Burry has reshuffled his bearish bets. What did he buy and sell?
The famed short seller is betting on a tech decline, retaining Palantir puts, and increasing his investments in mortgage giants Fannie Mae and Freddie Mac
Burry is considering returning to his late-1990s strategy of selling even undervalued stocks / Photo: FotoField / Shutterstock.com
Famed short seller Michael Burry wrote on his Cassandra Unchained blog on Sunday that he had again reshuffled his bearish bets, concentrating them in put options on the Nasdaq 100 and the VanEck Semiconductor ETF (SMH). Burry is preparing for the market reversal he is predicting: in his view, the bull market will peak within the next nine months.
To bet on a decline in the Nasdaq 100, Burry chose put options expiring in April 2027 with strike prices roughly 20% below the index’s current level. That expiration fits his forecast for a market reversal, while low volatility makes the options relatively inexpensive.
Burry concentrated his bets against semiconductor stocks in put options on the SMH, expiring in June 2027 with strike prices roughly 20% below the fund’s current share price. SMH’s largest holdings are Nvidia (19.6%), Taiwan Semiconductor (9.3%), and AMD (5.6%).
Burry closed his short position in Palantir, covering half in June and the rest when he switched to put options on the company’s stock expiring in September 2027. Palantir shares have doubled since June to hit an all-time high. Burry does not rule out another sharp rally but views declining trading volume as a sign of weakening buying demand.
Burry also made a trade outside of the AI sector. He sold all his common shares in mortgage companies Fannie Mae and Freddie Mac and instead bought five series of junior preferred shares, increasing his allocation to the firms to 8-10% of his portfolio. Burry expects a return of up to 290% if preferred dividends are reinstated when the companies exit conservatorship and the shares return to par value.
Following a strong rally in cloud software developer Veeva Systems, Burry decided to partially protect his position against a possible decline: he sold call options covering his entire holding, expiring in November with strike prices roughly at the stock’s current price.
Burry continues to hold put options on Oracle, insurer MetLife, and construction and mining equipment manufacturer Caterpillar, expiring in December 2027, January 2029, and December 2027, respectively. The strike prices for all three are well below the stocks’ current prices.
Burry also retains positions in health insurance company Molina Healthcare, online retailer Temple & Webster, footwear maker Birkenstock, hospital operator HCA Healthcare, footwear and apparel manufacturer Deckers Outdoor, software developer Adobe, mining company Ero Copper, and fintech Fiserv.
Over the next 6-9 months, Burry seeks to limit losses on his long positions while maintaining maximum leverage for his bearish bets. He is considering returning to a strategy he used in the late 1990s, when stock indexes were still rising but an increasing number of stocks were falling, including those of undervalued companies. Burry sold those stocks as they hit new lows to avoid even larger losses.
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