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Big Short investor accuses AI giants of inflating profits
Michael Burry, the investor immortalised in the movie “The Big Short”, has pointed the finger at some of America’s biggest tech firms for using creative accounting to overstate profits fuelled by the artificial intelligence (AI) boom. In a post on X on Monday, the Scion Asset Management founder claimed that so-called “hyperscalers” — the major providers of cloud and AI infrastructure — are understanding their depreciation costs by making unrealistic assumptions on how long their chips will last. Burry argues that pushing out the estimated lifespan of computing equipment - which artificially boosts earnings - is one of the more common financial manipulations of modern times. Despite hyperscalers rapidly increasing capital spending on Nvidia chips and servers — which typically have a two- to three-year life cycle — Burry claims they’ve all extended their depreciation timelines. By doing this, Burry estimated that between 2026 and 2028, this accounting practice could have understated depreciation by up to $176 billion, hence inflating reported profits across the tech sector. He singled out Oracle and Meta, suggesting their earnings might appear 27% and 21% artificially higher than they really are by 2028. CNBC rea
Investing
Explainer: Private and public companies
The distinction between public and private companies is important in the world of business and investing. Each differs in ownership, access to capital and regulatory insight, but still both need to meet certain regulations. So what are the main differences between the two, and how do they operate?How do each operate?Public companies sell shares and operate on the public stock exchanges, such as the NYSE, NASDAQ or ASX. These kinds of companies are normally beholden to keeping shareholders happy and consulting them in their decisions. University of Melbourne Professor in Management and Marketing Daniel Samson suggests that public companies' duty to their shareholders is both an advantage and a drawback. “Public companies that are listed on stock exchanges have the great benefit of being able to raise capital, for example, by publicly issuing shares and bonds,” Samson tells Azzet. “They also have to spend quite a lot of time and resources on their disclosure processes, knowing that what they do and how well they do will be scrutinised in detail by analysts in the market. “Their activities are examined not only by those who are interested in their financial performance from an investment perspective, but also by
Investing
Small-caps offer compelling value and growth case
With fund inflows tending to concentrate on the same rogues gallery of large-cap names, being a contrarian investor and not following the money trail - into already crowded trades - may be a productive strategy worth pursuing. With heavy passive fund inflows having reshaped Australia’s equity market over the last decade, InvestmentMarkets CEO Darren Connolly believes there’s never been a better time for active investors to consider small caps where sentiment is weak, while the fundamentals remain robust. The combined trading activity of retail investors can move the dial on small cap stocks – albeit it up or down - that bigger investors tend to avoid, and often due to institutional or regulatory issues. To put the surge in passive capital into context, more than $160 billion is now invested in ASX-listed ETFs - up fivefold in 10 years – a trend that is unlikely to unravel any time soon. Against that backdrop, Connolly claims there are rich pickings to be found within lower liquidity market segments - that, despite oozing value - appear to have been left behind. What Connolly is now witnessing on the InvestmentMarkets platform is a notable shift in investor behaviour. “We’re seeing self-directed investors pair lo
Investing
Explainer: The VIX and what it means for investors
A dramatic rise in the United States Volatility Index (aka the VIX), often dubbed Wall Street’s ‘fear gauge’, suggests that investors are spooked by the most turbulent stretch for equity markets since U.S. President Donald Trump’s fated Liberation Day tariffs were announced early April. As a popular measure of the share markets' implied volatility expectation based on S&P 500 index options, the Cboe Volatility Index, or VIX rose as high as 28.99 on Friday – its highest level in six months. As a result, investors piled into options contracts against the S&P 500 - as a hedge against market declines - that would pay out if the VIX surges to 47.5 and 50. Admittedly, the VIX - Wall Street's most watched gauge of investor anxiety - is now trading at 20.78 but analysts are concerned that recent spikes portend of upcoming market downturns. According to IBD research, when the VIX rises more than 20% above its 10-day moving average, it often signals a positive reversal in the market. The signal has occurred several times this year, including 7 April, 23 May, 13 June, 1 August, and 2 September. Each time, the S&P 500 made a low or was near a low. How the Vix and S&P 500 are linkedFor starters, what the VIX actually does is tra
Investing
Insights: Has the small-caps bull case run its course?
