- Michael Burry placed bets worth a notional $1.6 billion against the S&P and Nasdaq last quarter.
- The "Big Short" investor is a "one-trick pony" and his wager is a loser, analyst Marc Chaikin said.
Michael Burry shocked Wall Street this week by revealing he placed wagers with a notional value of $1.6 billion against the S&P 500 and Nasdaq-100 last quarter. But one veteran analyst thinks his apparent bet on a stock-market crash is a losing one.
"He's going to be wrong like Mike Wilson was wrong," Marc Chaikin, the founder and CEO of Chaikin Analytics, told Benzinga this week. He was referring to Morgan Stanley's chief US equity strategist, who was caught off-guard by the historic rally in stocks this year and issued a mea culpa in late July.
Chaikin dismissed the idea that Burry's portfolio update spooked retail traders into selling stocks this week.
"I promise you that nobody on Reddit follows Michael Burry," he said. "They're into their own world."
In fact, a key driver of the meme-stock craze in early 2021 was that Burry invested in GameStop in 2019, and wrote several letters to the video-game retailer's bosses that highlighted the excessive short interest against its stock. There's also a Burryology subreddit with 17,000 members that's dedicated to studying Burry and tracking his trades.
Chaikin also brushed off Burry as just the latest market doomsayer, and suggested his only notable achievement was predicting and profiting from the 2008 housing crash. The contrarian bet was chronicled in the book "The Big Short," and actor Christian Bale portrayed Burry in the movie adaptation, which made Burry a household name.
"There's always a Michael Burry out there, whether it's some bond guy, or whether it's Stan Druckenmiller at some point in time, or Paul Tudor Jones," Chaikin said. "They're a lot smarter by the way than Michael Burry with a lot more of a track record."
"He's a one-trick pony as far as I'm concerned," the stock-analytics guru added.
However, Burry has made several accurate calls in recent years. For example, he warned inflation could become a problem as early as April 2020.
When price growth hit a 40-year high last summer, he correctly predicted it would plunge within months. He also rang the alarm on meme stocks and cryptocurrencies before they plummeted last year.
The investor's Scion Asset Management held bearish put options on 200,000 shares of both the SPDR S&P 500 ETF Trust and Invesco QQQ Trust — index funds that track the S&P 500 and Nasdaq-100 respectively — on June 30. The combined notional value of the two holdings was $1.6 billion.
Burry's options could just be hedges, and will have cost him a fraction of that amount. But they are still "very large" positions given the rest of Scion's portfolio was only worth $111 million, Gerry Fowler, head of European equity strategy and global derivative strategy at UBS, told Insider.
In contrast to Burry — whose latest wagers follow his repeated warnings of historic asset-price bubbles and epic crashes — Chaikin said the S&P 500 is in a bull market, and predicted it wouldn't fall even 10% from its late-July high.