The Man Who Predicted the Housing Market Crash Lost $574 Million Due to This Particular Stock

Even experts are prone to mistakes


One such individual who had amassed a massive fortune for his clients as well as himself is Scion Asset Management’s CEO, Dr. Micheal Burry.

Ever since then, Dr. Burry has been a key figure in the US financial markets.

One such company was GameStop, the video game retailer that has been in the news recently all thanks to Robinhood, Wall Street bets, and skeptics who believed that they could take down the hedge funds through the unlikeliest of collaborations in U.S history.

Even though the firm’s equity holdings were sitting at $91 million for the first half of 2020, the firm’s portfolio is in fact worth slightly over $315 million. It held diversified positions in multiple stocks such as GameStop, Qorvo, Maxar Technologies, Jack in the Box, and Facebook.

Image credit: New Money
Image credit: New Money

“Some of his biggest call option positions are Google, Facebook, Booking Holdings Ltd, and Goldman Sachs”.

After he realised that the stock was being heavily shorted, he stopped shorting and rather built up a position to benefit from the “gamma squeeze” effect, a phenomenon that the entiore world has already witnessed when retail traders from a Reddit subgroup, called Wall Street bets had average Joes make millions of dollars in unrealized gains.

When computing the lost profits, it can be estimated that he would have made a profit of $574 million had he been able to liquidate his entire holding at the peak price of $483.

Image: New Money

A group of Redditors were also able to magnify their gains through leverage, by acquiring multiple ‘call options’ outright which further increased the stock price causing it surge beyond belief.

Image: Michael Förtsch on Unsplash



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