Investor Michael Burry said he has been buying software stocks that he views as oversold after a period of market stress tied to private-credit and bank debt linkages. In a Wednesday Substack post, Burry described the recent price moves in many software names as largely technical in nature rather than the result of deteriorating business fundamentals.
Burry wrote that a "reflexive positive feedback loop" formed between falling equity prices and stress in bank debt connected to software companies, which he said accelerated the share-price declines and created opportunities to buy. "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," he added.
In his disclosure, Burry said he opened a roughly 3.5% position in PayPal. He also said he continues to hold positions in Fiserv, Adobe, Autodesk and Veeva. Additionally, he indicated plans to add positions in Salesforce and MSCI on Thursday. Burry noted that none of these companies rely on private credit markets.
The moves come amid withdrawals from private credit funds over the past couple of months, a trend Burry highlighted as meaningful because many of the loans in those funds are tied to software companies. He suggested those flows have helped to amplify price declines through the feedback between credit stress and equity selling.
On the topic of advanced large language models, Burry said he sees several companies that are seriously affected for specific reasons related to their business models. However, he wrote that he does not see that dynamic applying to his selected holdings. "I do not see this for my selected companies and a good number of others, all of which I have just about finished analyzing forensically, competitively, and fundamentally as to investment potential," he wrote.
His comments frame the recent weakness in parts of the software sector as driven by technical market mechanics tied to debt and investor flows rather than a uniform weakening of company fundamentals. Burry's disclosure of a new PayPal position and his plans to add to Salesforce and MSCI underline his view that the sell-off has created entry points in certain names.
What this affects
- Software and payments equities that saw recent price declines tied to private-credit and bank debt stress.
- Private credit funds and lenders holding loans to software companies, which have experienced investor outflows in recent months.
- Companies evaluated for susceptibility to advanced large language models, with Burry noting selective impacts depending on business model.