Michael Burry, known for his role in “Big Short,” and Warren Buffett have made some intriguing moves in the stock market recently. According to SEC filings released on Monday, Burry’s Scion Asset Management fund purchased $866 million in put options against an S&P 500 fund and $739 million in put options against a Nasdaq 100 fund. Despite the S&P 500 and Nasdaq 100 both experiencing gains this year, these put options will allow Burry to profit if the market declines. The exact cost of the puts is unknown as of now, but it is believed to be much less than their notional value.
One theory from Insider suggests that Burry’s holdings could be hedges to protect Scion’s portfolio in case of a market slump. Alternatively, they could indicate Burry’s pessimism towards the two index funds, which are heavily weighted with stocks like Tesla and Nvidia. Meanwhile, Warren Buffett’s Berkshire Hathaway sold $8 billion of stocks in Q2 and reduced its buybacks. This cash-saving move boosted Berkshire’s total cash to a near-record $147 billion.
Robert Kiyosaki, the author of “Rich Dad Poor Dad,” believes that both Burry and Buffett are waiting for the market to crash before reinvesting their funds. He sees this as a significant amount of money on the sidelines. However, a recent Bank of America survey reveals that most fund managers are not taking the same cautious approach. The survey shows that their cash levels have decreased from 5.3% to 4.8%, indicating their preference for investing rather than holding onto cash.
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