Key Takeaways
- The Scion Asset Management founder established a roughly 3.5% stake in PayPal alongside plans for Salesforce and MSCI.
- According to Burry, technical market mechanics—not deteriorating business fundamentals—fueled the software sector downturn.
- A “reflexive positive feedback loop” involving declining share prices and distressed bank debt linked to software companies drove the selloff.
- PayPal shares climbed 2.5% Friday, boosted partly by emerging activist investor rumors.
- SG Americas’ 13F filing suggests potential activist involvement, with PayPal among identified targets.
Michael Burry is making a bold return to software equities—and he’s being unusually transparent about it.
The legendary investor behind Scion Asset Management took to Substack on Wednesday to explain his rationale for accumulating several undervalued software companies. His thesis is clear-cut: the recent price collapse stems from technical market forces rather than deteriorating business quality.
Burry outlined what he calls a “reflexive positive feedback loop”—a mechanism where declining stock valuations triggered stress in bank financing connected to software enterprises, subsequently accelerating the downward price spiral. He believes this cycle is nearing exhaustion.
“I do not believe the technical pressures brought on by the private credit/software debt issues are big enough to affect these stocks for much longer,” Burry wrote.
Burry’s Current Software Holdings
The most substantial new holding he revealed is PayPal (PYPL), where he initiated approximately a 3.5% ownership position. His existing portfolio already includes Fiserv (FISV), Adobe (ADBE), Autodesk (ADSK), and Veeva Systems (VEEV). He indicated intentions to acquire shares of Salesforce (CRM) and MSCI (MSCI) on Thursday.
A common characteristic unites these selections: they maintain independence from private credit financing. This distinction carries weight as retail capital has been exiting private credit vehicles over recent months, with numerous loans supporting software enterprises—creating precisely the technical dislocation Burry is exploiting.
Burry conceded that certain software businesses face genuine disruption from large language model technology. However, he excludes his chosen investments from this vulnerable category. He noted he has “just about finished analyzing” his selections “forensically, competitively, and fundamentally.”
PayPal Gains Ground Amid Activist Interest
PayPal received additional momentum Friday, advancing approximately 2.5%, with portions of that rally attributed to renewed activist investor chatter.
Gordon Hackett analyst Don Bilson identified that SG Americas—Societe Generale’s brokerage division—appears to be functioning as a swap intermediary for activist funds, based on examination of SG’s 13F regulatory disclosure. Bilson suggested PayPal might be attracting activist attention.
This isn’t PayPal’s first encounter with such speculation. Last February, the payments giant replaced its chief executive following underwhelming financial results and forecasts. During that same period, media outlets reported that the company had generated acquisition interest from potential buyers.
Additional companies Bilson identified as prospective activist candidates from SG’s filing include VICI Properties (VICI), Host Hotels (HST), and GitLab (GTLB). VICI advanced 0.8% Friday, Host Hotels increased 2.3%, while GitLab remained unchanged.
Burry’s Substack disclosure served as the principal catalyst for most software names he mentioned, with several posting gains following the announcement.
PayPal’s dual catalysts—Burry’s position combined with activist speculation—positioned it among Friday’s most actively traded names in the sector. The stock continues trading significantly beneath its historical peaks, likely enhancing its attractiveness to value-focused investors like Burry.
As of Thursday’s writing, Burry outlined intentions to expand his Salesforce and MSCI holdings—though execution of those transactions remains unconfirmed.
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