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Burry of 'Big Short' fame reveals large bearish bet against Tesla

Stock MarketsMay 18, 2021 03:36PM ET
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© Reuters. FILE PHOTO: The logo of car manufacturer Tesla is seen at a dealership in London, Britain, May 14, 2021. REUTERS/Matthew Childs

By Hyunjoo Jin and Maiya Keidan

BERKELEY, Calif. (Reuters) -The family office run by "Big Short" investor Michael Burry has disclosed a large bearish bet via options on Tesla (NASDAQ:TSLA) Inc.

Scion Asset Management said in a regulatory filing on Monday that it had put options on 800,100 shares in Tesla as of the end of the first quarter. Based on Tesla's closing price of $667.93 at the end of the first quarter the value of that many shares would be about $534 million.

Details on the strike price of the puts, their value and whether they are part of a broader trade were not available. Scion Asset Management did not immediately respond to a request for comment on the matter.

While the actual value of the options position was not known, the Securities and Exchange Commission rules state positions under 10,000 shares and less than $200,000 in total market value are not required to be disclosed.

Put options give investors the right to sell shares at a certain price in the future.

It is possible the puts disclosed in the filing may be part of a larger trade that would curb losses if the put position goes against the fund, options analysts said.

"That could be the long leg of a put spread," said Henry Schwartz, head of product intelligence at Cboe, referring to a strategy involving a combination of purchase and sale of put options.

"That said, since they reported no long shares, and Burry is a pure 'value' investor it probably is a short bet," he said.

One of the investors profiled in the book "The Big Short' and the film of the same name for betting more than $1 billion against the U.S. housing bubble, Burry has been skeptical of Tesla's sky-high valuations.

Powered by strong sales and its first annual profit, Tesla shares jumped more than 700% last year and hit a record high of $883 per share in January. But they have since fallen as hedge fund managers raise concerns that the stock is overvalued.

The shares closed at $576 per share on Monday, valuing the electric car maker at around $555 billion.

Burry also said last year that sales of green regulatory credits to Fiat Chrysler which Tesla has relied on to generate profits will dwindle.

Stellantis, owner of Fiat Chrysler, said this month it expects to achieve its European carbon dioxide emissions targets this year without environmental credits bought from Tesla.

Burry of 'Big Short' fame reveals large bearish bet against Tesla
 

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Comments (8)
Tyrone Jackson
Tyrone Jackson May 19, 2021 1:11AM ET
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He is already making huge money, the bet was placed when the share price was 650 or higher. Much hahaa
JOHN Altieri
JOHN Altieri May 18, 2021 5:10AM ET
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what strike?
Jeremy Thornton
Jeremy Thornton May 18, 2021 4:14AM ET
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He doesn't have 1/2 billion dollar short on Tesla. He has 8000 put options. The media knows nothing about how puts work. It's a 28 million dollar short and I read that it's against shares the own. Stupid article placed to cause a bear trap...
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Ad Cline May 18, 2021 4:14AM ET
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Bloomberg usually lists large positions owned by major investors. So far I've been unable to find a record if that position being owned by his hedge fund.
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Ad Cline May 18, 2021 4:14AM ET
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I 'm talking about large equity position that the hedge fund might own.
Tyrone Jackson
Tyrone Jackson May 18, 2021 4:14AM ET
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Jeremy , they don’t own even one share . *******are you talking about? It’s a pure short play ,
Irvin Mermelstein
Irvin Mermelstein May 18, 2021 1:54AM ET
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He's absolutely right about revenue from regulatory credits, which is way more than most investors know.
Giu Sa
Giu Sa May 18, 2021 1:54AM ET
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You are wrong. Stellantis is talking about European cars registration. Not USA
Mark Maxwell
MaxAnalysis May 17, 2021 9:14PM ET
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Someone's looking to crash n burn.
Heine Pedersen
Heine Pedersen May 17, 2021 9:14PM ET
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Tesla is going much further down
Mr KP
Mr KP May 17, 2021 9:09PM ET
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Reuter article = Garbage 🗑️
Benjamin McIntire
Benjamin McIntire May 17, 2021 9:09PM ET
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Why
divad mocihc
9divaD May 17, 2021 9:09PM ET
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With all due respect Mr KP, that is an insult to garbage.
Heine Pedersen
Heine Pedersen May 17, 2021 9:09PM ET
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What's wrong with it genius?
Connecticut Yankee
A_Jaundiced_Eye May 17, 2021 4:04PM ET
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"...Firm led by famed investor..." I feel so embarrassed: he's a "famed investor" and I never heard of him. I wonder if he's ever hear of me? I'm a "famed relative" to my kids.
Sean Deenihan
Sean Deenihan May 17, 2021 4:04PM ET
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he's pretty famous
Anthony Orchowski
Anthony Orchowski May 17, 2021 4:04PM ET
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you ever heard of the movie The Big Short?
Jouni Matero
Jouni Matero May 17, 2021 4:04PM ET
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I also feel embarrased.. For you since you don't know Michael Burry. Been living in a cave in 2008?
Clinton Powell
Clinton Powell May 17, 2021 3:42PM ET
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Selling puts
 
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