Michael Burry Goes Bearish on Entire Semiconductor Sector
Michael Burry, the renowned investor, has shifted his strategy and is now betting against the semiconductor sector. He has taken significant bearish positions in major semiconductor ETFs, including the iShares Semiconductor ETF (SOXX). This move comes as the semiconductor industry faces challenges due to the ongoing global chip shortage and fluctuations in the market.
Michael Burry, the renowned investor, has shifted his strategy and is now betting against the semiconductor sector. He has taken significant bearish positions in major semiconductor ETFs, including the iShares Semiconductor ETF (SOXX). This move comes as the semiconductor industry faces challenges due to the ongoing global chip shortage and fluctuations in the market.
Michael Burry Goes Bearish on Entire Semiconductor Sector
In August of last year, renowned investor Michael Burry captured attention by disclosing substantial bearish positions worth billions in the US stock market. In the subsequent months, scrutiny intensified as the performance of Burry’s investments unfolded amid market fluctuations.
The latest regulatory filing for the fourth quarter, however, unveils a significant pivot in Burry’s strategy. While he maintains his bearish stance on the S&P 500, incurring significant losses, Burry has redirected his pessimism toward a specific sector: semiconductors.
According to the Securities and Exchange Commission (SEC) filing published in November, Burry has now bet against semiconductors, often referred to as chip stocks. The asset management and hedge fund manager revealed significant positions consisting of bearish options on popular semiconductor-focused exchange-traded funds (ETFs).
Specifically, Burry’s firm purchased put options, which give the buyer the right to sell a security at a specified price, on the iShares Semiconductor ETF (SOXX). The filing showed that the notional value of these options contracts totaled nearly $800 million. It’s important to note that the notional value represents the total value of the underlying assets linked to the option contracts, and not their current actual value.
The filing did not specify the strike prices or expiration dates of the options, which would provide more insight into Burry’s specific bets against the SOXX ETF. This ETF is one of the largest semiconductor ETFs, with assets under management exceeding $6 billion. When it comes to individual stocks, the fund tracks and focuses on the biggest semiconductor-related companies.
Notable holdings include AMD (NASDAQ:AMD), Broadcom (NASDAQ:AVGO), NVIDIA (NASDAQ:NVDA), Intel (NASDAQ:INTC), Texas Instruments (NASDAQ:TXN), and Qualcomm (NASDAQ:QCOM). Interestingly, Micron (NASDAQ:MU), KLA Corp (NASDAQ:KLAC), Applied Materials (NASDAQ:AMAT), and Lam Research (NASDAQ:LRCX) remain among the top ten holdings. The SOXX ETF has surged year-to-date, primarily driven by the ongoing artificial intelligence (AI) boom.
In conclusion, Michael Burry’s latest bearish bets against the world’s biggest chipmakers come at an interesting time, considering that these companies have thrived on the craze around generative AI technology, seeing even triple-digit returns in the stock market over the past year.