The pace at which ASX-listed shares have advanced in recent months suggests a growing void between large and small-cap stocks, and this has become even more evident since August, with trend lines suggesting the emergence of two-speed growth for equities. Admittedly, it’s no secret that small caps have been leaving their large cap counterparts in the dust for a while now. After all, the Small Ords Index is up 18.5% over one year while the ASX 200 is up 7.7% over the same time frame. However, the degree to which the two indices have been diverging has been widening in the last few months. The ASX 200 has struggled to move 4% higher since early August, while the Small Ords Index is up around 13% on the back of lower interest rates, better economic signals and earnings expectations that exceed those of large caps. This is a complete reversal of the 23% underperformance experienced by small caps in the three years after Covid, when interest rate rises, inflation and small cap earnings downgrades attracted investors to more liquid large cap stocks. While the recent recovery staged by small-cap stocks has been well supported by the market, there’s now growing concern that this part of the market is looking a little topp

Investing
Is it time to take safe bets on a US small cap revival?
While small cap stocks on the ASX account for 87% of all listed stocks, they do precious little to move the market on any given day; with the difference between the All Ordinaries Index and the ASX300 Index accounting for 336 points - that’s a measly 3.68% of total market movement (based on today’s numbers). While small cap stocks significantly outpaced the tech-fuelled S&P 500 Index during the post-pandemic bull market ending in December 2021, the sector has for a long time played second fiddle to the global onslaught of tech stocks and, more recently, artificial intelligence. Since then, it’s AI-tech darlings that have shanghaied the media narrative that has driven capital flows into these immensely popular stocks.Value and contrarian appealHowever, for investors willing to do their own homework, the small cap landscape offers a veritable treasure trove of value and contrarian appeal, that’s lurking behind the hype of large-cap stocks that command the market’s attention both locally and overseas. Sentiment towards ASX-listed small caps has been progressively turning since the sector slumped to a five-year low in late October 2023. A closer look at the ASX Small Ordinaries Chart, which represents the small-cap compone
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Entrepreneurs shift from startups to established firms
Australian entrepreneurs are increasingly buying established businesses, rather than opening new startups. Of the 15,000 business loan requests submitted through Money.com.au in 2024-2025, 2,300 were aimed at buying an existing business, a Money.com.au report found. “We’re seeing a rise in acquisition-focused entrepreneurs who are opting for businesses with existing revenue, systems and customer bases, rather than taking on the risk and uncertainty of a new venture or startup,” said Money.com.au business finance expert Phil Collard. “About 84% of those seeking to purchase an existing business required immediate funding, which tells us there’s a sense of urgency — these buyers are often ready to move quickly when the right deal arises and they don’t want delays in their financing.” The report found that 42% of those requesting loans to buy existing businesses saw average monthly turnovers above A$30,000, indicating these are small businesses generating at least $100,000 each year. Small businesses are contributing almost $590 billion in value to Australia’s GDP in 2022-2023, around one third of the country’s total. Agriculture and rental services boasted the most profitable small businesses in that period, by thei
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Pact wraps up last-hurrah debt refinancing
Pact Group has completed a $775 million debt (US$501.8 million) refinancing program in what may be one of its last announcements as a publicly-listed company. The packaging company, which is facing delisting from the Australian Securities Exchange (ASX), said it had refinanced its senior and subordinated debt facilities, but this would have little impact on financial costs in the 2026 financial year (FY26). Pact said it had entered into a senior debt facility totalling $700 million expiring in June 2028 and June 2030 and a subordinated debt facility of $75 million expiring in December 2030. The facilities will replace all senior and subordinated debt, including facilities that were due to expire in January 2026. Pact, 88% owned by billionaire Executive Chairman Raphael Geminder, has slightly reduced debt limits but FY26 finance costs were not expected to reduce materially. “We are very pleased with the outcome of our refinancing arrangements. Near-term refinancing risk has been removed and we retain capacity to continue planned growth projects,” Managing Director and Group Chief Executive Officer Sanjay Dayal said in an ASX announcement. “Pact appreciates the continued support from its long-term relationship bank
Investing
Blackstone tops estimates, CEO warns of tariff risks
Blackstone reported better-than-expected first-quarter earnings on Thursday (Friday AEST), driven by strong performances in its private equity and credit divisions. However, the company’s Chief Executive Officer warned that heightened market volatility could impede asset sales in the near future. Earnings per share stood at $1.09, surpassing estimates of $1.05, while revenues reached US$2.76 billion, slightly ahead of expectations of $2.75 billion. "Uncertainty around tariffs, and their potential impact on economic growth and inflation, has dramatically impacted investor sentiment," said CEO Stephen Schwarzman during the earnings call. Schwarzman, a long-time backer of former President Trump, added, "We believe a fast resolution is critical to mitigating risks and keeping the economy on a growth path." His concerns echo those of other business leaders and economists, many of whom have increased recession warnings following the unveiling of the full tariff scope on 2 April. During the quarter, Blackstone drew in $61.64 billion in inflows, lifting its assets under management by 10% to $1.17 trillion. About half of these inflows were channelled into the credit and insurance segment, which provides a wide range of de