The 'Big Short' investor posted a link to the Enron book on X, drawing parallels between the energy giant's fraud and current AI spending patterns.
Michael Burry of "The Big Short" fame posted a link to an Amazon listing for "The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron" late Tuesday on X, adding two lines: "History is repeating. Time to read this one again, or for the first time."
The investigative business classic by Bethany McLean and Peter Elkind, first published in 2003, traces how Enron used mark-to-market accounting to book projected contract values as immediate profit, special-purpose entities and circular financing to keep debt off its balance sheet, and manufactured earnings to inflate its stock price. The energy trading giant collapsed into what was then the largest U.S. bankruptcy in December 2001.
Burry did not explain what he sees repeating. His recent public commentary on Big Tech and AI infrastructure spending fills in the pattern. Over the last several months, he has argued that the largest AI companies are overspending on microchips and data centers, stretching depreciation schedules to flatter reported earnings, and using off-balance-sheet structures and circular financing to disguise leverage and risk. That structure, in his telling, mirrors the Enron playbook.
Burry's personal portfolio, which he now publishes on Substack after closing his hedge fund late last year, includes short positions against Nvidia, Palantir, Oracle, Nebius, and Micron. NVDA shares were up 1.43% to $220.62 on Wednesday, carrying an Alpha Score of 74 out of 100.
This is not the first time Burry has invoked Enron. After Silicon Valley Bank collapsed in March 2023, he wrote: "It is possible today we found our Enron."
Jim Chanos, the short-seller who flagged Enron's accounting red flags before its implosion, has also questioned whether the hundreds of billions of dollars flowing into AI infrastructure will ever generate a return for the tech titans spending it.
Former Goldman Sachs CEO Lloyd Blankfein, in his recent memoir, described Enron as the "bane of my existence" at Goldman. The bank could not figure out how Enron was making so much money trading energy, commodities, and bandwidth. "As we learnt later, Enron was an enormous fraud," Blankfein wrote. "It was accumulating unhedged, long-dated risk that it marked at levels it could trade out at."
Burry rose to fame for his contrarian bet against subprime mortgages before the 2008 financial crisis, a story chronicled in both the book and film "The Big Short." He did not respond to a request for comment from Business Insider.
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