Michael Burry, the investor who famously bet against the US housing market during the 2008 financial crisis, has turned bearish on Oracle Corporation (NYSE:ORCL).
Burry announced his ownership of put options on Oracle shares in a Substack post after the markets closed last Friday. He also disclosed that he had directly shorted Oracle in the past six months.
Oracle, a leading database software company, has recently expanded into cloud-computing services, a move that has necessitated significant debt to increase data center capacity.
Responding to a reader’s question about his decision to bet against Oracle, Burry expressed his dissatisfaction with the company’s strategic positioning and investments. However, he did not disclose the specifics of the put options. Oracle’s shares have seen a tumultuous year, with a substantial drop of approximately 40% from its peak in September.
The company currently has around $95 billion of debt outstanding, making it the largest corporate issuer outside the financial sector in the Bloomberg high-grade index.
Burry also shared his hesitation to short larger tech companies such as Meta Platforms Inc. (NASDAQ:META), Alphabet Inc. (NASDAQ:GOOGL), and Microsoft Corp. (NASDAQ:MSFT). He stated that these companies’ businesses extend beyond AI, and he believes they will maintain their dominance in their core businesses despite potential losses from overbuilt capacity.
Michael Burry’s decision to bet against Oracle is noteworthy given his reputation for identifying overvalued assets. His bearish stance on Oracle may be indicative of perceived weaknesses in the company’s strategy or financial health.
The significant debt Oracle has taken on to expand into cloud computing services could be a potential concern. However, it remains to be seen whether Burry’s bet will pay off as it did during the 2008 financial crisis.
