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    Know Michael Burry, the man who bet over half a billion against Tesla

    Know Michael Burry, the man who bet over half a billion against Tesla

    Know Michael Burry, the man who bet over half a billion against Tesla
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    By CNBCTV18.COM IST (Published)


    Michael Burry, the hedge fund star who inspired The Big Short, has bet over half a billion against Tesla. He was the one who predicted the real estate bubble and now says Tesla is in a similar bubble.

    Michael Burry, the famed investor, recently revealed in a regulatory filing with the US Securities Exchange Commission (SEC) that he has bet more than half a billion against Tesla. Burry’s filing shows that he has put 800,100 (just over eight lakh) shares of Tesla on long put contracts by the end of Q1 of this financial year.
    The shares are worth $534 million. The value, strike price and expiration of these contracts are unknown.
    A put option is a common bearish strategy used by investors that are often used for hedging or when speculating on downside action of stock prices.
    However, even as Burry bets against Elon Musk’s automobile giant, there are many who might not know who Burry is or his call to fame.
    Michael Burry is an investor and currently runs his hedge fund, which he reopened in 2013.
    Burry managed to earn $800 million by shorting the market during the real estate bubble collapse of 2008. Burry had trained as a physician but left it to open his own hedge fund Scion Capital in 2000. Burry soon cemented his status as a keen investor.
    Michael Lewis, the author of the book The Big Short, wrote in Vanity Fair, "In his first full year, 2001, the S&P 500 fell 11.88 percent. Scion was up 55 percent. Burry was able to achieve these returns by shorting overvalued tech stocks at the peak of the internet bubble. The next year, the S&P 500 fell again by 22.1 percent, and yet Scion was up again by 16 percent. The next year, 2003, the stock market finally turned around and rose 28.69 percent, but Mike Burry beat it again -- his investments rose by 50 percent. By the end of 2004, Mike Burry was managing $600 million and turning money away."
    Burry’s real success came when he predicted the collapse of the real estate bubble and shorted the market against it. He managed to earn $800 million, with a personal profit of $100 million as a result. After the earnings, he closed his fund.
    Burry’s hedge fund had a 489.34 percent return during the eight years that it was operational.
    His actions during that time were captured in the book The Big Short, which was later adapted into a Hollywood movie.
    Burry now predicts that Tesla is in a similar bubble. Tesla’s stocks have seen an incredible rally in the last year as the stock prices rose up 740 percent. But recently, the company has seen a nearly 20 percent dip in its prices, in just a month.
    Burry has said that Tesla’s reliance on the regulatory credits it receives for its bottom line is a red flag. Tesla received $518 million in sales of regulatory credit in the first quarter of FY21, Tesla’s net income in the last quarter of the previous year only stood at $270 million.
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