Investor Michael Burry announced on 6 November in his blog Cassandra Unchained that he had cut his position in put options on shares of industrial‑equipment maker Caterpillar by 75%. Before he sold part of the contracts, their value had risen roughly fourfold.
Details of the reduction in the Caterpillar position
Burry sold three quarters of his put options on Caterpillar shares, leaving some contracts in his portfolio. A put option gives an investor the right to sell an asset at a predetermined price and is used to protect against a fall in quotations or to profit from a decline in a share’s value.
The market value of the remaining contracts roughly corresponds to the amount of the initial position opened at the end of the second quarter. Burry did not disclose the exact amount of profit realised.
Changes in other parts of the portfolio
The day before, on 5 November, he trimmed his position in put options on the VanEck Semiconductor ETF by 25%. In the post he also said he intended to keep the remaining put options on that fund and on the shares of Palantir, Oracle and the Invesco QQQ Trust ETF.
Burry simultaneously increased his investment in Latin American e‑commerce company MercadoLibre. He rated MercadoLibre’s long‑term prospects, saying the company is building competitive advantages despite reporting quarterly earnings below forecasts.
Market movement and reaction to technology stocks
The move came amid a sharp sell‑off in the US stock market: on 5 November the Nasdaq Composite plunged by 5.5% and entered correction territory, down more than 10% from its prior high. The S&P 500 declined by 4.4%, and the Dow Jones by 3.4%.
On 6 November stocks partially recovered: the Nasdaq Composite rose by 1.1% and the S&P 500 by 0.3%, though both indices finished the week lower. Caterpillar is cited among companies seeing demand for equipment from data‑centre construction, notably generators for their power needs, so Burry’s bet against the company’s shares draws attention from investors to the valuations of businesses tied to the development of artificial intelligence.
