Do Michael Burry of Big Short fame and Warren Buffett see something we don't? That's the question CNN and others are asking based on SEC filings released Monday. In late June, Burry's Scion Asset Management fund purchased $866 million in put options against a fund that tracks the S&P 500, and $739 million in put options against a fund that tracks the Nasdaq 100. YTD, the S&P 500 and Nasdaq 100 are up 16% and 38%, respectively, reports CNN, and those put options will see him profit if the market sinks. Reuters notes it's unclear how much the fund paid for the puts (it could be "a small fraction of their notional value").
One take from Insider: "The two holdings could be hedges, intended to soften the blow to Scion's portfolio if the stock market slumps and its long positions tumble in value. But they could also signal that Burry is pessimistic about the two index funds, which are dominated by aggressively valued stocks like Tesla and Nvidia." Meanwhile, Buffett's Berkshire Hathaway sold a net $8 billion of stocks in Q2 and cut down on its buybacks, moves that Insider reports pushed its total cash up 13%, to a "near-record" $147 billion.
Rich Dad Poor Dad author Robert Kiyosaki interprets their moves for Fox News: "I just watch these guys waiting for the market to crash, then go back in. It's a lot of money sitting on the sideline right now." CNN notes most fund managers aren't following suit, per a Bank of America survey released Tuesday that showed their cash levels have gone from 5.3% to 4.8%, indicating they're investing rather than building cash stockpiles. (More Warren Buffett stories.)
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