'The Big Short' protagonist Michael Burry's Scion Asset Management has revealed an extremely concentrated bearish portfolio, with put options in two stocks - Nvidia Corp and Palantir - comprising 80% of its holdings, according to a new 13F regulatory filing.
The filing shows that the total notional value of the fund surged 139% to $1.38 billion from the previous quarter. The bearish concentration includes $912 million in put options against Palantir, comprising 66% of portfolio, and $187 million in puts against Nvidia.
The combined $1.1 billion wager suggests a thesis that the valuations for both stocks have become too extreme to justify their current prices, even with favourable administration policies.
Michael Burry is an American hedge fund manager who founded Scion Asset Management. He was one of the most recognisable faces of the early twenty-first-century markets, having successfully predicted and profited from the housing market bubble in the US.
He has now set his sights on Nvidia and Palantir, two of the protagonists of the ongoing artificial intelligence boom that has sent stock markets soaring over the past year or so.
Nvidia, in particular, has positioned itself as a key player in the AI race, thanks to the company's strong hold in the data center business and best-in-class GPUs that are powering most modern-day AI software.
The Jensen Huang-run Nvidia has also recently become the first $5 trillion company in the world and is firmly on its way to reach a $6 trillion valuation, as the GPU manufacturer continues to strike deals with some of the largest companies in the world.
Nvidia's most recent deal saw them being a part of Amazon's pact with Open AI - a $38 billion deal that will incorporate the company's chips into the Amazon ecosystem.
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