Why Michael Burry's Nvidia and Palantir Short Position Tells a Different Story

Burry’s Latest Move Doesn’t Mean What Wall Street Thinks

When Scion Asset Management’s quarterly 13F filing revealed that Michael Burry had accumulated $1.1 billion in put options on Nvidia and Palantir Technologies, markets reacted sharply. Yet interpreting this as a fundamental bearish call on these artificial intelligence leaders would be missing the real picture. Understanding what hedge funds like Scion actually do requires looking beyond the headlines.

The Nature of Options: More Complex Than It Looks

To grasp Burry’s position, it’s essential to understand how put options function. A put option grants the holder the right to sell shares at a predetermined price. When someone holds puts on a stock, they’re essentially positioning for a near-term price decline—not necessarily declaring the company fundamentally broken.

Here’s the critical distinction: holding put options is often a tactical trade, not a long-term conviction. If the stock price moves in an unfavorable direction, the option simply expires worthless. There’s no obligation to execute the trade. This is particularly relevant for large hedge funds managing billions in assets, where capturing percentage-point moves generates substantial profits.

Scion’s Portfolio: A Snapshot, Not a Blueprint

Managing Scion Asset Management, Burry oversees approximately $1.4 billion in assets. His fund maintains a different operational model than long-term holding vehicles like Berkshire Hathaway. Scion’s portfolio rotates frequently—in fact, reviewing the past year’s 13F filings shows that most positions have turned over completely.

As of the most recent quarter, Scion held eight total positions across just four individual stocks: Molina Healthcare, Lululemon Athletica, SLM, and Bruker. The remaining holdings consisted of call options on Pfizer and Halliburton, plus the put positions in Nvidia and Palantir. This composition reveals an active trading operation, not a buy-and-hold philosophy.

The volatility in Scion’s holdings is telling. Comparing quarter-to-quarter changes shows minimal position persistence—Lululemon remains the only stock held consistently, which Burry even increased during the latest period. Every other position has cycled through, suggesting these aren’t deeply held convictions but calculated financial moves.

What Burry’s Trade Actually Signals

Rather than a proclamation that Nvidia and Palantir will collapse, this put option position likely reflects Burry’s assessment that these expensive stocks face near-term pressure. Both have experienced recent price declines, and with $1.1 billion concentrated in put options, even modest downward movement can generate meaningful returns depending on strike prices and exercise timing.

The options may have already been exercised and closed out. Or Burry could simultaneously be establishing long positions in these same names, using options purely for tactical hedging. The fourth-quarter filing could reveal an entirely different portfolio composition.

Institutional Strategy Versus Retail Reality

This distinction matters for individual investors: Burry’s job involves extracting profits from market movements through sophisticated instruments and rapid portfolio adjustments. His timeline is measured in quarters, not decades. His cost structure and trading frequency bear no resemblance to buy-and-hold retail investing.

Drawing direct parallels between Burry’s short-term tactical bets and long-term stock evaluation misses the point. His options positions don’t necessarily indicate that Nvidia or Palantir lack merit as long-term holdings. They simply indicate he’s positioned for near-term downside and expects to capitalize from it.

For retail investors evaluating these stocks for their portfolios, Burry’s moves should factor into broader due diligence—particularly regarding valuation—but shouldn’t serve as the primary decision driver. The strategies that work for billion-dollar hedge funds optimizing quarterly returns operate under entirely different constraints and objectives than individual wealth-building through equity ownership.