looming threat of tariffs is hurting the US economy and forcing CEOs 'to tighten their belts.' The 63-year-old Wall Street titan used a Tuesday interview with Bloomberg TV to issue some of his bluntest public criticism yet of the White House's tariffs policy as Trump reached the 100-day milestone of his second term. 'The policy actions to date have raised the level of uncertainty to a degree I do not think is healthy for investment and growth,' said Solomon. 'As I am talking to CEOs, talking to our clients, they are holding back on investment, and they are certainly tightening their belts.' 3 Goldman Sachs CEO David Solomon was speaking to Bloomberg TV in Norway during which he gave his assessment of Donald Trump's first 100 days of his second term in office. Bloomberg Television At the same time, Solomon appeared to throw his support behind Trump's effort to rework the US trading relationship with the EU and cut back on the 'regulatory bureaucracy' of 'complex' Brussels red tape — particularly when it comes to banking regulations. 'I definitely take away a sense of resolve, of excitement, about actually moving forward, breaking down some of the regulatory barriers that have been inhibitions to growth here, and that would be quite constructive,' the Goldman boss said. Solomon told Bloomberg that it was 'important to get more clarity on the direction' of trade policy so that 'things will settle down' in the markets and hand a possible boost to M&A deals. 'Capital markets activity was up year-over-year in the first quarter,' the top banker said. 'If the level of uncertainty grows from here, yes, you won't see the same amount of capital markets activity.' 3 Legendary 'Big Short' investor Steve Eisman told The Post that dealmaking would be revived once Trump had completed his trade negotiations. Steve Eisman/Youtube 'People need to transact, need to raise capital, need liquidity for their investments. Part of this is just a reset of expectations,' he added. His comments come eye-watering $80 million retention bonuses for Solomon and his right-hand man, chief operating officer John Waldron, were formally signed off by shareholders earlier this week. 'The Big Short' investor Steve Eisman, who predicted the 2008 global financial crisis, told The Post that he believed dealmaking would be revived once Trump's trade negotiations had been completed. 'M&A activity will come back and we will get through this, one way or the other,' the lead anchor of the Eisman Playbook podcast said. 'Your model about what a company is going to do is irrelevant right now. There's only one variable that matters: politics. Everything else is out the window. Take a vacation on your fundamental analysis.' A report by Goldman economists entitled 'Tariff-Induced Recession Risk' cut its US growth forecast for 2025 to 1.3% from 1.5% and predicted a 45% probability of a recession over the next 12 months, up from 35%. Despite unease about the administration's trade policies, Wall Street banks reported a surge in trading revenue in the first three months of this year. Goldman's trading division reported revenues of $4.2 billion, up 27% from the same period last year, as investors scrambled to remake their portfolios to mitigate the hit from the new tariffs. 3 President Trump unveiled a string of reciprocal tariffs on April 2 that sparked a massive selloff across global markets. An analysis on Trump's tariffs by New York City's economic watchdog, the Office of the Comptroller, was published earlier this month and forecast news for Wall Street's bottom line. It predicted that 2025 profits will 'decline by 20% from their lofty 2024 levels' in a no-recession scenario. That figure rises to 40% in a mild recession, and as much as 55% in a deep recession, according to the comptroller's report. Trump's announced a string of reciprocal tariffs against some of America's biggest trading partners on his so-called 'Liberation Day' on April 2, only to hit pause on the levies for three months just days later. Investor fears about trade contributed to a 13% decline in U.S. mergers and acquisitions in the first quarter, according to data compiled by Dealogic, a consultancy, before the Rose Garden announcement.
