Known for his "Big Shorts," Michael Burry, founder and manager at Scion Asset Management, may have just signaled that he believes the market rally has legs.
Burry, portrayed by Christian Bale in "The Big Short," made his name for shorting the market and winning big as he correctly predicted the 2008 financial crisis.
On Tuesday, a 13F filing revealed Burry had closed a large short position — opened in August on S&P 500 and Nasdaq derivates, which are tracked by ETFs including the SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ), respectively.
BREAKING : MICHAEL BURRY HAS CLOSED HIS "$1.6 BILLION DOLLAR" S&P 500 AND NASDAQ SHORT POSITION FOR AN ESTIMATED LOSS OF 40%
— GURGAVIN (@gurgavin) November 14, 2023
Scion filed with the SEC on Tuesday, but the exact value of the move is unknown. Burry's bet might have even paid off — depending at what price he bought the securities and at what price he sold.
Rally could already be on for the S&P 500
It's only just a couple of weeks since the S&P 500 dipped into correction territory — 10% below its previous cyclical peak — and while it has recouped 9%, Burry could still be in the money.
The move does add to a growing sense that the next few weeks and into 2024 could bring further gains for U.S. stocks. Earlier on Tuesday, Benzinga reported that global fund managers had returned to an overweight rating on U.S. equities for the first time since April 2022.
So if Burry has just cashed out on a short position in U.S. stocks, there's further reason to believe that institutional investors are preparing for an old-fashioned Santa rally.
Michael Burry illustration by Gonzalo Lanzilotta for Benzinga.