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The Street

Michael 'Big Short' Burry Shorts Apple

Infamous investor Michael Burry of "The Big Short" has bet against Apple ( (AAPL Get Apple Inc. Report), according to a SEC filing.

During the first quarter, Burry, a hedge fund investor who is known for predicting and profiting from the housing bubble and subprime mortgage crisis by betting against collaterized debt obligations or CDOs during the mid 2000s, stocked up on Alphabet ( (GOOGL Get Alphabet Inc. Class A Report), Meta  Platforms (FB), and Discovery ( (DISCA Get Discovery, Inc. Class A Report) for Scion Asset Management.

The hedge fund owned bearish put options against 206,000 Apple shares as of March 31. While the Macbook and iPhone manufacturer's stock price has nearly quadrupled since 2019, Apple's stock has fallen by 16% this quarter alone and 11.8% during the past month.

Billionaire investor Warren Buffet has taken a different investing strategy. The CEO of Berkshire Hathaway purchased $600 million worth of Apple shares last quarter, making it his largest holding based on market cap.

By the end of December, Scion only owned six stocks and sold all of its holdings aside from Bristol-Myers Squibb ( (BMY Get Bristol-Myers Squibb Company Report) last quarter.

The total value of Scion's U.S. stocks  rose by 122% to $165 million due to the purchases, not including options. The fund's largest long positions were a $22 million stake in Bristol-Myers Squibb, about $19 million in Booking Holdings ( (BKNG Get Booking Holdings Inc. Report) and Discovery and a $18 million stake in Alphabet as of March 31.

Big Prediction Linked to Inflation

Burry invested in GameStop ( (GME Get GameStop Corp. Class A Report) in 2019, but decided in 2021 to bet against Cathie Wood's flagship Ark Innovation fund and Tesla ( (TSLA Get Tesla Inc Report).

He has said that GameStop, Tesla, brokerage Robinhood ( (HOOD Get Robinhood Markets, Inc. Class A Report), the skyrocketing housing market and cryptocurrencies such as bitcoin and dogecoin showed signs that there was too much speculation in the markets.

Burry warned last June that the markets had created the "greatest speculative bubble of all time in all things" and retail investors who sunk their money into the popular meme stocks and crypto were facing the "mother of all crashes."

By the third quarter of 2021, his stock holdings were only worth $42 million, excluding options because he had sold 14 stocks and only held onto six. At the end of the fourth quarter, his stocks were worth $74 million after exchanging three of his six holdings.

In April, he predicted how inflation would impact and lower the profit margins of companies. His two tweets were later deleted.

"Watch profit margins fall, and then price/sales ratios," Burry wrote. "Early in an inflation, pricing power runs ahead of sticky wages/supply contracts. Inflation laughs last, needs not peak but once."

He said the Federal Reserve increased interest rates so the central bank could push up asset prices after they fall instead of working to deal with inflation. 

"The Fed has no intention of fighting inflation," he had tweeted. "Serial half-point hikes are for getting elevation before stocks and the consumer tap out. Same with rapid-fire QT."

"The Fed's all about reloading the monetary bazooka," Burry tweeted. "So it can ride to the rescue & finance the fiscal put."