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- Michael Burry revealed a bet against Cathie Wood’s flagship Ark ETF this week.
- “The Big Short” investor predicted her downfall and suggested the next crash will catch her out.
- Burry has criticized several of Wood’s favorite holdings including Tesla and bitcoin.
- See more stories on Insider’s business page.
Michael Burry of “The Big Short” fame revealed he’s betting against star stock-picker Cathie Wood in a portfolio update this week. The fund manager’s new position is no surprise, as he’s publicly predicted the Ark Invest chief’s hot streak won’t last, and compared her to past growth investors whose luck ran out.
Burry’s Scion Asset Management held put options on 235,500 shares of Ark Innovation ETF (ARKK), Wood’s flagship exchange-traded fund, at the end of June. The ETF invests in high-flying technology stocks such as Shopify, Coinbase, Zoom, and Tesla – which Burry is also short.
“It is too early, she is too hot, and, today, short sellers are timid, but Wall Street will be ruthless in the end,” Burry said about Wood in a February tweet that has since been deleted.
“Shades of Gary Pilgrim and PBHG Growth from the 1990s, or Gerald Tsai and the Manhattan Fund in the 1960s,” Burry tweeted around the same time.
Pilgrim’s growth-style mutual fund lost a fortune when the dot-com bubble burst, while Tsai’s aggressive growth fund was caught out by the market crash in the late 1960s and shed 90% of its assets in a few short years, Forbes says.
Burry’s tweet added that Wood’s Ark fund is “defining an era” and investors risked repeating the mistakes of the past.
The Scion boss has expressed skepticism about some of Wood’s favorite investments, which helps explain his wager against her ETF. For example, he’s called out Tesla for its “ridiculous price,” compared it to the housing bubble, and told investors to “enjoy it while it lasts.” Meanwhile, Wood and her team expect Tesla’s stock to more than quadruple by 2025, lifting its market capitalization to over $3 trillion.
Burry has also dismissed bitcoin as a “speculative bubble” built on massive amounts of leverage, and questioned its future because governments won’t want to lose their currency monopolies. In contrast, Wood has heralded cryptocurrencies as the “missing layer of the internet,” and predicted bitcoin will eventually soar about 10-fold in value to $500,000 a coin.
Wood’s team also invested in Robinhood following its recent IPO, whereas Burry has blasted the trading app as a “dangerous casino” that markets itself as “fun for all ages.” More broadly, Wood doesn’t believe the stock market is in a bubble, while Burry has warned it’s “dancing on a knife’s edge” and expects the “mother of all crashes.”
The Ark chief reacted to the news of Burry’s bet against her by giving him credit for a “great call” on the housing market, but asserting the Scion chief just doesn’t get tech.
“I do not believe that he understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space,” she tweeted.
Wood is anticipating mass technological disruption, and wants to own Tesla shares, bitcoin, and other assets that she expects to usher in the coming revolution. Burry disagrees so strongly that he’s bet money on her marquee ETF crashing back to earth. Investors will be watching closely to find out who’s right.