Scion Asset Management, Llc

The biggest adds table makes clear where conviction is rising: Scion is aggressively averaging down into names the market currently dislikes. The portfolio suggests a view that managed care, premium apparel, and student lending are cyclical, not broken, stories.

• MOLINA HEALTHCARE (MOH): Position lifted to 35.11% after a 400.0% share increase and a $19.1M add, even though the stake sits about -35.3% vs average cost. This looks like a classic Scion move: a regulated, cash-generative health plan operator bought harder as policy and margin fears pressure the multiple.
• LULULEMON (LULU): Scion doubled the position (+100.0% shares) to 26.11% of the book, with an incremental $8.9M committed despite the stake being roughly -30.9% vs their average buy. The bet is that Lululemon’s brand equity and unit economics outlast a shaky discretionary backdrop and current fashion-cycle anxieties.
• SLM CORP (SLM): The only new position, immediately sized at 19.5% of AUM with about $13.3M deployed, currently around -10.8% vs average buy. This is a bold expression that the market is overpricing credit risk and regulatory overhang in consumer and student lending.

The 13F only exposes Scion’s current top-50, with no visible trims among them — but the concentration math tells a story. To build a three-name book where MOH, LULU, and SLM already consume essentially the whole disclosed portfolio, something else had to shrink or disappear off the list.

The most plausible funding sources are full exits or deep cuts to smaller, lower-conviction positions that no longer make the top-50. In effect, Scion appears to have decided that anything outside these three ideas isn’t worth the capital today.

That’s an important signal: this is not casual averaging down. This is a conscious migration from a somewhat more diversified set of holdings to a handful of concentrated, high-variance bets where they believe their underwriting edge is highest.

The sector bar chart confirms a sharp rotation in the book’s risk geometry. Scion is moving from a consumer-centric posture toward a barbell of defensive health care and controversial finance.

Health care, represented by Molina, climbed from an estimated 34.97% to 43.49% of the portfolio, making regulated managed care the single largest sector call. At the same time, finance jumped from effectively 0.0% to 24.16% with the new SLM stake, pulling the book meaningfully toward credit risk and interest-rate sensitivity.

Consumer discretionary exposure, now primarily Lululemon, dropped from an estimated 65.03% to 32.35%. That is less a repudiation of the consumer than a reweighting: Scion is still backing premium discretionary demand, but is no longer willing to have it dominate macro risk.

Taken together, the quarter reads as a high-conviction contrarian reset. Scion is choosing to be extremely concentrated in three names that are all currently under water relative to its own cost basis.

Forward-looking, this positioning says they expect policy and margin fears in managed care to ease, the Lululemon brand to outgrow a cyclical soft patch, and credit losses in student lending to undershoot market anxiety. If those views are roughly right, the embedded operating leverage in MOH, LULU, and SLM could produce very lumpy but powerful upside.

The flip side is clear: drawdowns will be brutal if any thesis breaks. But that is the point of this portfolio construction. Scion appears comfortable trading short-term mark-to-market pain for the chance to own a small set of misunderstood cash-flow machines at distressed sentiment levels.