Scion Capital Quarterly Letter

Dear Scion Capital Investor,

I trust you are well and navigating the shifting tides of this uncertain market with a firm hand at the helm.

Since our last correspondence in Q4 of 2005, an intriguing development has transpired that warrants your attention. The Architect, a reclusive billionaire tech magnate who has built his fortune on the foundations of the modern economic system, has made an unexpected declaration that has sent shockwaves through the financial world.

In an extraordinary public statement, The Architect announced his decision to step away from active investing in the economic system, stating that it no longer poses an intellectual challenge that stimulates his ambitious mind. In its stead, he is embarking on what he describes as the “moonshot of all moonshots,” a groundbreaking venture in quantum and neutrino communications.

This ambitious project, cloaked in the aspirational language of pushing humanity into a new era and revolutionizing the way we transmit information, is certainly awe-inspiring. The Architect’s intention is to construct a supercollider capable of probing the elusive properties of these fundamental particles under extreme conditions, promising a project of unparalleled scale and complexity.

While the concept of this grand scientific endeavor is fascinating, it has also served to unmask a more unsettling reality hidden beneath the glitz and glamour of such an ambitious project – the shaky financial foundation on which the Architect’s empire is built.

The Architect’s empire comprises two primary pillars: Pilantes, an enterprise software company competing with Oracle, and Foresight Homes, a real estate developer constructing housing subdivisions in the southwestern ex-urbs of Texas and Arizona. These businesses are precariously interconnected, with the financial health of Foresight Homes underpinned by an estimated $8 billion in Pilantes’ stock pledged as collateral.

In my analysis, I found the Architect to be dangerously overextended. Scion’s proprietary models have detected an increase in the default rates in the areas where Foresight Homes is most active. This paints a bleak picture: a housing market crash could potentially trigger a financial catastrophe that could jeopardize the Architect’s control over Pilantes as creditors liquidate the collateralized stock, creating a downward pressure on its price.

Therefore, it is with a measure of caution and concern that I inform you that Scion Capital has initiated short positions on Pilantes. In addition to this, we are actively exploring ways to increase our exposure to housing debt shorts specific to the regions where Foresight Homes operates.

What we are witnessing with The Architect is the collision of ambition with economic reality. The moonshot of all moonshots indeed promises to push us into a new era, but whether this era is one of technological marvel or financial meltdown remains to be seen.

While I respect The Architect’s thirst for knowledge and the audacity of his scientific ambitions, I am not blind to the potential fallout that could occur should his financial Jenga tower collapse. We remain vigilant, prepared to act swiftly and decisively to ensure the protection of your investments.

As always, I assure you of Scion Capital’s unwavering commitment to safeguarding and growing your investments. I look forward to sharing our progress with you in the upcoming quarter.

Yours sincerely,

Dr. Michael J. Burry

Managing Director, Scion Capital LLC