Michael Burry, the famed investor from the film The Big Short, has taken a large short position against Cathie Wood’s Ark Innovation ETF (ETF). The ETF invests in companies such as Tesla and Square as well as GBTC.
Burry’s hedge fund, Scion Asset Management, purchased $31 million worth of negative put options against 235,000 shares of the ETF, according to second-quarter 13F filings with the US Securities and Exchange Commission. Put options are a means to profit from a stock or fund’s drop in value.
With $22.62 billion in assets, the Innovation ETF is the largest Ark fund. Tesla, Square, Coinbase, and the Grayscale Bitcoin Trust are among the innovative technology businesses it invests in (GBTC).
According to the documents, Burry wasn’t the only business that shorted Ark’s flagship fund. Laurion Capital Management had $171 million input options against 1.3 million shares, while GoldenTree Asset Management, Moore Capital Management, and Cormorant Asset Management also had significant negative positions.
Wood, on the other hand, seemed to like the challenge, tweeting on Monday:
“To his credit, Michael Burry made a great call based on fundamentals and recognized the calamity brewing in the housing/mortgage market. I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space.”
Wood is a major believer in cryptocurrency, and in July, Ark collaborated with 21Shares, a Swiss corporation, to develop a Bitcoin (BTC) ETF.
In the same month, Ark Invest made two separate purchases of over 450,000 GBTC shares, and in April, Ark made a $110 million acquisition of Coinbase shares, part of which were for the Innovation ETF.
Burry, on the other hand, is a crypto bear who has been warning about the market’s “unsustainable valuations” for a few months.
In June, he expressed concern that investment in cryptocurrencies and meme stocks could lead to “the mother of all crashes.” He wrote on Twitter:
“All hype/speculation is doing is drawing in retail before the mother of all crashes. When crypto falls from trillions, or meme stocks fall from tens of billions, #MainStreet losses will approach the size of countries. History ain’t changed.”
Burry rose to prominence after correctly predicting the collapse of the housing market during the global financial crisis and gained handsomely from the subprime mortgage crisis.
He was the central character in Michael Lewis’ book The Big Short, which was adapted into an Oscar-winning film starring Christian Bale.
