Michael J. Burry (born June 19, 1971 in New York) is a doctor of medicine and an alternative management manager. He founded Scion Capital LLC, which he led from 2000 to 2008, then focused more specifically on his own investments. Burry was one of the first investors to recognize and invest in the looming subprime crisis.
Michael Burry Early life and education
Burry studied at Santa Teresa High School in San Jose, California1,2,3. He attended the University of California, Los Angeles (UCLA) for his undergraduate studies in economics and pre-medical studies. He graduated from Vanderbilt School of Medicine2 and studied neurology at Stanford Hospital and Clinics. At night he made financial investments as a hobby.
Burry left Stanford Hospital and his work in neurology to start his own hedge funds. He had already acquired a reputation as an investor, by demonstrating the incredible success of “investment values”, which he began to evoke on the forums of the Silicon Investor site from 1996. He was so successful that it eventually caught the attention of companies such as Vanguard, White Mountains Insurance Group as well as major investors like Joel Greenblatt.
After his website closed in November 2000, Burry launched Scion Capital, funded by a small inheritance and loans from his family. The company is named after The Descendants of Shannara, one of his childhood favorite books. Burry quickly made large profits to his investors. According to author Michael Lewis: “In its first full year in 2001, the S&P 500 fell 11.88%. Scion was up 55%. The following year, the S&P 500 fell again, 22.1%, and Scion again rose 16%. The following year, 2003, the stock market finally hovered around a 28.69% increase, but Mike Burry beat it again with his investments increasing by 50%. By the end of 2004, Mike Burry has managed $ 600 million ”.
In 2005, Burry began to focus on the subprime loan market. Through his analysis of mortgage lending practices in 2003 and 2004, he predicted the collapse of the housing bubble as early as 2007. Burry’s research on residential property values convinced him that subprime mortgages , especially those with “teaser” rates and obligations based on those mortgages, would start to lose value when initial rates were reset. This finding led Burry to sell short in the market, persuading Goldman Sachs to sell him subprime default hedges he considered vulnerable. This analysis turned out to be correct, and Burry took advantage of it accordingly.
While he suffered from the investor revolt (where some worried investors withdrew their investment from Scion Capital’s hedge fund) before his predictions came true, Burry still earned a personal profit of $ 100 million and a profit to its remaining investors of over $ 700 million2. Scion Capital ultimately recorded returns of 489.34% (net of fees and charges) between inception on November 1, 2000 and June 2008. The S&P 500 generated just under 3%, including dividends in the during the same period.
Burry liquidated his short credit default swap positions in April 2008 and did not benefit from the taxpayer-funded bailouts of 2008 and 2009.8 He subsequently liquidated his company to focus on his portfolio. ‘personal investment.
On April 3, 2010, in an op-ed for the New York Times, Burry argued that anyone who carefully studied the financial markets in 2003, 2004 and 2005 could discover the increased risk in the subprime markets9. He criticized federal regulators for failing to heed the warnings coming in from outside the inner circle of advisers.
Michael Burry Personal life
Burry is married, has children, and currently lives in Saratoga, California4. His son has been diagnosed with Asperger’s syndrome, and Burry believes he has Asperger’s himself4,11,2.
In popular culture
2015: The Big Short, a biographical drama. Burry is played by Christian Bale12.
2010: Michael Lewis, The Big Short: Inside the Doomsday Machine
2009: Gregory Zuckerman, The Greatest Trade Ever: The Behind-the-Scenes Story of How John Paulson Defied Wall Street and Made Financial History.
Famous shorter Michael Burry bets big against Tesla
Michael Burry has revealed that he has bet more than half a billion dollars against Tesla. The man has flair: in 2008, he bet on the subprime crisis …
He is one of the most famous investors and above all, the most famous shorters. His greatest achievement was betting on the subprime mortgage crisis in the United States in 2008. In 2015, he appeared as Christian Bale in the Oscar-winning film “The Big Short”.
Michael Burry seems to have a new target: Tesla. He announced Monday that he had bet $ 534 million, through his firm Scion Asset Management, on a drop in Tesla stock. The electric car maker has cause for concern …
Skepticism about Tesla
In a regulatory document, Scion Asset Management said it had bearish put options on 800,100 Tesla shares at the end of the first quarter. Put options include the right, but not the obligation, to sell shares at a predefined price at a certain time.
This stand against Tesla is not Burry’s first. In February, he tweeted “My last Big Short just got bigger and bigger and BIGGER,” in reference to Tesla’s soaring market capitalization. “Take advantage of it while it lasts,” he stressed in particular.
He also advised Elon Musk, the chief executive of Tesla, to sell shares in order to raise capital. Tesla’s stock was, at the time, on the rise after hitting extremely low levels during the pandemic. Burry had, moreover, not hesitated to describe the heights attained by Tesla as “ridiculous”.
With this position, “it expresses the type of skepticism that many have about Tesla,” Steve Sosnick, chief strategist at Interactive Brokers LLC, told Bloomberg.
Driven by strong sales and the company’s first annual profit, Tesla stock hit a record high of $ 883 in January. Over a year, the company had seen its price explode by nearly 700%.
Since January 26, however, Tesla has plunged 35% on Wall Street, with hedge fund managers worried about the company being overvalued.
Elon Musk notably lost his status as the richest man on the planet. According to Bloomberg estimates, his personal wealth has fallen 24% since January.
Analysts point out, in particular, the lack of specific prospects for vehicle deliveries in 2021. However, it is impossible to know when Scion bet against Tesla.
Another element to be borne by the manufacturer of electric cars, according to Michael Burry, is its dependence on carbon credits. The revenue generated by Tesla through carbon credits represented $ 518 million in the first quarter of this year and nearly $ 1.6 billion for the whole of 2020 (+ 166% year-on-year). However, according to the famous investor, these will gradually fade.
Stellantis, the entity created by the merger between PSA and FCA, said earlier this month that it plans to meet its EU carbon dioxide emissions targets this year without the environmental credits it bought from Tesla. .
“Tesla is down 14% since the end of the first quarter, so overall these puts have been profitable, although it is impossible to be sure,” says Steve Sosnick.
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