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"Burry doesn't understand the basics":
Star investor Cathie Wood takes Michael Burry's short attack on her fund outwardly
Photo: Alex Flynn / Bloomberg via Getty Images
Two star investors are currently entertaining the financial scene: On one side is
Michael Burry
. The 50-year-old is known for his bet against the US real estate market and his prediction of the financial crisis of 2008. His hedge fund Scion Capital bet on a collapse of mortgage bonds early on and earned more than 700 million dollars. His actions were filmed in the Hollywood film "The Big Short". Even today he is a successful investor with his hedge fund, which was renamed Scion Asset Management.
On the other side is
Cathie Wood
.
The 65-year-old economist from the USA founded her investment company Ark Invest in 2014, which primarily invests in companies with disruptive technologies.
She became famous for her extremely high price targets for Tesla and Bitcoin as well as during the Corona crisis, when more and more private investors passed their time with investments in the stock exchange in the wake of the lockdowns.
Wood is now a real star on the scene, fans can even buy merchandising items with their hedge fund's logo.
The stock market flotation of Robin Hood shows how great Woods influence is at the moment: shortly after the IPO, the share of the trading app slipped significantly into the red.
But when Woods announced that he had joined Robin Hood, the stock took off.
Burry's short bet against Ark Innovation
According to documents filed with the US Securities and Exchange Commission, Burry's Scion fund as of the end of June held put contracts worth nearly $ 31 million on Ark's most important fund, the Ark Innovation ETF. These put contracts give Scion the right to sell shares in the Ark Fund prior to a specified date and at a previously agreed price. If Ark's price falls below this threshold, Burry wins his short bet.
Burry believes many of the companies Wood has selected are overrated and expects a bubble to burst.
Above all, the star investor warns against investments in cryptocurrencies and so-called meme stocks, which are offered for sale in Internet forums such as Reddit.
At the top of his short list is the electric car maker Tesla, whose shares he believes are completely overvalued.
According to the documents, he has now increased his bet against Tesla shares again.
Wood relies on everything that Burry is a thorn in the side
On the other hand, Cathy Wood relies on exactly these stocks frowned upon by Burry. The Tesla share, for example, is the largest single position. In 2018, the hedge fund made its breakthrough with an investment in the electric car manufacturer. The investor still thinks the stock is undervalued and expects the price to rise to $ 3,000 by 2025. It's hard to believe, because the share is currently trading at $ 670, and the record high of $ 880 at the end of January this year seems a long way off.
In addition, the Ark Innovation ETF naturally also invests in Bitcoin. Here Wood expects an increase in value of up to $ 500,000. Here, too, the forecast seems gigantic far removed from the current price: Currently, the largest and best-known of all cryptocurrencies on the Bitstamp trading platform is quoted at 45,000 US dollars, in mid-April the previous record high of 63,000 dollars was reached.
Wood also caused a stir with her investment in the US online broker Robinhood at the beginning of August: The company's stock market debut at the end of July was anything but successful. When Wood made an investment in the trading app a few days later, her fans grabbed it and catapulted the share price by 65 percent. The company, which is used by many small investors to push stocks in a targeted manner, has now itself become the target of this so-called crowd speculation.
"Queen Cathie", as her followers also call her, invests exactly where Burry would never invest.
In fact, it was only a matter of time before the hedge fund manager would take a direct stand against his competitor.
Especially since the fund is 6 percent in the red this year after a growth increase of 200 percent last year.
But Wood is now on her part to attack: "Burry does not understand the fundamentals that lead to explosive growth and accordingly offer investment opportunities in the field of innovation," she countered on Twitter.
Only time will tell who of the two star investors will be right in the end.
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