Michael Burry sold most of his US stocks last year in preparation for the “mother of all crashes,” so the current sell-off probably isn’t wreaking havoc on his portfolio. Still, the investor of “The Big Short” fame might regret scrapping his bet against Cathie Wood’s flagship Ark Innovation ETF (ARKK).
The Scion Asset Management boss cut his number of holdings from around 20 to a mere six in the third quarter of 2021. The sales slashed his portfolio’s total value (excluding options) from nearly $140 million to $42 million.
Several of the stocks that Burry sold have tumbled in recent months. As of Tuesday’s close, Golden Ocean, Marinus Pharmaceuticals, and Scorpio Tankers are down 25%, 44%, and 43% respectively since June 30. Genco and Zymeworks, which he sold in the second quarter of 2021, have slumped 45% and 67% each since March 31.
On the other hand, Burry potentially left money on the table by cashing out prematurely. For example, he sold Precision Drilling, Occidental Petroleum, and Ingles Markets in the second quarter of 2021. Those stocks have surged by 91%, 38%, and 26% respectively since the end of March.
Moreover, Burry disclosed bearish put options against 235,500 ARKK shares on June 30, only to eliminate that position by September 30. Shares of Wood’s flagship ETF have tumbled 46% over the past seven months, including 27% this month alone, suggesting the investor got out too early.
Burry also removed his puts against 1.1 million Tesla shares in the third quarter. Shares of Elon Musk’s electric-vehicle company soared 80% between the end of June and early November, and they’re still about 35% higher today than in mid-2021, so the investor will probably be glad he scrapped that wager.
The Scion chief’s disposals underscore the difficulty of timing the market. While Burry avoided precipitous declines in some stocks by selling them last year, he potentially missed out on sizeable gains from other holdings, and probably didn’t make as much money betting against ARKK as he could have.
It’s worth emphasizing that Burry may have reinvested in stocks, reestablished his puts, or made various other trades in recent months. Scion discloses its US stock portfolio once per quarter, and will only share its holdings as of December 30 in mid-February.
Read more: The creator of a Michael Burry subreddit explains why ‘The Big Short’ investor’s selling spree is a huge red flag and lays out why it’s a major endorsement for the few stocks he has left