Burry details latest moves, offers thoughts on the Nvidia scandal

Nvidia shares have fallen 9.5% since Monday, the first trading day after reports that CEO Jensen Huang had an affair with an alleged Chinese spy. Prominent short seller Michael Burry has no plans to buy Nvidia, saying the scandal could hasten the erosion of Nvidia’s competitive advantages. Which companies and sectors is he betting on now?

The news about Nvidia’s CEO was “not something I expected,” Burry said. He was “a bit shocked at how the market has turned on the company.” “If not for the thesis I have espoused over the last year, this kind of selloff in NVDA stock is the kind of think that gets a contrarian a little pumped,” he wrote on his blog.

Even at current prices, Burry sees little appeal in Nvidia as a long-term investment. He thinks traders may soon see an opportunity to buy the stock for a short-term trade, however. Burry bet against Nvidia last year and has long been a skeptic.

Burry expects the scandal involving Huang to have little impact on Nvidia’s financial performance, but he sees its competitive edge shrinking over the next five years. That erosion could accelerate, he says, as Huang’s personal life, Nvidia’s trade in advanced graphics processors with China, and the U.S. Justice Department’s ongoing antitrust investigation, which began under President Joe Biden, come back into focus.

Burry’s biggest holdings are Australian retailer Temple & Webster and Latin American e-commerce platform MercadoLibre. Each accounts for more than 10% of his portfolio.

He has continued to add to his MercadoLibre position even though the stock could fall further. He bought twice in recent trading sessions, both times at less than $1,500 per share. Burry sees the name as an attractive long-term investment in the $1,400s. He wrote that he expects to buy more if it falls another 20%.

Burry also added to his Adobe position despite the stock’s weak performance. This spring, the company announced a program to buy back up to $25 billion of stock through the end of April 2030. Burry expects buybacks at current low prices to support the stock and is comfortable with it trading in the low $200s for a while.

He also bought more stock in Chinese internet giant JD.com. Burry thinks investors are overlooking the company and that its stock is cheap. He still sees upside in athletic apparel brand Lululemon and footwear maker Deckers. He thinks both names look undervalued relative to current earnings. In early October, he sold his Lululemon shares to realize a loss and reduce his tax bill, and bought Deckers shares as what he initially saw as a temporary replacement. Burry now says he may wait for the right time to buy Lululemon again while maintaining his Deckers stake.

In addition to Deckers and Birkenstock, Burry owns stock in stuffed animal maker and retailer Build-A-Bear and long-dated call options on Sprouts Farmers Market, a grocery chain specializing in fresh produce and organic foods. He added to his Sprouts position on Tuesday.

Burry also wrote that he kept his stake in Veeva Systems, a major provider of software for the pharmaceutical industry, after a sharp run-up in its stock. He closed out the call options he had sold and kept his long position.

Burry has kept his basket of Chinese stocks intact despite their weak performance and continued softness in Chinese consumer demand. Alongside JD, he holds tech giant Tencent, food delivery service Meituan, appliance maker Haier Smart Home, restaurant chain Haidilao, and electric vehicle maker BYD. Each position other than JD accounts for just over 2% of his portfolio.

While buying beaten-down stocks, Burry is holding put options on the Nasdaq 100 index, the VanEck Semiconductor ETF (SMH), and shares of Oracle, Palantir, Caterpillar, and MetLife.

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