"The Big Short" Michael Burry bets on a semiconductor sector pullback! Establishing a short position in SOXX ETF amid a record-breaking rally.

Investor Michael Burry, known for being the prototype of the movie "The Big Short," recently wrote on his Substack platform that he has established a new short position by buying put options on the iShares Semiconductor ETF (SOXX). The options expire in January 2027 with a strike price of $330. This move comes as the Philadelphia Semiconductor Index has recorded a record 18 consecutive trading days of gains. Burry believes that the index will eventually fall, as the current increase is driven more by technical factors rather than fundamental support, especially in the market narrative of chip supply shortages in the backdrop of large-scale data center expansion, he remains cautious. Burry: Historic Rally Driven by Technical Factors Michael Burry's decision to short the SOXX ETF reflects his doubts about the sustainability of the recent rally in the semiconductor sector. The Philadelphia Semiconductor Index has recorded an unprecedented continuous increase, which Burry believes is driven by technical factors rather than solid fundamental support. His bearish view comes as the market's core narrative revolves around chip supply shortages (especially in the context of large-scale data center expansion). Burry's strategy implies that he believes these technical factors are difficult to sustain in the long term, and the sector may face an adjustment. The iShares PHLX SOX Semiconductor Industry Fund (SOXX) is an important ETF in the semiconductor sector, providing investors with diversified exposure to semiconductor stocks. The fund has a management size of approximately $30.7 billion and is an important tool in the technology sector, reflecting the increasing importance of semiconductors in various fields from consumer electronics to data centers. However, current valuation metrics question the sustainability of its price level. According to GuruFocus data, SOXX's GF Value is $279.00, while the current trading price is $461.60, indicating that the ETF is overvalued by 65.4%. This significant gap suggests that potential investors lack sufficient margin of safety - the current price is significantly higher than the intrinsic value calculated based on historical trading multiples, past business growth, and future performance expectations. In addition, SOXX's trailing twelve months price-to-earnings ratio (TTM) is 39.85 times, which is at a high level, suggesting that the ETF is trading at a premium relative to its earnings. The high P/E ratio combined with the GF Value evaluation raises concerns about the sustainability of the current price level. In the past three months, SOXX has not reported any insider buying or selling activity, indicating that insiders currently have neither a clear intention to buy nor a sell signal for the ETF. GF Value shows that SOXX is currently significantly overvalued and has a high P/E ratio. Although it still reflects strong fundamentals, the significant gap between the current price and intrinsic value implies that a correction may be approaching. Frequent recent statements: "Too high, beware" Since April, Michael Burry has been releasing significant market views one after another. On the one hand, he says that the current hot stock market rally is not yet evolving into a catastrophic crash, but on the other hand, he provides detailed data to prove that Wall Street has systematically overvalued the real profits of tech giants by more than 40% over the past decade, and ordinary investors are paying the price for it. At the end of last year, Burry announced that he no longer manages client funds and instead focuses on investing his own capital and sharing his investment strategy on Substack. He has long been skeptical of the AI boom that has been driving the market to new highs, warning of overvaluation, accounting doubts, over-investment, and cyclical trading in the industry. Burry explicitly pointed out in a discussion with Substack subscribers last week that the "spire" shape, which sees the stock market soaring and then immediately crashing, is extremely rare in market history, "like unicorns, they are only a legend until they are proven to exist." He predicts that the market is more likely to show a volatile trend next, "there will be fluctuations, more new highs and significant pullbacks, and when future investors look back, the current rally may be seen as part of the market top in the bull market." This view follows his post on the X platform last Friday. At that time, the S&P 500 index surged 12% in 13 trading days, closing at a historical high of 7,126 points, Burry wrote, "The market has never seen a spire," and he quoted his view from the end of March as a supplement: "Shorting is not always right." As of the close on Monday, the Nasdaq ended the 13-day rally, and the S&P 500 index edged slightly lower.