Michael Burry

Michael Burry, M.D. is a hedge fund manager that ran Scion Capital LLC from 2000 to 2008.  Burry was one of the first investors to recognize the massive excesses taking place in the subprime mortgage market.  He bet against some of the more toxic securities and ended up making a fortune for himself and his investors.

Dr. Burry received his undergraduate education at UCLA – studying economics and pre-med.  Later, he attended and graduated from Vanderbilt University School of Medicine, and then began his residency at Stanford Hospital in neurology.  When not occupied with medical school, he would focus on his true passion: value investing.  He was an avid participant on a message board site known as Silicon Investor.  His stock picks did so well that he attracted the attention of a number of companies and professional investors (including Joel Greenblatt).

Burry left the neurology resident program at Stanford Hospital to start a hedge fund called Scion Capital.  According to author Michael Lewis: “Right from the start, Scion Capital was madly, almost comically successful. In his first full year, 2001, the S&P 500 fell 11.88 percent. Scion was up 55 percent. The next year, the S&P 500 fell again, by 22.1 percent, and yet Scion was up again: 16 percent. The next year, 2003, the stock market finally turned around and rose 28.69 percent, but Mike Burry beat it again—his investments rose by 50 percent. By the end of 2004, Mike Burry was managing $600 million and turning money away.”

Michael Burry started focusing on the subprime mortgage market in 2005.  He believed that the subprime market would implode around 2007 due to a combination of unsustainable real estate prices and leverage, improper lending practices, and toxic mortgage products.  Burry convinced a number of investment banks to sell him credit default swaps on securities containing shakier mortgages.

For a while, this subprime trade worked against Burry and was a source of personal and professional stress.  Ultimately, however, Dr. Burry was vindicated and ended up making $100 million for himself and $725 million for his investors on the trade.  Per Michael Lewis: “By June 30, 2008, any investor who had stuck with Scion Capital from its beginning, on November 1, 2000, had a gain, after fees and expenses, of 489.34 percent. (The gross gain of the fund had been 726 percent.) Over the same period the S&P 500 returned just a bit more than 2 percent.”  Shortly after closing this subprime trade, Burry liquidated his hedge fund and returned all limited partner capital — opting to just manage his personal portfolio going forward.  His latest trade focuses on water and farmland.

Currently, Dr. Burry manages a new asset management firm call Scion Asset Management.

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3Q 2006

1Q 2008

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