Michael Burry’s Scion Fund Is Deregistered, SEC Filing Shows

Michael Burry's Scion Asset Management has terminated its SEC registration, effective November 10, signaling a potential closure of the hedge fund or a shift to managing only internal capital, as firms with over $100 million AUM typically require registration. Burry, known for his successful 2008 bet against the housing market, recently expressed skepticism about market exuberance and the AI boom, having disclosed bearish put options against Nvidia and Palantir Technologies in Q3 filings, while hinting at new ventures.

Analysis

Michael Burry's Scion Asset Management terminated its SEC registration on November 10, a significant development given that investment advisers managing over $100 million in regulatory assets typically require such registration. This deregistration, following a March filing indicating $155 million in AUM, suggests a potential closure of the hedge fund or a strategic shift to managing only internal capital, echoing Burry's past action of shuttering Scion Capital in 2008.

Burry, renowned for his successful 2008 bet against the US housing market, has recently expressed strong caution regarding broader market exuberance, specifically questioning the financial soundness of the AI boom. His social media posts hinted at impending "bubbles" and alluded to "much better things Nov 25th," signaling a potential new focus or strategy.

Scion's third-quarter filings disclosed significant bearish wagers, including put options against Nvidia (NVDA) and Palantir Technologies (PLTR), both key beneficiaries of artificial intelligence advances. The firm specifically allocated approximately $9.2 million to Palantir put options with a $50 strike price expiring in 2027, underscoring a high-conviction bearish stance on these AI-driven equities. The overall sentiment surrounding this news is moderately negative (-0.4) with a cautious tone, reflecting the potential implications of Burry's actions and market outlook.

Key Decisions for Investors

• Investors should closely monitor any further public statements or actions from Michael Burry, given his historical success in identifying significant market dislocations.
• Re-evaluate current portfolio exposure to high-growth AI-related equities, such as NVDA and PLTR, in light of Burry's significant bearish positioning and expressed market skepticism.
• Consider incorporating hedging strategies or adjusting risk profiles, particularly for portfolios heavily weighted towards sectors exhibiting signs of exuberance, as suggested by Burry's cautious stance.