Michael Burry, the renowned investor who predicted the 2008 financial crisis, has made significant adjustments to his portfolio, particularly in Chinese tech stocks. In a strategic move, he reduced holdings in Alibaba and JD.com before the market rallied following DeepSeek’s release, while increasing his stake in PDD, the parent company of Temu.

Seizing Opportunities Amidst Market Volatility

Trimming Holdings Before the Rally

In the final quarter of 2024, Michael Burry, through Scion Asset Management, strategically pared down his positions in two major Chinese tech giants. This decision came just before DeepSeek's launch ignited a substantial market rebound in early 2025. By reducing his stakes in Alibaba by 25% and JD.com by 40%, Burry positioned himself to capitalize on emerging trends more effectively.The rationale behind these reductions was multifaceted. The Chinese tech sector had been under intense pressure due to regulatory concerns, economic slowdowns, and geopolitical tensions. Burry's proactive approach allowed him to mitigate risks while setting the stage for potential gains from more promising investments. His foresight proved invaluable as the market responded positively to DeepSeek's release, leading to notable increases in stock prices across several Chinese tech companies.

A New Focus on Temu’s Parent Company

Amidst the reshuffling of his portfolio, Burry also made a bold move by acquiring a significant stake in PDD, the e-commerce platform behind Temu. This addition to his holdings signaled a shift towards companies with robust growth prospects and innovative business models. PDD’s success story, characterized by its disruptive pricing strategies and rapid user base expansion, made it an attractive investment opportunity.The inclusion of PDD in Burry’s portfolio underscores his knack for identifying undervalued assets with strong growth potential. As the market began to rally following DeepSeek’s release, PDD’s stock surged by 28%, validating Burry’s decision. This strategic pivot not only diversified his portfolio but also positioned him to benefit from the broader resurgence of Chinese tech stocks.

Repositioning for Broader Market Trends

Beyond his moves in Chinese tech, Burry also made several changes to his overall portfolio, reflecting his broader investment strategy. He exited positions in Olaplex, Shift4Payments, and TheRealReal, indicating a shift away from certain sectors that no longer aligned with his investment thesis. Conversely, he added new holdings in Canada Goose, Estee Lauder, VF Corp., Bruker, HCA Healthcare, Magnera, and Oscar Health, signaling a diversified approach to risk management.These adjustments highlight Burry’s ability to adapt to changing market conditions. By exiting less favorable positions and entering into sectors with stronger fundamentals, he ensured that his portfolio remained resilient and well-positioned for future opportunities. Despite the overall value of Scion’s portfolio dropping slightly, the number of positions increased, demonstrating a balanced approach to asset allocation.

The Impact of DeepSeek on Chinese Tech

The release of DeepSeek marked a turning point for Chinese tech stocks, which had been struggling under various pressures. The cut-price AI model generated significant excitement, driving up stock prices and restoring investor confidence. Alibaba saw a 47% gain, Baidu experienced a 16% rise, and JD.com posted a 19% increase, all within a short span.Burry’s foresight in trimming his positions before this rally allowed him to re-enter or retain these stocks at potentially lower valuations, maximizing returns. The DeepSeek phenomenon underscored the importance of staying ahead of market trends and being prepared to act swiftly when opportunities arise. Burry’s strategic maneuvers exemplify his reputation for making contrarian bets that often yield substantial rewards.

Burry’s Investment Philosophy and Future Outlook

Michael Burry’s investment philosophy is rooted in identifying undervalued assets and making contrarian bets. His track record, including predicting the 2008 housing bubble collapse and investing in GameStop long before it became a meme stock, demonstrates his ability to anticipate market shifts. By navigating the volatile Chinese tech sector and embracing emerging platforms like Temu, Burry continues to prove his acumen in spotting high-potential opportunities.Looking ahead, Burry’s strategic decisions are likely to influence investor sentiment and market dynamics. His actions serve as a barometer for where the market might be heading, especially in sectors facing uncertainty. As the global economy continues to evolve, Burry’s unique perspective and bold moves will undoubtedly shape the investment landscape.