re: Michael Burry appears to be shutting down Scion Asset Management

Boom

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He's a market manipulator.

He made comments without knowing jack shite just to win. It had nothing to do with him being right or wrong. It was him trying to manipulate the market.

He spent millions to short NVDA and PLTR. When the prices did not drop, he started going to the media to knock them down.


He's a POS that just lost a lot of people's money.

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Every major short position player releases their short position and usually a thesis on why. This isn't some special thing. Bulls also hold positions and then tout the reasons why its "going to the moon". I'm not taking any sort of side on if PLTR is overvalued or not, but if short sellers think there is something going on they can and will tell people why.

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Why I Think Michael Burry Is Shutting Down Scion Now

Let’s put a few things together…Burry’s liquidation letter, his depreciation thread on the hyperscalers, and his “me then, me now” Big Short meme and he’s basically spelling out one story.

He thinks we’re in an earnings inflated, AI driven bubble that a value investor can’t sit inside without eventually getting crushed.

In the letter he says it plainly “My estimation of value in securities is not now, and has not been for some time, in sync with the markets.” That’s not a I’m tired of running money line. That’s a man saying, I can’t reconcile what I see in the numbers with the prices the market is willing to pay. When someone like Burry reaches that point, the logical move isn’t to keep collecting fees and hope it mean reverts. It’s to get out of the structure that forces you to play the game at all.

Then you look at his post on depreciation. He’s saying the biggest beneficiaries of the AI boom that includes META, GOOG, ORCL, MSFT, AMZN of juicing earnings by quietly stretching the useful life of servers and GPU rigs that are really on a 2–3 year technology cycle. Extend the life in the accounting model, and you cut today’s depreciation expense. Cut depreciation, and EPS looks 20–30% higher than it would under a stricter assumption. He’s saying that the market is paying premium multiples on numbers that are, in his view, structurally overstated.

Put that together with the “me then, me now… it worked out, it will work out” post, and he’s clearly casting himself as the same guy who sat in front of a wall of subprime prospectuses in 2005. Back then, he saw engineered AAA paper built on bad collateral. Now he sees trillion dollar market caps built on AI capex and accounting choices he thinks will blow up 2026–2028 as the depreciation math reverses.

SO WHY SHUT DOWN SCION NOW? MY HIGHEST PROBABILITY READ IS THIS

He expects a major repricing in the very stocks that dominate the indices and he doesn’t want to live through the last, craziest stretch of the bubble with other people’s money tied to his name.

If he’s right about the under depreciation, then over the next few years earnings growth for the hyperscalers should slow sharply or even go negative just as the AI narrative cools and the cycle matures. When that happens, multiples compress, passive flows that are overweight those names work in reverse, and the broad market takes a hit because the “Magnificent Few” are the market. From his perspective, that looks less like a normal correction and more like the equity version of the housing unwind: a long stretch of fake comfort, then a sharp break when the math can’t be hidden anymore.

Closing the fund accomplishes a few things at once. It lets him step aside before that break, so he’s not fighting client redemptions or daily benchmarking while he’s trying to hold deeply contrarian positions. It frees him to short or sit in cash on his own terms, without regulators and LPs looking over his shoulder. And it sends a signal: if valuations are this disconnected from what he thinks the true earnings power is, the most honest thing he can do as a fiduciary is hand back the money and say, I don’t want you in this.

So, in my view, he’s not walking away because he’s done with markets. He’s stepping off the stage because he thinks the show has turned into something he’s seen before: a late cycle mania, powered by flattering models and aggressive accounting, that ends with a long, grinding reset in stock prices especially at the top of the index.

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Every major short position player releases their short position and usually a thesis on why. This isn't some special thing. Bulls also hold positions and then tout the reasons why its "going to the moon". I'm not taking any sort of side on if PLTR is overvalued or not, but if short sellers think there is something going on they can and will tell people why.

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Agreed here ..,. they are required to release their positions, whether they be short or long.

I recently retired from the fiber industry, focused on hyperscalers …. and Burry is on the mark with his comments on them, IMO. The valuations are insane.

Based on his letter, Burry is advocating for the retail investors …. like those who post here. I just don’t get all the undeserved criticism.

The reason long holders generally dislike Burry is the same reason that average Vegas craps players dislike bettors that play the Don’t Come line …. it’s exactly the same.

Burry has long been a contrarian investor that seeks out over-leveraged plays. He’s a shrewd investor who bears thoughtful observation.

Like all, he’s neither right nor wrong all of the time …

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but the "people on the other side" are the biggest companies in the world...aren't they

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Other traders?

These AI plays might be riskier than people think. The monetization route isn't clear and these companies are keeping a lot of debt off their books by hiding them in special purpose vehicles. The circular supply of money might pay off. Or the capex might spook investors if there isn't a clear path to sustainable profits. What would concern me is there doesn't appear to be a lot of consumer appetite at the level that would be required for these things to work. NVIDIA might be the safest because they're trading at sane P/E and they actually benefit from all the capex spending. Meta might have a problem. They don't seem to be integrating or even marketing their models at all. The average Facebook user is probably unaware that llama exists. But they definitely know about nano banana and chatGPT. Even anthropic is marketing claude on TV. Meta doesn't seem to be pushing their products at all.

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Generally I think there is too much cash out there looking desperately for value in anything AI or AI adjacent.

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Agreed. What I keep going back to is I don't see the general public demanding this. Unless there are real enterprise solutions in the near future the money following a lot of the AI hype might also be early.