Michael Burry, the legendary investor who famously predicted the 2008 financial crisis, is shutting down his hedge fund after making controversial bets against artificial intelligence companies including Palantir Technologies. The move marks the end of an era for one of Wall Street's most prominent contrarian voices.
The Palantir Controversy
Last week, Burry found himself at the center of a storm when Palantir CEO Alex Karp launched a furious attack on CNBC against investors shorting his company. Karp specifically targeted those questioning the AI revolution, calling such actions "super triggering." The source of his anger became clear when regulatory filings revealed Burry's Scion Asset Management had taken a $912 million position in Palantir puts - derivatives that profit if the stock price falls.
The announcement had immediate market consequences. Despite reporting better-than-expected earnings, Palantir's shares dropped nearly 8% on November 4 following news of Burry's bearish position. The investor had also placed a smaller bet against Nvidia, another AI market leader.
From Medical Doctor to Market Legend
Burry rose to prominence through Michael Lewis's 2010 book The Big Short, which documented his successful bet against subprime mortgage bonds before the financial crisis. Christian Bale's intense portrayal in the subsequent film cemented his status as an iconoclastic genius who spotted the impending meltdown when few others did.
The 54-year-old investor stands out even among Wall Street's colorful characters. After losing an eye to retinoblastoma at age two, he grew up as a self-described loner. Burry studied English, economics and medicine at UCLA, attended Vanderbilt's medical school and completed a residency at Stanford Hospital before his stock-picking hobby overtook his medical career.
The End of an Era for Contrarian Investing
Burry's decision to wind down Scion Asset Management comes during a brutal period for bearish investors. Several famous short sellers, including Jim Chanos and Nate Anderson, have shuttered their firms in recent years as stock markets marched relentlessly higher.
In a letter to investors, Burry acknowledged the challenge: "My estimation of value in securities is not now, and has not been for some time, in sync with the markets." This disconnect proved particularly punishing for investors skeptical of the AI boom.
Despite the headline-grabbing $912 million position against Palantir, the actual cost of the puts was just $9.2 million, and Burry suggested the position was quickly closed out. His stature among online retail investors - the same cohort that helped drive Palantir's remarkable performance - made the bet particularly noteworthy.
The fund's closure, revealed through SEC filings this week, represents the final chapter for one of finance's most unconventional figures, whose prescience about one crisis couldn't overcome the challenges of navigating today's AI-driven markets.
