Michael Burry

A Physician by profession, Michael Burry, founded Scion Capital in November 2000. If these names ring a bell, its because Dr Michael Burry, played by Christian Bale, and his fund were featured in a popular motion picture “The Big Short”.

Born in California in 1971, Michael Burry pursued MD from Vanderbuilt University school of medicine. Soon after completing his medical degree, Burry left the medical profession to start a hedge fund and follow his true passion of investing.

Dr. Burry’s investment strategy was based on the old school “Value Investing”. His style however, has often been described as contrarian due to his frequent short positions in seemingly good quality (at the time) assets. After successfully running the fund for a few years, he turned his focus to the subprime mortgage market in 2005. Through an analysis of the housing market he was able to correctly predict the 2007 housing bubble and started betting against the market by using credit default swaps.

Despite facing an initial revolt from his investors over the fund’s short positions (on Mortgage Backed Securities), he continued the strategy and eventually earned $100 million in personal profit and over $700 million for his investors.

Despite this he was unable to raise money and eventually had to wind up Scion Capital. A part of his failure to do so, can be attributed to his anti-social and awkward personality. After liquidating Scion capital Dr. Burry decided to focus on his personal investments. In 2013, he reopened his fund, now named Scion Asset Management, focusing on commodities and alternative assets.

In recent articles and interviews Dr. Burry has warned against another bubble in the making in selected large cap stocks due to the rising popularity of passive investing.

Could the rise of index investing really lead to a bubble in blue chip stocks or does the onset of the pandemic justify their value? Let us know your thoughts in the comment section below. Until then, Stay Safe.