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Scion Asset Management

From Alfawiki
Scion Asset Management, LLC
Company typePrivate
IndustryHedge fund, Investment management
Founded2000
FounderMichael Burry
Headquarters
California
,
United States
ProductsHedge fund, Asset management

Scion Asset Management, LLC is a hedge fund based in California, founded by Michael Burry. It became well-known for its lucrative bets during the subprime mortgage crisis and its role in the GameStop short squeeze.

Scion Capital

In November 2000, Michael Burry established Scion Capital, initially supported by family loans and inheritance, with additional capital provided by Joel Greenblatt’s Gotham Capital. The fund’s name was inspired by Terry Brooks' The Scions of Shannara. Scion Capital quickly generated impressive returns, outperforming the S&P 500 every year from 2001 through 2003. By 2004, assets under management reached $600 million, though Burry capped further inflows to preserve investment flexibility. The fund’s success was partly due to short positions on overpriced technology stocks during the height of the Dot com bubble.

By mid-2005, Scion had achieved a return of 242%. On May 19, 2005, Burry executed his first trade involving subprime mortgage securities by acquiring $60 million worth of credit default swaps (CDS) from Deutsche Bank. By October of that year, Scion held CDS contracts exceeding $1 billion on subprime mortgage bonds.

Although many investors doubted Burry’s bearish view on the housing sector and requested withdrawals, his prediction proved correct when the subprime market collapsed in mid-2007. The fund generated $725 million for its investors, with Burry personally earning $100 million. From its inception in November 2000 until June 2008, Scion Capital delivered net gains of 489.34%, vastly surpassing the approximate 2% return of the S&P 500.

Facing public criticism and undergoing several IRS audits in 2008, Burry decided to shut down Scion Capital to pursue other investment ventures.

Scion Asset Management

In 2013, Burry relaunched his hedge fund under the name Scion Asset Management, concentrating on personal investments such as water resources, agricultural land, and gold.

In August 2019, Scion revealed substantial holdings in GameStop, Tailored Brands, and two small-cap South Korean firms. Adopting an activist stance, the fund encouraged these companies to implement share repurchase programs. Scion’s accumulation of GameStop shares and advocacy for buybacks contributed to the environment leading up to the GameStop short squeeze. Nevertheless, Scion divested its entire position by late 2020, missing the peak of the rally. At its height, its 5.3% stake would have been valued at over $1.5 billion but still realized approximately $100 million in profits upon sale.

In May 2021, Scion purchased put options on Tesla stock but exited this position by November along with call options on Alphabet Inc. and put options on ARK Innovation.

Between May 2020 and May 2023, following Scion’s disclosed investments would have produced annualized returns near 56%, compared to roughly 12% for the S&P 500 during the same period.

In August 2023, anticipating a downturn in equity markets, Scion acquired $1.6 billion worth of put options against ETFs tracking both the S&P 500 and Nasdaq-100 indices. By November, these bearish positions were closed out, likely yielding profits as markets declined approximately 3%. The firm also held a sizable put option on the iShares Semiconductor ETF. By year-end 2023, all bearish bets were liquidated while exposure to healthcare, technology, and financial services sectors was increased substantially—particularly through larger stakes in Alibaba Group and JD.com.

In November 2024, Scion notably expanded holdings in Alibaba Group, JD.com, and Baidu, employing put options as downside protection. While many investors remained wary about China’s market outlook, Burry was among a minority bullish group that included Appaloosa Management’s David Tepper.

By February 2025, following a $1.3 trillion surge in China’s stock market driven by the emergence of DeepSeek, Scion reduced some Chinese equities but retained them among its largest positions and exited all put option hedges.

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