Michael Burry's Massive Short Position on AI

Michael Burry filed his 13-F early this quarter, and his positions shocked the market.

From Q2 to Q3, Burry essentially rebuilt his entire portfolio. 90% of his portfolio is in options.

Two short positions are really eye popping...

He has a $912M short position on Palantir, and a $186M short on Nvidia.

This represents 80% of his entire portfolio. Damn.

Other things he added was a Pfizer and Halliburton call, going long Lululemon (hey! I did that a year ago!) and added SLM corp (a consumer banking company)

Cool, so what's his thesis?

It's hard to find anything online that speaks to his thesis on Palantir/Nvidia, other than he clearly thinks we're in an AI bubble. He posted this to his X account:

Just in case you want to see the images closer... here they are...

This graph shows that YoY growth for Amazon, Alphabet, and Microsoft's Cloud Segment is slowing pretty precipitously (esp for Alphabet and Amazon).

This shows how Tech and TMT Capex spending are approaching levels only seen before recession (TMT stands for Tech, Media, and Telecommunications, so it's a bit more broad)

And then finally he gives the Circular financing chart that we've all seen.

So yeah, that pretty much tells us what he's thinking. AI is a bubble.

One other thing I found in my research is from back in 2019, where he called out passive investing as the next "Sub-prime crisis", which we just made a video on (This is the dumbest stock market in history is the title on Youtube!)

He said...

“Passive investing has removed price discovery from the equity markets,” he said. “The simple theses and the models that get people into sectors, factors, indexes, or ETFs and mutual funds mimicking those strategies – these do not require the security-level analysis that is required for true price discovery.”

His view that index flows distort prices ties directly into why he thinks AI mania is a symptom — investors are chasing themes, not fundamentals.

Which again makes me proud to be a Flanker! It will be easier and easier for us to beat the market as the majority of the market looks for the easy way out.

Palantir's Response

Alex Karp jumped on CNBC next day to defend his company. This his response on CNBC (@3:11 and again at 6:00). His response was sort of unhinged, "why oh why do they short us!"... They short you because your P/E is over 600 bro.

What do y'all think?