The Real Reason Michael Burry Bet Millions Against Apple

Wright explains that Buffett is a long-term investor while Burry shorts stock on short-term plays. Buffett is not in the business of predicting company stock prices but invests in companies that he believes have business value down the road. Burry, on the other hand, is looking at what Apple stocks will do in the near future. Inflation, supply chain issues complicating the technology sector, China’s COVID-19 lockdowns, and the performance of NASDAQ are bound to affect Apple stock in the short term.

Burry has been open about his vision of the market, assuring that “the greatest speculative bubble of all time in all things” is inevitably leading to the “mother of all crashes” with investors piling up on cryptocurrencies (via Business Insider). Burry’s put options on Apple stocks give him the right (but not the obligation) to sell shares at a certain price, at a certain time. “If Apple doesn’t fall beneath a certain price by that time, the put options would expire worthless,” Billy Duberstein explains in a separate post for Fool.

Benzinga adds that Burry’s bearish position is valued at around $36 million if he exercises it. It is the largest position in his portfolio. Apple stock had a big run, quadrupling its stock price since early 2019. However, by May 2022, Apple stocks are down 20% year-to-date. The company from Cupertino saw a 16% drop in the stock price in this past quarter alone. Burry’s portfolio reveals his confidence in the U.S. market. He slashed it from 20 holdings to just six in the third quarter of 2021, with a value that dropped from $140 million to $42 million. In the fourth quarter, he swapped three of his remaining six holdings, lifting his portfolio to $74 million. “Short sellers on a stock have nothing, zero, zilch, nada, to do with the success or failure of the underlying business,” Burry tweeted on April 27.