In a stunning turn of events, Evergrande, a prominent name among China’s property developers, has recently filed for bankruptcy, succumbing to the relentless turbulence in the country’s housing market.
The crisis has cast a shadow over another major player, Country Garden, as it grapples with imminent default risks after losing billions of dollars and accumulating $200 billion in unpaid debts.
These developments highlight the issues the Chinese real estate market, and the broader economy, are facing at the moment. Naturally, the headwinds have weighed on the country’s stock market as well, with the CSI 300 benchmark index losing more than 3.3% over the past 5 days.
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Interestingly, legendary stock investor Michael Burry dodged the bullet after successfully predicting these challenges.
According to ‘Michael Burry Stock Tracker,’ the investor sold all of his Chinese stock holdings right before Evergrande’s collapse, the Twitter account declared on August 21.
“Michael Burry dumped all of his Chinese stocks right before Evergrande collapsed and Country Garden faces its debt default.”
– Michael Burry Stock Tracker tweeted.
Which stocks did Burry sell?
Per the Securities and Exchange Commission (SEC) filings released last week, Burry’s fund Scion Asset Management offloaded a large number of shares, particularly in the banking sector.
Notably, the investor sold 150,000 shares of First Republic Bank, Huntington Bank PacWest, and Western Alliance.
Further, Burry backtracked on Chinese stocks, selling all of his holdings in JD.com and Alibaba (NYSE: BABA).
The move marks a significant change, considering that 20% of Scion’s portfolio was made up of these two stocks.
Burry shorts the US stock market
Over the years, Burry became famous for his keen analytical insights and unconventional market predictions.
In 2008, the legendary investor foresaw the housing market debacle in 2008 in the US, placing massive short bets on the mortgage crash. His predictions came to fruition, and the ‘Big Short’ made a fortune.
Last week, Burry placed another significant short bet, this time against the US stock market. In particular, the fund manager purchased 40,000 put options contracts tied to SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ).
The nominal value of these contracts is $1.6 billion, although it remains unknown whether Burry still holds these positions.
