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Michael Burry closes $1.6 billion bet against the market with huge loss

Michael Burry closes $1.6 billion bet against the market with huge loss

Michael Burry reportedly closed a ‘big short’ trade worth $1.6 billion in nominal value against the SPDR S&P 500 ETF Trust (SPY) and the Invesco QQQ Trust (QQQ). Burry was featured in “The Big Short” movie, with a massive win against the housing market in 2008.

However, the legendary investor’s most recent ‘big short’ accumulated estimated losses of 40% since its opening in August 2023. Gurgavin Chandhoke, CEO and founder of uINVST, reported the position’s closure and estimated results on November 14.

Despite having a nominal value of around $1.6 billion, Michael Burry “only spent around $26.5 million to build” this position, according to Chandhoke’s first report in August. Particularly, Burry invested $18 million on 20,000 SPY put options and about $8.5 million on 20,000 QQQ puts.

Sentiment shift: Is Michael Burry bullish on the stock market?

Interestingly, this most recent decision suggests Michael Burry saw a strong invalidation for his previous thesis that motivated the short position in August. The invalidation must be strong enough to justify 40% of realized losses over a $26.5 million purchase.

At this moment, the market can only speculate on the investor’s motivations. In the meantime, this ‘big short’ closure happened on the same day the U.S. CPI data came below the market’s expectations. The Federal Reserve previously considered the CPI a leading indicator when making interest rate decisions.

Essentially, a lower-than-expected price inflation in the United States could strengthen the odds of a Federal Reserve’s pivot on interest rates. Michael Burry could have seen this as a bullish signal.

SPDR S&P 500 ETF Trust (SPY)

Notably, SPY is already up 1.98% in the day, trading at $448.91 by press time on the New York Stock Exchange (NYSE).

SPY 1-day chart. Source: Finbold

Invesco QQQ Trust (QQQ)

At the same time, QQQ has an identical performance for its 24-hour gains on NASDAQ, changing hands by $384.66 as of writing.

QQQ 1-day chart. Source: Finbold

The vast majority of stocks are trading with gains on this second day of the week, and traders are now waiting for Michael Burry’s next move, as this sentiment shift could trigger a bull market for the coming months.

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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.

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