Michael Burry Bets Against Cathie Wood's Ark, Adds To Tesla Puts

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by Tyler Durden
Monday, Aug 16, 2021 - 12:36 PM

Today is the deadline for 13F filings and while we already know what most of the marquee hedge funds have done during the quarter thanks to previously leaked investor letters (with the notable exception of the Soros Family Office which we learned over the weekend liquidated all of the $375MM of Archegos shares it had rushed to purchase in the last days of Q1 after suffering millions in losses), one filing was of particular interest, that of Scion Asset Management's Michael "Big Short" Burry. And boy were there surprises.

As a reminder, one quarter ago Burry's 13F caused a stir across trading desks when the "Big Short" revealed a major Tesla put, which with nominal value of $534 million and representing just over 800K underlying shares, was Burry's largest position in Q1. Also notable was Burry's aggressive positioning for a surge in inflation (as a reminder, it was Burry back in February warned that Weimar hyperinflation is coming), which as of March 31 he traded as follows:

  • PUT on the TLT 20+ Year TSY bond ETF, equivalent to some 1.266MM shares or $171.5 million
  • CALL on the TBT 20+ Year Treasury Ultrashort ETF, equivalent to 2.536MM shares or $55.1 million
  • CALL on the TTT 20+ Year Treasury Ultrashort ETF, equivalent to 100K shares or $4.6 million
  • CALL on the 3x levered TMV 20Y Treasury Bear ETF, equivalent to 38,400 shares or $3.1 million
  • Outright long in the TBT 20Y Treasury Ultrashort ETF, amounting to 300,000 shares or $6.5 Million.

Another notable change was Burry's substantial bullish bet on FAAMG giants Alphabet and Facebook, where Scion owned a little over $160 million in Call premium, or an equivalent of 80,000 shares of GOOGL and 550,000 shares of FB.

So fast forward to today when this morning Burry's Scion Asset Management released its latest 13F when yet again there was a notable surprise: a big bearish bet against one of Wall Street's biggest bubble chasers - Cathie Wood.

Specifically, as of June 30, Scion owned Puts contracts against 235,500 shares of the ARK Innovation ETF. As everyone knows by now, the flagship exchange-traded fund of Cathie Wood and her firm Ark Investment Management has emerged as the US SoftBank, investing billions into anything with a "story", and betting for virtually perpetual growth in countless growth and momentum stocks. In the process it has lured billions in the past year after her thematic tech-focused bets trounced the market in 2020, although Wood and Ark have struggled to maintain their momentum this year, amid concerns about lofty valuations and accelerating inflation.

To be sure, Burry was already indirectly betting against Ark's biggest long, Tesla, but now he has taken the fight directly to Cathie Wood. And speaking of TSLA, Burry's massive bearish bet has increase by over 34% and the Puts now cover 1,075,500 TSLA shares, representing a nominal value of $731 million as of June 30 (naturally the actual capital at risk is far lower, although without more details on which specifics TSLA puts Burry has bought it is impossible to defined his full exposure), making the TSLA short his biggest position.

Besides Ark and Tesla, Burry added to many of his positions from last quarter, bumping his Facebook Call position by 71%, while also adding modestly to his Alphabet calls.

Also notable: Burry added to one of the Archegos liquidation shares, showing a 24,780 share stake in Discovery as of June 30.

There was sizable rotation elsewhere, with the fund opening new call positions in McKesson, Walmart, Cardinal Health, as well as new stock position in energy producer Ovintiv while liquidating his positions in Occidental, Precision Drilling; Burry also added to correctional facilities provider GEO Group, while liquidating his modest stake in Lumen, Genco Shipping, RPT Realty, Now Inc, NetApp, Meredith and others.

Altogether, Burry's portfolio had a nominal value of just over $2 billion as of June 30, but note that most of this is in the form of call and put value-equivalents;  the actual value at risk for Burry in these names is far lower.

To summarize: Burry sees downside in Tesla and Cathie Wood's Ark ETF, upside in Alphabet and Facebook, and is betting on a surge in Treasury yields.

The table below summarizes the latest Scion 13F, with new positions in green.

Source: 13F