Burry Joins as Advisor: New Short Fund Targets Private Credit Risks
nashnova research
Michael Burry — the investor who shorted subprime — has joined new short-selling fund Minerva Investment Management as senior advisor, targeting a record 6.3% U.S. private-credit default rate as its founder warns "this will be much worse than 2008."
Why is Burry back in the game?
Burry's Scion Asset Management shut down late last year. He pivoted to a paid newsletter, "Cassandra Unchained."
Minerva was founded by Laks Ganapathi and plans to launch later this month. Burry was introduced through a mutual contact; his title is senior advisor.
This means → Burry is not managing money directly, but his name and judgment are backing a brand-new fund — the market will read this as a directional signal.
What exactly are they betting on?
Minerva's core thesis: private credit — loans made directly by private funds, not traded on public markets — is the biggest hidden risk in today's market.
Ganapathi put it bluntly: "AI is not the entire market. Credit is the leading indicator." The fund will scan healthcare, retail, restaurants, and small-to-mid-size banks for short targets.
In plain terms = she believes many companies are propped up by private loans, with financial stress building invisibly — when it surfaces, share prices will catch down hard.
How bad is the private-credit problem?
Fitch Ratings data: the U.S. private-credit default rate hit 6.3% annualized in August — a record high.
Ganapathi cited three blowups already on the books: auto-parts supplier First Brands, used-car dealer Tricolor, and UK mortgage lender Market Financial Solutions — all bankrupt.
This reflects a double-edged feature of private credit: its opacity can hide borrower distress for years, and by the time it surfaces, recovery is often too late.
Why have short-only funds nearly disappeared?
HFR data: dedicated short funds fell from 54 in 2008 to just 6 by Q2 2026.
Three drivers: tighter regulation, persistent underperformance of short books, and changes in U.S. hedge-fund disclosure rules. The 2021 GameStop squeeze further exposed the lethal risk of crowded shorts.
This means → Minerva has picked a lane with almost no peers — less competition, but also a survival rate near zero.
Can this strategy actually work?
Ganapathi also runs Unicus Research, a short-focused research firm. Past bearish calls include EV maker Faraday Future and used-car retailer Carvana.
The single key variable: whether Minerva can pinpoint targets before private-credit risk fully surfaces — short-selling profits depend on timing, and entering too early invites a squeeze.
In plain terms = Burry was right on subprime in 2008, but he endured two years of drawdowns before the payoff. The question this time: will the market give them that long a window again?
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