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He’s the somewhat legendary investor that was one of the first to predict – and then eventually profit from – the subprime lending crisis in the U.S between 2007 and 2010. The Scion Asset Management founder became a household name after his story was made into a book called ‘The Big Short,’ and then an award-winning film by the same name shortly after.
So what’s Mr. Burry up to in the current financial landscape in mid-September 2022? He’s making some interesting and pessimistic statements in the news about the state of the markets lately, and not long ago he stripped his hedge fund’s portfolio of all of his positions and replaced them with just one, a prison company, called Geo Group Inc, which on the surface doesn’t seem like anything special.
Let’s take a closer look at what might have motivated this bold move, and if you think it’s a winning strategy, get yourself a trusted and regulated broker, like Easymarkets to help get you started and take advantage of the market volatility.
A big call?
Last month Reuters reported after recent 13-F filings had been released that Burry’s hedge fund had sold off the entirety of its portfolio in the previous quarter and replaced them with around a $3.9 million stake in Geo Group Inc.
At the time, Burry, who is apparently becoming known for making statements via social media platform Twitter and then deleting them shortly after, commented about not being able to shake the feeling that another stock-market-shattering event was just around the corner.
The filings show he dropped his hedge funds assets from $164 million down to just the $3.9 million position which included a $12.9 million stake in Meta Platforms, a $19.7 million position in Cigna Corp, and $23.1 million in Bristol-Myers being sold.
More recently in early September, Bloomberg writes that the investor made another less than optimistic prediction, tweeting “we have not hit bottom yet.”
So, Burry believes stocks are looking set for a major devaluation soon – should you follow his lead?
Don’t throw the baby out with the bathwater just yet
It’s only natural to look at what’s happening in the markets and what investors like Burry are doing and subsequently panic, but it’s worth noting a few things before you do.
Firstly, the particular filings made with the Securities and Exchange Commission are published well after the quarter, so they can’t accurately depict what is currently in a hedge fund’s portfolio, it’s just a snapshot in time. They’re also not obligated to share any information with regard to short positions held or foreign investments, so there’s a lot that we don’t know.
Secondly, the market will recover as it always does, so it’s probably best to ignore the hype and keep your focus and strategy fixed in the long term. Look to diversify your portfolio and manage your risk with hedging and short-term opportunities. Think about going to some defensive-type stocks in case of a recession, and never invest more than you’re prepared to lose.