A 23% rebound in the Nasdaq Composite is still a bear market rally and the worst is yet to come, says Michael Burry. He’s the “Big Short” investor who betted against the U.S. housing market in `08.
Scion Asset Management is now 98% in cash
On Tuesday, Burry revealed to have pulled out of every stock he held except one, Geo Group Inc (NYSE: GEO) – a Florida-based company that invests in private prisons and mental health facilities.
Per the SEC filing, his hedge fund Scion Asset Management is now 98% in cash. The remaining is comprised of 500,000 shares of “GEO” worth $3.30 million. Earlier in August, the real estate investment trust reported better-than-expected revenue for its fiscal Q2.
The news sent Geo Group Inc up 5.0% today. Burry’s view is in line with Wall Street that sees upside in this stock to $13 on average; about a 65% increase from here.
Burry warns the market has not bottomed yet
“IXIC” has now retraced more than half of its year-to-date loss that’s usually read as a sign that the trend is shifting in favour of the bulls. Burry, however, disagrees with that notion. His recent tweet reads:
Nasdaq now up 23% off its low. Congratulations, we now have the average bear market rally. Across 26 bear market rallies, the average is 23%. After 2000, there were two 40%+ bear market rallies and one 50%+ before the market bottomed.
U.S. consumer debt is currently expanding by $40 billion per month versus its historical average of $28 billion. That, as per the hedge fund manager, will eventually weigh on “profits” and trigger the next leg down in stocks.