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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.<\/span><\/p>\n Last week, Alex Karp, the voluble chief executive of data company Palantir, went on CNBC and frantically attacked investors who doubted his company and dared to bet that its shares were overvalued.\u00a0<\/p>\n \u201cWhen I hear short sellers attacking what I believe is clearly the most important software company in America \u2014 and therefore the world, in terms of our impact \u2014 simply to make money, and trying to call the AI revolution into question\u2009.\u2009.\u2009.\u2009[it] is super triggering to me,\u201d he said. <\/p>\n Who had caused Karp\u2019s ire? The hedge fund manager Michael Burry, who had revealed in a routine regulatory filing that his Scion Asset Management was betting against Karp\u2019s richly valued data intelligence company.\u00a0<\/p>\n Burry shot to prominence in Michael Lewis\u2019s 2010 book The Big Short<\/em> as an iconoclastic doctor turned investor who successfully bet against subprime mortgage bonds before the financial crisis. In the subsequent film he was portrayed as an intense, socially awkward genius by Christian Bale, cementing his status as one of the rare oddballs who spotted the signs of impending meltdown and profited handsomely for their prescience.<\/p>\n Burry\u2019s stature is particularly strong among the online retail investors who have helped to make Palantir one of the world\u2019s best performing stocks. Headlines of his $912mn position of Palantir puts \u2014 derivatives which pay off if shares fall \u2014 and a smaller bet against Nvidia were therefore particularly damaging for the companies. On November 4, Palantir\u2019s share price fell nearly 8 per cent despite reporting better than expected earnings the evening before.<\/p>\n However, the actual cost of the puts was just $9.2mn and Burry suggested the position quickly closed out. By the end of this week Karp enjoyed the last laugh, with news that Burry was winding down his hedge fund. <\/p>\n This has been a brutal era for many contrarian, value-orientated or bearish investors who bet on shares falling. Several famous short sellers \u2014 such as Jim Chanos and Nate Anderson \u2014 have shuttered their firms in recent years as the stock market has marched relentlessly higher. It has been a particularly unforgiving market regime for investors sceptical of the AI boom.<\/p>\n \u201cMy estimation of value in securities is not now, and has not been for some time, in sync with the markets,\u201d Burry said in a letter to his investors.<\/p>\n The 54-year-old stands out even among the colourful characters who are attracted to short selling. At two he lost an eye to retinoblastoma and wears a glass eye. He grew up a self-described loner who has nevertheless been married twice. \u201cMy nature is not to have friends,\u201d he once told author Michael Lewis. \u201cI\u2019m happy in my own head.\u201d\u00a0<\/p>\n After studying English, economics and medicine at the University of California, Los Angeles, Burry attended Vanderbilt\u2019s medical school and went on to a residency at Stanford Hospital. However his new hobby \u2014 picking stocks \u2014 engaged him more than the messy world of medicine.\u00a0<\/p>\n When Burry\u2019s residency ended in 2000 he decided to leave medicine and set up an investment firm. He named it Scion Capital, after The Scions of Shannara<\/em>, a 1990 fantasy book by Terry Brooks, and developed a reputation as a ferociously contrarian money manager.\u00a0<\/p>\n \u201cIf you are going to be a great investor, you have to fit the style to who you are,\u201d Burry told Lewis.<\/em> \u201cThe late \u201990s almost forced me to identify myself as a value investor, because I thought what everybody else was doing was insane.\u201d<\/p>\n After the housing bubble crashed, Burry\u2019s online fame spread via Twitter, (now X). He built a cult following with his erratic and often enigmatic posts, amassing more than 1.5mn followers as \u201cCassandra Unchained\u201d, inspired by Warren Buffett once likening him to the Greek prophet whose curse was never to be believed.<\/p>\n Burry\u2019s AI scepticism has coincided with a wobble in the stock market\u2019s rapid rise this year. The Nasdaq has dipped 3.6 per cent this month, with some of the racier AI-linked stocks \u2014 including Palantir \u2014 falling even harder.<\/p>\n One issue that Burry has highlighted is that some of the biggest technology companies have boosted their reported earnings by extending the estimated lives of their AI servers for accounting purposes, thus spreading out depreciation costs over a longer period.\u00a0<\/p>\n However, tech investors say the depreciation issue was already well known, and has little bearing on the main question the market is grappling with: will the monstrous investments in AI infrastructure generate a long-term return. \u201cSpecific depreciation schedules are unlikely to be the gotcha issue,\u201d said Jim Tierney, a fund manager at AllianceBernstein.<\/p>\n Burry\u2019s starring role in the financial crisis guarantees him an avid following among retail investors, but for many professionals, his performance since then has been distinctly ho-hum. \u201cWhat are his other great calls since 2007?\u201d groused one veteran investor. \u201cI\u2019m so surprised he gets the publicity he gets.\u201d<\/p>\n Burry has seemingly retired from investing before, shuttering Scion Capital after his bets against subprime mortgage bonds paid off in 2008 before reopening as Scion Asset Management a few years later. Perhaps this too will prove just a temporary break. <\/p>\n As he cryptically wrote on X shortly before filing for the wind-down of his fund: \u201cSometimes we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is to not play.\u201d<\/p>\n robin.wigglesworth@ft.com<\/em>, <\/em>amelia.pollard@ft.com<\/em>, <\/em>richard.waters@ft.com<\/em><\/p>\n","protected":false},"excerpt":{"rendered":" Unlock the Editor\u2019s Digest for free Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter. Last week, Alex Karp, the voluble chief executive of data company Palantir, went on CNBC and frantically attacked investors who doubted his company and dared to bet that its shares were overvalued.\u00a0 \u201cWhen I hear<\/p>\n","protected":false},"author":1,"featured_media":33576,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[49],"tags":[1810,19219,3401,19220,3746],"class_list":{"0":"post-33575","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-business","8":"tag-bet","9":"tag-burry","10":"tag-michael","11":"tag-seller","12":"tag-short"},"_links":{"self":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/33575","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=33575"}],"version-history":[{"count":0,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/posts\/33575\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=\/wp\/v2\/media\/33576"}],"wp:attachment":[{"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=33575"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=33575"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/naijaglobalnews.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=33575"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}