Michael Burry Shuts Down Scion Asset Management Citing Market Valuation Disconnect

This analysis is based on multiple reports from November 13, 2025, regarding Michael Burry’s decision to shut down Scion Asset Management [1][2][3]. The SEC filing shows Scion’s registration was officially terminated on November 10, 2025, following an October 27, 2025 letter to investors where Burry stated his “estimation of value in securities is not now, and has not been for some time, in sync with the markets” [3][4].

The shutdown occurs amid Burry’s increasingly bearish stance on AI-driven market valuations. Scion’s final 13F filing revealed put options against AI leaders with notional values of $912 million against Palantir and $187 million against Nvidia, though Burry later clarified actual exposure was much smaller ($9.2 million for Palantir) [3][4]. This sophisticated options positioning reflects Burry’s contrarian approach rather than outright short selling.

Burry’s exit follows a pattern of strategic fund closures at market inflection points. He previously shut down Scion Capital in 2008 after successfully betting against the subprime mortgage market [3]. The current closure coincides with his criticism of major tech companies’ accounting practices, estimating that Microsoft, Google, Oracle, and Meta could understate depreciation by approximately $176 billion between 2026-2028, artificially boosting reported earnings [2].

: Burry’s exit reinforces growing concerns about AI stock valuations and market concentration risk. With AI stocks accounting for 75% of S&P 500 returns since ChatGPT’s launch in November 2022 [2], his departure signals potential vulnerability in the market’s most influential sector.

: Burry joins other prominent skeptics like Hindenburg Research and Jim Chanos in facing challenges operating in a market hostile to bearish views [2]. This trend suggests potential market inefficiencies where fundamental analysis is increasingly discounted relative to momentum-driven investing.

: By deregistering, Burry avoids future public disclosure requirements while maintaining flexibility for his November 25 announcement [1][5]. This move could become more common among managers who feel regulatory transparency conflicts with their investment strategies [2].

: Burry’s specific allegations about AI hyperscalers “quietly stretching out depreciation schedules to make earnings look smoother” [2] raise questions about earnings quality at major tech companies. He estimated Oracle’s profits could be overstated by 27% and Meta’s by 21% by 2028 due to these practices [2].

: The heavy reliance on AI stocks for market returns creates systemic vulnerability. Burry’s exit, combined with his detailed accounting criticisms, suggests potential earnings quality issues that could trigger broader market corrections [2][4].

: While Burry’s track record lends credibility to his concerns, his previous major calls have often been early relative to market timing [1][4]. The market may continue rewarding AI optimism despite fundamental concerns in the short term.

: Burry’s transition to a less regulated structure (potentially a family office) could reduce market transparency regarding sophisticated investors’ positioning [2][6].

: Burry’s departure may create opportunities for value-oriented investors if AI stocks experience corrections due to accounting concerns or valuation adjustments [3][4].

• Fund Details
  : Scion Asset Management managed $154.93 million as of March 2025 [3]
• Regulatory Status
  : Officially deregistered with SEC on November 10, 2025 [1][2]
• Final Positions
  : 80% exposure to put options against AI leaders, with $1.1 billion notional value but significantly smaller actual capital deployment [3][4]
• Future Plans
  : Burry announced “much better things” coming November 25, 2025 [1][5]
• Market Impact
  : Immediate reactions included Nasdaq declining 3% and Palantir dropping 8% despite beating earnings [4]
• Historical Context
  : Second voluntary fund closure following 2008 Scion Capital shutdown after successful housing market bet [3]

The investment community remains divided on Burry’s exit, with some viewing it as validation of bubble concerns while others see it as capitulation to market momentum [4]. The full implications will become clearer following Burry’s November 25 announcement.