Michael Burry has a new target—semiconductor stocks. The famed The Big Short investor looks to be narrowing his bearish call on U.S. stocks overall, down to one of the buzziest areas in the market.
Burry’s Scion Asset Management bought put options with a notional value of $47.4 million against the
iShares Semiconductor ETF
(ticker: SOXX), according to the firm’s latest quarterly filing. A put is a bearish option that gives the holder the right to sell the security at a set price over a specified period.
It’s a contrarian move at a time when semiconductor stocks seen as benefiting from investment in artificial intelligence have become market darlings. The third-biggest component of the
iShares Semiconductor ETF
is
Nvidia
(NVDA), while the two largest are
Advanced Micro Devices
(AMD) and
Broadcom
(AVG), all stocks that have surged this year on the AI excitement.
The iShares Semiconductor exchange-traded fund has risen 48% this year through Tuesday’s close and was up 1.1% on Wednesday.
The put trade is in keeping with Burry’s previous skepticism toward high-flying technology plays. He has bet against
Tesla
(TSLA) and tech investor Cathie Wood’s flagship
ARK ETF
(ARKK) in recent years.
However, it’s arguably also a more conservative stance from Burry than his previous bearish call on the market as a whole. The latest filing suggests he has closed out much larger broad-based put option positions tied to ETFs tracking the
Nasdaq 100
and
S&P 500,
which Scion had announced during the prior quarterly filing released on Aug. 14.
While the outcome of the bet against semiconductor stocks is partly going to depend on AI, there are broader signs of fragility in the sector. A string of chip makers that serve the auto and industrial markets have warned of prolonged weak demand.
Burry hasn’t publicly commented on his latest moves and Scion didn’t immediately respond to a request for comment. Managers have 45 days to file the reports from the end of the quarter so it isn’t clear if Scion still holds the position or how it has performed. The amount paid for the put option is likely to be much smaller than the notional value.
Burry obtained mainstream fame after he was portrayed by Christian Bale in The Big Short movie, following his bet against the housing market ahead of the 2007 subprime mortgage collapse.
Write to Adam Clark at [email protected]
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