Key Takeaways
- Michael Burry revealed a roughly 3.5% stake in PayPal alongside plans to acquire Salesforce and MSCI shares.
- According to Burry, the software sector downturn stems from technical market forces rather than deteriorating business fundamentals.
- Burry identifies a feedback mechanism linking declining share prices with distress in banking loans connected to software enterprises.
- Shares of PayPal increased 2.5% Friday, boosted partially by rumors of potential activist investor involvement.
- Evidence suggests SG Americas could be facilitating activist positions, with PayPal emerging as a likely candidate for intervention.
Michael Burry has returned to software stocks with conviction — and he’s making his thesis public.
The founder of Scion Asset Management posted a detailed analysis on Substack this Wednesday, explaining his rationale for accumulating several depressed software equities. His central premise is simple: the recent downturn reflects technical trading dynamics rather than fundamental deterioration in these businesses.
Burry outlined what he calls a “reflexive positive feedback loop” — a cycle where declining stock valuations created problems for bank loans backed by software enterprises, which subsequently accelerated downward price momentum. According to Burry, 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 Software Portfolio Revealed
The most significant addition to his portfolio is PayPal (PYPL), where he established an approximately 3.5% ownership position. His existing holdings include Fiserv (FISV), Adobe (ADBE), Autodesk (ADSK), and Veeva Systems (VEEV). Burry indicated intentions to initiate positions in Salesforce (CRM) and MSCI (MSCI) on Thursday.
A unifying characteristic across these selections: they maintain independence from private credit financing. This distinction carries weight as retail capital has been withdrawing from private credit vehicles over recent months, with numerous loans supporting software businesses — creating the exact technical headwinds Burry anticipates will dissipate.
Burry conceded that certain software businesses face legitimate disruption from large language model technology. However, he excludes his chosen companies from this vulnerable category. He stated he has “just about finished analyzing” his portfolio selections “forensically, competitively, and fundamentally.”
Activist Interest Lifts PayPal Shares
PayPal received additional momentum on Friday, advancing approximately 2.5%, with portions of that rally attributed to emerging activist investor speculation.
Gordon Hackett analyst Don Bilson identified that SG Americas — Societe Generale’s brokerage division — might be facilitating swap positions for activist funds, based on examination of SG’s recent 13F disclosure. Bilson highlighted PayPal as a probable activist target.
This marks recurring interest from activist-focused market participants. During February, PayPal underwent CEO replacement following underwhelming financial results and forward guidance. That identical period saw reports emerge regarding acquisition interest from strategic buyers.
Additional companies Bilson identified as potential activist objectives from SG’s regulatory filing include VICI Properties (VICI), Host Hotels (HST), and GitLab (GTLB). VICI appreciated 0.8% Friday, Host Hotels advanced 2.3%, while GitLab remained unchanged.
Burry’s Substack disclosure served as the dominant catalyst for most software names he discussed, with several experiencing upward price movement following the announcement.
PayPal’s convergence of Burry’s disclosed stake and activist speculation positioned it among the most actively traded names within the software cohort on Friday. The shares remain substantially below historical peaks, presumably enhancing appeal for value-focused investors like Burry.
As of Thursday, Burry communicated plans to expand Salesforce and MSCI holdings — though execution of these transactions remains unconfirmed.
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