Michael Burry, the famed investor featured in the book and movie “The Big Short,” is now betting against Cathie Wood’s ARK Innovation exchange traded fund (ETF).
Burry’s Scion Asset Management has purchased bearish “put” contracts against 235,500 shares of the ARK Innovation ETF (NYSEArca:ARKK), valued at almost $31 million U.S., according to a regulatory filing with the U.S. Securities and Exchange Commission (SEC).
The flagship exchange-traded fund of Cathie Wood’s firm Ark Investment Management (Ark Invest) attracted billions of dollars in the past year after her thematic technology focused bets beat the market in 2020.
However, Wood and Ark Invest have struggled to maintain momentum amid concerns about lofty prices and rising inflation.
Burry has been warning about unsustainable valuations in the stock market for months. In June, he cautioned that retail investors could be getting drawn into “the mother of all crashes” by investing in cryptocurrencies and meme stocks.
A put contract gives Burry the right to sell shares in the ETF before a certain date and at a previously agreed price. Its value increases if shares drop below the threshold stipulated in the contract.
Burry has been indirectly betting against Wood for some time via a big position against Tesla (NASDAQ:TSLA), one of Ark’s top picks and the ARKK fund’s biggest holding.
The regulatory filing shows that Burry increased his bearish wagers against Tesla in the second quarter with puts on 1,075,500 Tesla shares. That’s up from 800,100 shares in the first quarter of this year.
ARKK dropped 2.6% on Monday (August 16) amid broad technology stock declines. Tesla fell 4.7% as the U.S. opened a formal investigation into the company’s autopilot system.
Burry rose to fame when his successful bets against mortgage securities during the 2008 financial crisis were chronicled in Michael Lewis’ book “The Big Short,” which was later made into a movie.
