Why Is Michael Burry Going In On China? An In-Depth Look At Scion Capital Holdings

Recall how Scion Capital founder Michael Burry — who gained widespread recognition after being portrayed by actor Christian Bale in the 2015 film "The Big Short" (based on Michael Lewis' book) — tweeted “Sell” back on Feb. 1.

Then Burry deleted his Twitter account.

Though the investor is known for deleting his account (and tweets), what exactly did he mean by "Sell?"

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The one-word tweet should’ve actually been “buy,” because according to Scion Capital’s latest 13F filing, Burry bought more stocks than he sold. And, he could’ve said “China” after.

What Happened: Looking at Scion’s latest 13F for the fiscal quarter ending Dec. 31, against the previous filing for the fiscal quarter ending Sept. 30, the hedge fund exited four positions, liquidated shares of others, and added seven new positions, two of which are Chinese companies.

That may sound a bit confusing, so here are a couple of charts.

Burry exited Aerojet Rocketdyne Holdings, an American aerospace and defense company that provides missile defense, strategic, and tactical missile programs to America and our allies.

It sold its position in Charter Communications, a cable company that operates through the Spectrum brand, and axed Liberty Latin America, a cable brand that operates in Costa Rica.

And while the hedge fund manager still owns millions of dollars in shares of corrections and prison services through Geo Group, it exited its position in Corecivic.

On the buy side, it added integrated software, data and analytics company Black Knight, Coherent Corp, a global provider of lasers and laser-based technology, regional airline SkyWest Inc, and “Sperry” shoe-brand owner, Wolverine Worldwide.

Scion Capital also bought Chinese-based Alibaba Group Holdings, JD.com, and opened a position in MGM Resorts International, which owns 51% of MGM China Holdings Ltd.

Why It Matters: As China reopens its economy, record inflows into emerging market equities have been observed, according to a report by Bank of America Global Research reported earlier by Benzinga.

Against this backdrop, Burry has made a move into China, seeking to capitalize on the anticipated rise in demand.

This has led to an upswing in assets across various industries, from crude oil to European luxury goods, as investors and businesses alike seek to take advantage of the renewed activity.

Burry is not the only hedge fund manager making such moves, as Coatue Management and Farallon Capital Management have also reportedly bought shares in Chinese e-commerce giant, Alibaba.

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