Key Takeaways
- Michael Burry disclosed approximately 3.5% ownership in PayPal while planning additions to Salesforce and MSCI holdings.
- The investor attributes recent software stock weakness to technical market dynamics rather than fundamental business issues.
- Burry identifies a “reflexive positive feedback loop” linking price declines to strain in banking debt associated with software companies.
- PayPal shares advanced 2.5% Friday, supported by potential activist investor interest.
- SG Americas appears positioned as a swap intermediary for activist funds, with PayPal identified as a potential activism candidate.
The founder of Scion Asset Management has returned to software equities with conviction and transparency.
Michael Burry published a detailed Substack entry Wednesday explaining his strategy for accumulating shares in several distressed software companies. His thesis centers on a clear premise: the latest price declines stem from technical trading patterns rather than deteriorating business fundamentals.
Burry identified a “reflexive positive feedback loop” mechanism where declining share prices triggered complications in banking debt connected to software enterprises, which subsequently amplified downward price pressure. According to his assessment, this cycle approaches its conclusion.
“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 Portfolio Additions
The most substantial new holding he revealed involves PayPal (PYPL), where he established approximately 3.5% ownership. His existing portfolio includes Fiserv (FISV), Adobe (ADBE), Autodesk (ADSK), and Veeva Systems (VEEV). Burry indicated intentions to increase positions in Salesforce (CRM) and MSCI (MSCI) on Thursday.
A common characteristic links these selections: they operate independently of private credit financing. This distinction carries weight as individual investors have withdrawn capital from private credit vehicles over recent months, with numerous loans supporting software businesses and generating the technical headwinds Burry aims to capitalize on.
Burry recognized that certain software enterprises face genuine disruption from large language model technologies. However, his chosen investments fall outside that vulnerable category. He stated he has “just about finished analyzing” his selections “forensically, competitively, and fundamentally.”
PayPal Gains Ground on Activism Chatter
PayPal received additional momentum Friday, advancing roughly 2.5%, with portions of the movement attributed to renewed activist investor speculation.
Gordon Hackett analyst Don Bilson noted that SG Americas — Societe Generale’s brokerage division — appears to function as a swap intermediary for activist investors, based on examination of SG’s 13F disclosure. Bilson identified PayPal as potentially appearing on an activist’s target list.
This marks a continuation of prior attention. PayPal replaced its chief executive in February after reporting underwhelming financial results and forward guidance. During that same period, media accounts indicated the company had garnered attention from prospective buyers.
Additional companies Bilson highlighted as possible activism candidates from SG’s filing include VICI Properties (VICI), Host Hotels (HST), and GitLab (GTLB). VICI climbed 0.8% Friday, Host Hotels appreciated 2.3%, while GitLab remained unchanged.
Burry’s Substack publication served as the principal catalyst for most software names he discussed, with multiple tickers moving higher following the disclosure.
PayPal’s convergence of Burry’s fresh stake and activism speculation positioned it among the session’s most active names within the group Friday. The shares remain significantly beneath historical peaks, presumably enhancing appeal for a value-focused manager like Burry.
As of Thursday, Burry outlined intentions to expand Salesforce and MSCI holdings — though execution of those transactions remains unconfirmed.
