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‘The Big Short’ Investor Michael Burry Bets Big on Regional Banks amid Ongoing Crisis

UTC by Tolu Ajiboye · 3 min read
‘The Big Short’ Investor Michael Burry Bets Big on Regional Banks amid Ongoing Crisis
Photo: Unsplash

Burry increased his stakes in several regional banks in Q1, including NYCB, PacWest, Western Alliance, and First Republic.

Hedge fund manager and investor Michael Burry added new positions in several regional banks during the first quarter, regardless of the sector’s gross underperformance. Burry’s increased investment position in the sector contradicts the prevailing investor convention as many others have fled the scene due to the ongoing banking crisis that has undermined the financial sector. The hedge fund manager’s move underscores his faith in the banking sector amid a tumultuous period.

Following the Silicon Valley Bank collapse in mid-March, Burry opined that the banking crisis would soon end without severe damage. In a now-deleted tweet, the famed ‘Big Short’ investor said, “This crisis could resolve very quickly. I am not seeing true danger here.”

Burry’s Stakes in Regional Banks for Q1 2023

Securities filings released on Monday revealed that Burry’s Scion Asset Management bought $23.4 million of bank stocks in the first quarter. These include 850,000 shares in New York Community Bancorp (NYSE: NYCB) and 250,000 in PacWest Bancorp (NASDAQ: PACW). The asset manager’s positions also include 150,000 shares in First Republic Bank and 125,000 shares in Western Alliance Bancorp (NYSE: WAL). Although Scion’s positions entailed mostly embattled mid-sized institutions, reports state that Burry’s firm added a $4.6 million position in Wells Fargo (NYSE: WFC).

On May 1st, the Federal Deposit Insurance Corporation (FDIC) announced the closure of First Republic, and its subsequent sale to JPMorgan (NYSE: JPM). Scion’s filings did not state whether the asset management firm had sold its positions before the dissolution.

The First Republic collapse marks the most significant bank failure since the 2008 financial crisis.

Scion’s new holdings include $7.6 million in New York Community Bank shares and $4.4 million in Western Alliance. In addition, the asset manager has $2.4 million in PacWest and $2 million in First Republic. Through his firm, Michael Burry also purchased $2 million worth of Ohio-based regional bank Huntington Bank (NASDAQ: HBAN).

Other Burry investments during the first quarter include increased stakes with Chinese e-commerce powerhouses Alibaba (NYSE: BABA) and (NASDAQ: JD). The ‘Big Short’ investor also invested in Signet Jewelers, Sibanye Stillwater, Zoom Video, and Cigna.

Nevertheless, securities filings disclosed that the celebrated investor liquidated his positions in several other firms during the same period. These include MGM Resorts International Inc (NYSE: MGM), SkyWest Inc (NASDAQ: SKYW), Qurate Retail Group Inc (NASDAQ: QRTEA), and Wolverine World Wide Inc (NYSE: WWW).

The Big Short Book & Movie Adaptation

In 2010, Burry was featured in the book “The Big Short” by Michael Lewis, which later became a movie adaptation in 2015. The movie covers how the US housing bubble triggered the 2007/08 financial meltdown. Burry rose to fame with his bets against the housing market before the full-blown impact of the financial crisis.

The 2015 “Big Short” movie stars an ensemble cast, including Steve Carell, Ryan Gosling, Brad Pitt, and Christian Bale as Michael Burry.

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