Michael Burry is an American investor, hedge fund manager, and physician best known for predicting and profiting from the 2008 subprime mortgage crisis. He founded Scion Capital in 2000, later renamed Scion Asset Management, and gained a reputation for deep value investing based on the principles of margin of safety and fundamental analysis.
Burry rose to public prominence after earning extraordinary returns for his investors by shorting the housing market ahead of the 2007-08 financial crisis. His story was famously renditioned into the movie “The Big Short”, which went on to inspire a generation of short-selling wannabes attempting to replicate his moonshot.
Burry has remained in the spotlight post the financial crisis and the movie, and has since frequently appeared in news headlines for his punts and positions.
Recently, Burry announced the liquidation of Scion Asset Management and the return of capital to investors, marking the end of a notable era for the fund. Rumours sparked, ranging from an alleged blow up due to his bear punts (long puts) on Palantir Technologies Inc (NASDAQ: PLTR) and NVIDIA Corp (NASDAQ: NVDA) to theories that he is staging for Big Short 2.0.
So which is it, and should we pay attention?
Camp 1: Burry Blew Up – A Contrarian Gambit Gone Wrong
Some investors posit that Burry’s abrupt fund closure signals a major loss, possibly triggered by his aggressive Q3 2025 short positions in AI leaders NVDA and PLTR, which made up over 79% of Scion’s portfolio value. Betting against two of the market’s fastest-growing stocks during an ongoing AI-driven rally is, by any measure, an extremely high-risk contrarian gamble.
If these puts moved deeper out-of-the-money as tech kept climbing, losses in the hundreds of millions would not be implausible.
Observers cite the speed and finality of the fund’s de-registration – including terminating SEC status before year-end, as consistent with a forced retreat after a failed position. Historically, rapid fund closures have often followed either ruinous losses or severe investor outflows following poor performance. The fact that Burry’s Q3 saw total capital shifted from long calls and equity positions into this new bearish core, accompanied by a complete exit from previous defensive and growth stocks, suggests limited portfolio diversification and increased vulnerability to sectoral rallies.
Critics point to the psychological toll of being persistently contrarian – especially as market regimes shift from value-driven cyclical recoveries to prolonged momentum in tech – and Burry’s history of taking lonely, asymmetric risks often under intense criticism. Unlike 2007-08, however, when the housing bubble was overlooked by nearly all institutions, today’s AI mania is heavily watched and often hedged against, making Scion’s concentrated bets appear less prescient and more reckless. The loss of investor confidence alone, compounded by any realized losses from deep out-of-the-money put positions, may have sealed the fund’s fate.
Social media and some financial commentary, especially on platforms like Reddit and financial YouTube, draw ominous parallels to Burry’s pre-2008 experience of battling client redemption pressure and back-office headaches. But this time, instead of toughing it out and achieving eventual vindication as in “The Big Short,” Burry seems to have opted to withdraw from the fray entirely, fueling speculation that his contrarian edge may have been dulled by recent market realities.
Camp 2: Big Short 2.0 – Early Exit, Early Conviction
Supporters of Burry’s prescience argue that the fund’s closure is not a blow-up but a strategic retreat, positioning him to profit massively should another market reversal (akin to his famed housing short) materialise soon.
This camp emphasises Burry’s history as one of very few investors who have successfully profited from the collapse of a bubble others failed even to notice. In 2025, Burry has spent months warning of “bubbles in the market,” singling out AI stocks as dangerously overvalued. His move to establish enormous put positions precisely as institutional and retail enthusiasm for AI reached a fever pitch could be interpreted as setting the stage for a new contrarian coup.
Rather than evidence of failure, Burry’s liquidation notice is viewed as an unwillingness to continue managing outside capital in turbulent conditions. In his letter, he states that “the only winning move is not to play” with the current market bubble. This echoes his mid-2000s playbook where, despite immense pressure and redemptions, he held fast to his conviction until the market ultimately collapsed and his puts paid off spectacularly.
Proponents note that Burry’s portfolio moves over the past year – fully exiting broad exposure, redirecting US$ 550 million in capital toward tactical, asymmetric bets, and building a portfolio designed for flexibility and volatility – reflect a shift toward high-conviction contrarianism, not desperation. His choice to liquidate, return capital, and step out of visible fund management could be a way to avoid compliance burdens and client distractions, freeing him to pursue pure portfolio bets free from public scrutiny or redemption risk.
The timing of his departure – just as regulatory filings were updated and before key AI sector earnings – could be interpreted as strategic. Market history is replete with examples of famous investors walking away before their ideas play out, only to be proven right when consensus finally cracks. His withdrawal could be a temporary step, allowing him to re-enter the market personally or in a new vehicle at higher conviction (and arguably higher potential leverage), unconstrained by client mandates.
Some market commentators believe Burry’s public warnings and portfolio restructuring indicate strong belief in an impending correction, not resignation after losses. The liquidation may yet be an opportunity for Burry to “flip the script,” quietly preparing for a Big Short 2.0, if overheated AI stocks finally face a downturn as he predicts. In this reading, the closure is less blow-up than well-timed tactical withdrawal from distracting fiduciary obligations, allowing a seasoned contrarian to focus on what he does best: betting against bubbles and waiting for the crash.
Weighing the Evidence: What Outcome Is Most Probable?
Both camps present plausible arguments, but the available evidence tilts the balance toward Burry voluntarily closing his fund before a possible market reversal, rather than an outright blowup.
That said, the magnitude and concentration of his AI puts means losses could be substantial if tech stocks rise further. But the lack of any evidence for default, freezing, or forced liquidation supports the view that capital preservation and withdrawal—not financial ruin—is the immediate driver.
It is most probable that Burry is closing Scion Asset Management as an early, tactical retreat, not as a blow-up, and may yet be preparing for “Big Short 2.0”—willing to stake his capital, reputation, and conviction against what he perceives as a dangerous bubble. Whether or not he is vindicated in the months and years ahead will depend on whether his dire warnings about AI mania turn out to be justified. Market history would suggest that even if he is early, a disciplined withdrawal does not preclude a spectacular return, especially for a contrarian with his track record.
That said, anyone is free to believe in what they chose to given the uncertainty and lack of information surrounding the situation.
What would you believe in then?
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