Michael Burry Joins Short Fund Targeting Private Credit Risk

Minerva Investment Management, a short-biased fund founded by Laks Ganapathi, has hired Michael Burry as senior adviser. The firm is due to launch later this month and plans to take short positions in companies whose financing is tied to US private credit.

Minerva will review firms in healthcare, retail, restaurants and smaller banks, sectors where private credit financing is common. Ganapathi said, “Financing arrangements linked to private credit could leave some companies facing greater financial stress than is apparent from their reported results.” She declined to identify specific targets or disclose the size of the new fund.

Private credit often operates outside standard public disclosure. Minerva’s strategy is to use signals from that market to identify short opportunities where short-term liquidity pressures or covenant stress may not appear in public financial statements.

Credit rating agencies reported that US private credit’s annualized default rate reached 6.3% in August, the highest level on record. Industry data show the number of dedicated short-biased hedge funds fell to six in the second quarter of 2026 from 54 in 2008. Industry observers point to tougher market conditions for short strategies, increased regulatory scrutiny and changes in US hedge fund reporting requirements.

Short sellers face the risk that share prices can move quickly against them; in 2021 retail buying produced large gains in heavily shorted names. Burry will serve in an advisory role as Minerva builds its research and trading approach to focus on credit-related vulnerabilities.