Michael Burry


Michael James Burry is an American physician, investor, and hedge fund manager. He was the founder of the hedge fund Scion Capital, which he ran from 2000 until 2008, before closing the firm to focus on his own personal investments. Burry was the first investor to recognize and profit from the impending subprime mortgage crisis.

Early life and education

Michael Burry was born in 1971 and grew up in San Jose, California. At the age of two he lost one of his eyes to cancer and has had an artificial eye ever since.
As a teenager, Burry attended Santa Teresa High School.
Burry studied economics and pre-med at the University of California, Los Angeles, went on to earn an M.D. from the Vanderbilt University School of Medicine, and started but did not finish his residency in neurology at Stanford University Medical Center.
While off duty at night, Burry worked on his hobby, financial investing. On one occasion, Burry had been working so hard studying both for medical school and his personal financial interests that he fell asleep standing up during a complicated surgery and crashed into the oxygen tent that had been built around the patient. As a result, he was thrown out of the operating room by the lead surgeon.
Despite not practicing, Burry has kept his license as a physician active with the Medical Board of California, including continuing education requirements.

Investment career

After medical school, Burry worked as a Stanford Hospital neurology resident and then a Stanford Hospital pathology resident.
Burry then left to start his own hedge fund. He had already developed a reputation as an investor by demonstrating success in value investing, which he wrote about on message boards on the stock discussion site Silicon Investor beginning in 1996. He was so successful with his stock picks that he attracted the interest of companies such as Vanguard, White Mountains Insurance Group and prominent investors such as Joel Greenblatt. Burry has a strictly traditional understanding of value. He has said more than once that his investment style is built upon Benjamin Graham and David Dodd’s 1934 book Security Analysis: "All my stock picking is 100% based on the concept of a margin of safety."
After shutting down his website in November 2000, Burry started the hedge fund Scion Capital, funded by an inheritance and loans from his family. The company was named after Terry Brooks' The Scions of Shannara, one of his favorite novels. Burry quickly earned extraordinary profits for his investors. According to the author Michael Lewis, "in his first full year, 2001, the S&P 500 fell 11.88%. Scion was up 55%. Burry was able to achieve these returns by shorting overvalued tech stocks at the peak of the internet bubble. The next year, the S&P 500 fell again, by 22.1%, and yet Scion was up again: 16%. The next year, 2003, the stock market finally turned around and rose 28.69%, but Mike Burry beat it again—his investments rose by 50%. By the end of 2004, Mike Burry was managing $600 million and turning money away."
In 2005, Burry started to focus on the subprime market. Through his analysis of mortgage lending practices in 2003 and 2004, he correctly predicted that the real estate bubble would collapse as early as 2007. Burry's research on the values of residential real estate convinced him that subprime mortgages, especially those with "teaser" rates, and the bonds based on these mortgages, would begin losing value when the original rates were replaced by much higher rates, often in as little as two years after initiation. This conclusion led Burry to short the market by persuading Goldman Sachs and other investment firms to sell him credit default swaps against subprime deals he saw as vulnerable. This analysis proved correct, and Burry profited accordingly. Burry has since said, "I don't go out looking for good shorts. I'm spending my time looking for good longs. I shorted mortgages because I had to. Every bit of logic I had led me to this trade and I had to do it."
During his payments toward the credit default swaps, Burry suffered an investor revolt, where some investors in his fund worried his predictions were inaccurate and demanded to withdraw their capital. Eventually, Burry's analysis proved correct; he earned a personal profit of $100 million and a profit for his remaining investors of more than $700 million. Scion Capital ultimately recorded returns of 489.34% between its November 1, 2000 inception and June 2008. The S&P 500, widely regarded as the benchmark for the US market, returned just under 3%, including dividends over the same period.
According to his website, Burry liquidated his credit default swap short positions by April 2008 and did not benefit from the bailouts of 2008 and 2009. He subsequently liquidated his company to focus on his personal investment portfolio.
In an April 3, 2010 op-ed for The New York Times, Burry argued that anyone who studied the financial markets carefully in 2003, 2004, and 2005 could have recognized the growing risk in the subprime markets. He faulted federal regulators for failing to listen to warnings from outside a closed circle of advisors.
In 2013, Burry reopened his hedge fund, this time called Scion Asset Management, filing reports as an exempt reporting adviser who is active in the state of California and approved by the SEC.
Burry has focused much of his attention on investing in water, gold, and farm land. Burry has been quoted saying "Fresh, clean water cannot be taken for granted. And it is not—water is political, and litigious." After the end of the film, The Big Short, a statement regarding Burry's current interest reads, "The small investing he still does is all focused on one commodity: water."
Glimpses were offered into Scion's portfolio with 13Fs filed from the 4th quarter of 2015 through the 3rd quarter of 2016, as required by the SEC when fund holdings top $100 million. After more than two years, on February 14, 2019, Scion Asset Management filed another 13F, showing Michael Burry to hold numerous large-cap stocks and $103,528,000 13F assets under management, just above the threshold for filing. In August, 2019, Bloomberg News quoted an email from Burry stating his belief that there was a bubble in large US company stocks due to the popularity of passive investing, which "has orphaned smaller value-type securities globally".

Personal life

Burry is married, with children, and currently lives in Saratoga, California. His son was diagnosed with Asperger syndrome, and Burry believes he himself has Asperger syndrome after reading about the disorder.

In popular culture

Film