Michael Burry’s latest 13F reveals short positions in Nvidia and Palantir (NASDAQ:PLTR). Together, these seem to make up almost 80% of Scion Asset Management’s portfolio.
Investors, however, need to be careful with interpreting this. My guess – and it is a guess – is that this isn’t the all-in bet against artificial intelligence (AI) stocks it looks like.
Put options
The two largest positions in Scion’s quarterly filing are put options. These give the holder the right to sell a stock at a certain strike price before a specified expiry date.
Puts on Nvidia (66%) and Palantir (13%) make up almost 80% of the firm’s reported portfolio. So it certainly looks like a big bet against some AI names.
The associated risk would be huge – if the stocks don’t fall and the options expire worthless, almost 80% of Burry’s portfolio could go up in smoke. But that’s not necessarily the situation.
Options traders often structure their positions to limit their exposure in ways that don’t always show up on 13F filings. And with a sophisticated investor like Burry, this could well be the case.
Bearish structures
One way of betting against a stock using put options involves simultaneously buying contracts at one strike and selling ones at a lower one. The result is a short position, but with a twist.
In this case, the trader gets part of their spend back from the options they sell. And if the stock goes down, the puts they own – with the higher strike – go up faster than the ones they sold.
The thing is, if a firm sells options, this doesn’t show up on its 13F. So if Scion sold puts on Nvidia and Palantir alongside its buys, this wouldn’t be in the latest filing.
This means that – for all the 13F shows – Burry’s net short exposure to AI stocks might well be much lower than it looks. So investors need to be careful about reading too much into this.
Palantir
Burry’s position has got some investors worrying about valuations. And at a price-to-earnings (P/E) ratio of somewhere around 630, Palantir looks like one of the most ambitious right now.
That’s been the case for a while, though, and it hasn’t stopped the stock from storming higher. And while the firm is still growing rapidly, something in its recent earnings caught my eye.
Signing up US commercial customers has driven the company’s explosive growth. But the rate at which new customers have been coming on board over the last few quarters has slowed.
Source: Palantir Q3 2025 Investor Presentation
At a big multiple, even small disruptions can be significant. And this is something investors who own – or are thinking of owning – Palantir stock need to keep in mind.
AI stocks
Michael Burry is almost certainly betting against AI stocks. But given how risky staking 80% of Scion’s assets on two options would be, I think there’s a strong chance the 13F doesn’t tell the full story.
Investors should never just copy what someone else is doing. And it’s exceptionally unwise in this situation, where the public information might be crucially incomplete.
I’m wary of AI disruption in the software industry, though Palantir is one of the few I have a positive view of. But even for me, it’s a bit expensive at today’s prices.
