Michael Perry helped pave the way for GameStop’s short squeeze, bet on Elon Musk’s Tesla and Cathie Wood’s Ark Invest, and warned of a historic market crash last year.
The head of Scion Asset Management also described bitcoin as a “speculative bubble,” predicting inflation would pick up and selling most of his US stocks in 2021.
Perry is best known for his profitable bet on the housing bubble in the mid-2000s. He was portrayed by Christian Bale in the movie adaptation of “The Big Short”.
Burry’s contradictory bet on GameStop in 2019 helped lay the groundwork for retail investors to increase the stock by up to 2,500% in January 2021.
The Scion boss initially welcomed the day traders battled powerful hedge funds, but soon refrained from manipulating the supply market.
“This is abnormal, crazy and dangerous,” he wrote on Twitter, calling for legal and regulatory action.
Perry later compared the saga to his signature bet against the housing bubble.
“It was a uniquely perfect setup,” he tweeted, highlighting the game retailer GameStop’s small size, the massive short interest in its stock, and its wholesale rejection by most of Wall Street. “There will never be anything else like it. Pretty much like #thebigshort.”
Scion exited its GameStop site in the last quarter of 2020, before the stock soared significantly. However, Bury later tells Barron’s that he made a huge profit from the bet.
The GameStop episode came to a head with Securities and Exchange Commission officials visiting Scion’s offices in March, according to Burry, prompting him to delete his Twitter account for a few months.
Read more: Subreddit founder Michael Burry explains the unique investor appeal of The Big Short — and reveals hidden stocks in his tweets
Barry, who revealed in December 2020 that he was betting against Tesla, issued several dire warnings about the automaker’s stock after it surged the following month.
He tweeted in January 2021: “Okay, my last Big Short just got bigger and bigger and bigger too.”
Scion revealed that it held bearish put options on approximately 800,000 shares of Tesla at the end of March, and increased that position to 1.1 million shares by June 30. It also revealed the ETF’s status in Cathie Wood’s Ark Innovation ETF, a major supporter of Tesla.
Perry rang Tesla’s alarm bell again in November. He wrote on Twitter, “Could TSLA depreciate in dollars by 80 or 90%?
It also targeted investor Elon Musk, accusing the Tesla CEO of selling stock because he knew electric car stocks were overvalued.
“He doesn’t need the money,” Berry wrote on Twitter. “He just wants to sell TSLA dollars.”
Musk responded on Twitter: “Watch a broken watch.”
Perry sounded the alarm on a large number of assets in 2021, predicting a historic crash.
“The market is dancing on a knife edge,” he wrote on Twitter in February, citing rising stock prices and ballooning debt margins.
Burry compared the hype around bitcoin, electric vehicles, software-as-a-service companies and meme stocks with dot-com and housing bubbles in a tweet in March.
He warned that those assets are “driven by the fervor of speculation to crazy heights from which the fall will be dramatic and painful.”
It was declared in June the “biggest speculative bubble of all time”. “All hype/speculation is drawing in retail before the mother of all malfunctions.”
Berry also announced in a November tweet that there is more market speculation than there was in the 1920s, and more overvaluation than there was during the 1990s.
Berry correctly predicted in April 2020 that reopening the US economy after the pandemic would trigger inflation. The alarm about price hikes has been sounded several times in 2021.
“Get ready for inflation,” he wrote on Twitter in February of last year. “Reopening and stimulus on the way.”
Perry paralleled German hyperinflation in the 1920s, noting that everyone was playing in the market and that volumes were going up at the time. “Sound familiar?” Asked.
The investor also shared Warren Buffett’s famous warning about how inflation discourages companies from investing, erodes the value of future profits, and produces negative real returns for investors.
“Inflation… just doesn’t reopen anymore, guys,” Berry wrote on Twitter in November, after the CPI rose 6.2% in October.
“It doesn’t mean that anyone could have seen this coming,” he added sarcastically.
Perry trimmed his portfolio of US stocks from more than 20 holdings to just six in the third quarter of 2021, reducing its total value from about $140 million to just $42 million (excluding options).
The founder of r/Burryology, a spin-off of Burry’s close followers, told Insider that the sales were a huge red flag that the Scion leader was preparing for a historic meltdown.