Michael Burry Cuts Oracle Short Position in Half, Denies Full Exit: 'Fake News'

Michael Burry, the investor immortalized in 'The Big Short,' has recently cut his short position on Oracle (ORCL-US) in half to secure partial profits, while maintaining the remainder of his bearish bet. He has dismissed reports that he fully exited the trade, calling such claims 'fake news.'

In a July 17 trading update posted on Substack, Burry revealed he sold half of his put options on Oracle expiring in January 2027 with strike prices around the mid-$100 range. The move came as Oracle's stock price plunged, increasing the value of his put options and making the overall risk exposure 'too large,' prompting a partial reduction.

Markets initially misinterpreted the move, suggesting Burry had fully closed his Oracle short position, ending a bearish trade that had lasted about six months. Burry clarified that he only reduced half the position due to its success and substantial profit realization, but has not withdrawn his bearish outlook.

Oracle's stock hit a 52-week low of $121.50 on the 17th, down approximately 63% from its all-time high of $345.72 set last year. Burry first disclosed his Oracle put position in January, citing three main risks: the company's aggressive expansion of AI data centers, capital expenditures heavily reliant on debt, and future growth overly concentrated on a single customer, OpenAI.

Oracle's debt now stands at around $95 billion, making it the most indebted non-financial company in the Bloomberg high-grade corporate bond index. On July 9, S&P Global downgraded Oracle's long-term credit rating by one notch to BBB-, just one level above junk status, reinforcing Burry's concerns about financial leverage and customer concentration.

S&P Global noted that OpenAI accounts for about half of Oracle's $638 billion in remaining performance obligations, highlighting significant customer concentration risk. With Oracle's capital expenditures projected to reach $90–95 billion, S&P has raised its forecast for the company's free cash flow deficit in fiscal 2027 to $42 billion—nearly double the previous estimate.

Although Oracle's stock rose on the day of the downgrade—reflecting investor focus on record-order volumes—it subsequently continued to decline, reaching its 52-week low eight trading days later. As the value of his short position increased, Burry chose to reduce exposure and realize partial gains.

In addition to trimming his Oracle short, Burry also increased his put options on Nvidia (NVDA-US) expiring in December 2026 with strike prices in the low $100s on the same day. However, he described this as a low-cost, 'pocket money' bet, not a core position. Burry believes Nvidia's current valuation remains too high when factoring in potential margin and earnings risks over the next five years.

On the long side, Burry added to his position in DraftKings (DKNG-US) at around $25, expanding a position initiated on July 8. That initial online gambling portfolio was approximately 60% allocated to Flutter Entertainment (FLUT-US) and 40% to DraftKings.

Burry's bullish case for both companies centers on narrowing regulatory arbitrage. He expects prediction markets, which currently operate in legal gray zones and divert customers from traditional sports betting, will eventually be brought under the same regulatory and tax frameworks as licensed gambling operators—improving the competitive landscape for established players.

Burry also commented on Netflix's (NFLX-US) valuation but did not disclose any long or short positions. He questioned whether Netflix's content assets possess the cross-generational value of Disney or Pixar productions and stated that under his 'IV15' valuation framework, Netflix's stock would need to fall to the low $50s to become attractive. However, he emphasized this reflects a fair entry price, not a price prediction.

This marks the second time recently that Burry has cut a profitable short position by half rather than fully exiting. He employed a similar strategy in June with his short on Palantir (PLTR-US), suggesting that locking in partial gains while retaining downside exposure is becoming his standard position management approach.