Burry Shuts Scion Capital

What happened

Michael Burry terminated Scion Asset Management, his hedge fund with approximately $155 million in assets as of March 2025, liquidating funds and returning capital to investors. This action follows Burry's concerns regarding inflated valuations in the tech and AI sectors, particularly his anticipation of a market correction. He cited aggressive accounting practices potentially masking true costs and understating depreciation by an estimated $176 billion across AI infrastructure between 2026 and 2028. Burry had previously placed significant put options against companies like Palantir and Nvidia.

Why it matters

The closure of Scion Asset Management, driven by concerns over aggressive accounting in AI infrastructure, introduces an increased due diligence requirement for financial analysts and procurement teams evaluating technology investments. This action highlights a potential visibility gap regarding the true depreciation costs within AI-related assets, increasing exposure for compliance and risk management departments to understated liabilities. The burden falls on internal finance and audit functions to scrutinise capital expenditure and accounting practices more rigorously.