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Burry of ‘Big Short’ fame reveals $530m bet against Tesla

American investor and hedge fund manager known from the movie the ‘Big Short’ has disclosed a short position against Elon Musk’s electric car company worth more than half a billion.

India turns down Musk's tax cut plea. Photo: Reuters

(ATF) The family office run by Michael Burry, an American investor and hedge fund manager known from the movie the “Big Short”, has disclosed a short position against Tesla Inc worth more than half a billion.

Scion Asset Management said in a regulatory filing on Monday that it had bearish put options on 800,100 shares in Tesla as of the end of the first quarter that were worth $534 million, Reuters reported on Tuesday May 18.

Put options give investors the right to sell shares at certain price in the future.

Burry won fame for being the first investor to foresee and profit from the subprime mortgage crisis that occurred between 2007 and 2010. He was one of the investors profiled in the book “The Big Short” and the film of the same name for betting more than a billion dollars against the US housing bubble.

Burry has said his investing is based on the margin of safety – the difference between the intrinsic value of a stock and its market price.

But he, and many others, have been sceptical of Tesla’s sky-high valuations. Burry reportedly took short positions on Tesla around early December 2020, and Wikipedia reports that he was likely to have added to his short positions after its market capitalisation of Tesla surpassed that of Facebook.

He has predicted that Tesla stock will plunge like the housing bubble.

Burry made headlines in January, when he reported reached a 1,500% gain on a big investment in GameStop. His 1.7 million shares had soared in value to $271 million at the peak during volatile trading at that time.

In February, Burry tweeted “my last Big Short got bigger and Bigger and BIGGER,” referring to Tesla’s surge in market capitalisation. “Enjoy it while it lasts,” he said.

Tesla shares jumped more than eight times last year and hit a record high of $883 per share in January in stock trading powered by strong sales in China and its first annual profit. But its shares have fallen since then as hedge fund managers raised concerns that it was overvalued.

The stock closed at $576 per share on Monday, valuing the electric car maker at around $555 billion.

Burry said last year that the green regulatory credits which Tesla has relied on to generate profits will dwindle as Fiat Chrysler increases sales.

Stellantis, formed through the merger of Italy’s FCA and France’s PSA, said this month it expects to achieve its European carbon dioxide emissions targets this year without environmental credits bought from Tesla.

Scion, which does not hold external capital, also lifted its exposure to energy last quarter, adding 530,000 shares in Golden Ocean Group, 323,823 shares in SunCoke Energy and 225,000 shares in Occidental Petroleum.

With reporting by Reuters


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Jim Pollard

Jim Pollard is an Australian journalist based in Thailand since 1999. He worked for News Ltd papers in Sydney, Perth, London and Melbourne before travelling through SE Asia in the late 90s. He was a senior editor at The Nation for 17+ years.


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