Michael Burrythe famous investor of “Big Short“, The man who predicted the collapse of the US housing market in 2008, sounded the alarm on”largest speculative bubble of all time“About a year ago. Burry has sought to especially warn retail investors who own large amounts of stocks, meme stocks and cryptocurrencies.
Yesterday a tweet from Burry, not particularly active on social media, right after the publication of the data on the United States real estate market, alerted investors at an already complex time for the financial markets. The S&P 500 is flirting with the threshold of the “bear market” or a decline in 20% compared to the highs and the Nasdaq is already down 28% from the beginning of the year.
“As I said about 2008, it’s like seeing a plane crash. It hurts, it’s not funny and I’m not smiling, ”reads the tweet that Burry later deleted as his custom.
Tuesday’s cryptic tweet came at a stage where the S&P 500 registered seven consecutive weekly declines, the worst series since 2001.
Burry’s hedge fund, Scion Asset Management, has over $ 291 million in AUM and is a very active fund with an average holding period of 0.08 quarters.
Scion’s largest short position is dput options against Apple. The fund has 2,060 put options. These put options represent the right to sell 206,000 shares of Apple if they expire in the money. The second position is in Bristol-Myers Squibb, in this case bullish and which proved to be a great bet for Burry, as he is up 23% YTD compared to the 18% YTD loss of the S&P 500.
Alert for the real estate market
US government real estate data highlighted the collapse in sales of new homes for the month of April, -16.6% compared to March, equal to 0.591 million annualized with respect to 0,709 million of the previous month. This is the slowest sales pace since April 2020 (when the US was in the midst of the first Covid lockdown).
Consumers are hit by rising interest rates and the highest inflation in the past four decades. This makes it even more difficult to afford homes at the high prices at which they have soared. In the USA the average price of a new home sold in April was $ 450.600with a increase of almost 20% compared to a year earlier.
Burry’s bet against the real estate market in 2008
The story of Michael Burry, with his gamble against the real estate market before the 2008 financial crisis, was immortalized in the book by Michael Lewis “The Big Short” and the subsequent blockbuster. Yesterday’s tweet isn’t new to Burry who had alarmed investors in the past. As is his custom, Burry soon deletes his tweets. In detail, Mr Big Short had already warned small investors about a year ago that the “Mother of all collapses” was arriving.
Will Burry be right this time?