Michael Burry, the investor made famous for his bet against the US housing market ahead of the 2008 financial crisis, is closing his hedge fund as he warned that market valuations had become unhinged from fundamentals.
Scion Asset Management this week terminated its registration with US securities regulators, according to a Securities and Exchange Commission database.
Burry told investors that he would “liquidate the funds and return capital — but for a small audit/tax holdback — by year’s end”, according to two people with direct knowledge of a letter he sent to investors.
“My estimation of value in securities is not now, and has not been for some time, in sync with the markets,” said the letter, which was dated October 27th.
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The move to close Scion comes as some investors have become concerned that markets are trading at frothy levels after years of strong returns.
Those jitters flared up on Thursday, with the tech-heavy Nasdaq Composite sliding nearly 2 per cent.
Still, the big gains for tech stocks this year, driven by hopes that artificial intelligence will transform business and society, have left valuations at lofty heights compared with their average in recent years The Nasdaq Composite’s forward price-to-earnings ratio, a key measure that compares stock prices with future earnings, is hovering at almost 30-times, above the 10-year average of about 25-times.
Other famous short sellers, including Jim Chanos and Hindenburg’s Nate Anderson, have also closed their outfits as they have struggled to navigate the vigorous rise in many stocks.
A basket of the 250 US stocks most popular with short sellers has surged more than 50 per cent this year, while dozens of unprofitable tech stocks have also gained ground thanks to investor enthusiasm for AI.
Burry disclosed a short position against defence group Palantir using derivatives that increase in value when share prices fall, according to a US regulatory filing earlier this month. Palantir’s shares have climbed about 130 per cent this year. Burry also revealed a smaller move against AI chipmaker Nvidia.
The investor previously closed Scion Capital in 2008 following successful bets against mortgage-backed securities that Burry correctly deemed were worth far less than official ratings and market sentiment suggested. He reopened his hedge fund under the name Scion Asset Management a few years later. - The Financial Times Limited 2025
