Burry's Bearish Bets Pay Off as July Selloff Hits Market Leaders
Complete. Here is the key summaryInvestor Michael Burry's bearish bets on Tesla, Caterpillar, Nvidia, Applied Materials, and the VanEck Semiconductor ETF largely paid off during July's market selloff. Four of his five short positions moved in his favor as these stocks declined, with Tesla and Caterpillar seeing significant drops. However, Nvidia rose slightly against his position. While the trades were profitable based on June disclosures, it remains unclear if he still holds them.
Investor Michael Burry's latest bearish bets have mostly worked as several of the stocks he targeted fell sharply in July. Burry, who became famous for betting against the U.S. housing market before the 2008 financial crisis, said in a June 30 Substack post that he had shorted Tesla (TSLA), Caterpillar (CAT), Nvidia (NVDA), Applied Materials (AMAT), and the VanEck Semiconductor ETF (SMH). A short position makes money when a stock falls, so the recent pullback has moved four of those five trades in his favor.
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Explore NVDS for 2X short leverage on NVDATesla has been Burry's strongest winner so far. He said he opened the short near $416.22, and the stock now trades at around $308 per share following disappointing quarterly results. That left Tesla down roughly 26% for July.
Caterpillar has moved sharply lower too, falling to around $894.54 from Burry's reported entry price of $1,060.98. The trade was unusual for him because he said Caterpillar had previously performed well for him as a long investment. Even so, the recent decline has made the short profitable on paper.
Semiconductor Bets Have Delivered a More Mixed Result
His semiconductor bets have delivered a more mixed result. The VanEck Semiconductor ETF dropped to roughly $556 from his disclosed short price of $642.80, while Applied Materials fell to about $541 from $729.40. Nvidia, however, moved against him by rising to around $208.76 from his reported entry near $198.09.
Overall, four of the five trades have gone in the direction Burry expected as investors pulled back from some of the market's strongest industrial and AI-related winners. However, it remains unclear whether he still holds any of these positions. Burry trades actively and often changes his portfolio quickly, so the June disclosure only shows where he entered the bets, not what he owns today.
Which Stock Is the Better Buy?
Turning to Wall Street, out of the four stocks mentioned above, analysts think that NVDA stock has the most room to run. In fact, NVDA's price target of $309.94 per share implies 48.5% upside potential. On the other hand, analysts expect the least from CAT, as its $1,016-per-share price target implies 14.2% upside. (See NVDA Stock Forecast).