Michael Burry investment strategy | Michael Burry investment style | Michael Burry Net Worth
Michael Burry is not a traditional run-of-the-mill investor, but an experienced American investor hedge fund manager who managed multi-billion portfolios and Family Offices. Mainstream traditional media is not showing the truth about economy so we are going to look into Michael Burry’s latest investment strategies.
Table of Contents
Who is Michael Burry ?
Michael Burry’s rise to the fame with his ground-breaking prediction of the House market crash in the year 2008. He correctly predicted House market bubble way ahead of time in 2008, when everyone in the economy were investing in Housing market. Michael Burry’s fund betted against the market and made approximately $725 million in profits. His ability to predict a financial crash of such a magnitude showcases his extraordinary insights into market dynamics.
Michael burry was also the main character of the book “ The Big Short” by Michael Lewis, which later became a popular film of the same name staring Christian Bale.
Michael burry’s investment strategy
Michael burry is famous for his investment approach and has unique investment strategies. He do not follow the herd of investors but conducts independent research and analysis of various asset classes. We will discuss Fundamentals of Michael Burry’s investment strategy below-
Strategy 1: Value focused approach.
Michael Burry believes in Value focused investment strategy from his early days at Scion Value Fund. This strategy involves in locating undervalued securities. Securities which are trading at much lower valuations then its intrinsic value.
Unlike many hedge funds, he does not depend on hedging strategies, instead to mitigate downward risk, he believes in investing in heavily undervalued stocks. In his own words, “The best hedge is buying an appropriately safe and cheap stock.”
This approach set him apart from the heard, and made Scion Capital unconventional in its strategies. The central idea being, not depending on short position or Option strategies for the sake of hedging short-term volatility – This was a very bold move by him which set him apart from the norm. He believes, protecting his capital is much more significant than generating more returns. Example, for instance, a 33% Loss requires a 50% Gains to just break-even. This made protecting capital his highest priority.
Strategy 2: Micro over Macro Economic factors.
In today’s era, majority of the investors are obsessed with Macro economic factors affecting the economy and predicts the market movements . However, Michael Burry has an un-convention approach and preferred to focus on individual company’s performance and economic factors for his research and investment decisions. He viewed the overall performance of broad market index as an irrelevant factor affecting his stock investment.
Michael Burry believes that focussing on individual investments within an inefficient market is the best way of investment.
He aims to generate at least 20% Annual returns over several years. This long term vision of market allows him to distance himself from the short term noise and can concentrate on the fundamentals of individual companies.
Strategy 3: Risk V/S Volatility
One of the most striking aspects of Michael Burry’s investment philosophy was his unconventional view of Risk V/S Volatility. While majority of the investors around the world often equates positive correlation of volatility with risk, Michael Burry’s view differ.
He believe that the ability to buy undervalued stock, even if the market is highly volatile do present golden opportunity to the investor and not risk, one should enjoy this opportunity and not run away from it.
Michael Burry has challenged the view on volatility on multiple occasions in the past. He assured his investors that, risk was not defined by volatility rather the real opportunity lies in mispriced investment.
He has a strong opinion that a dollar consistently selling at premium valuations are much riskier than a high fluctuating dollar selling at discounted rates.
Strategy 4: Avoid Heard Mentality
Michael Burry’s investment philosophy heavily emphasizes the importance of being an individual investor rather than following the heard.
He believes that blindly replicating other investor’s investment style and strategies might not work for themselves, however encourages investors to discover their own style based on their strengths, interests and vision of the market.
Michael Burry advises others to conduct their own research and due diligence which suit their personal financial goals and risk tolerance capacity.
Strategy 5 Contrarian Approach
Contrarian investment style is an investment style where an individual goes against the market trends and sentiments and bets against the market. In 2008 crisis, Michael Burry used Contrarian investment strategy and realized the bubble being formed in the housing market.
He then crafted the product ‘Credit Default Swap’ with his investment banks to bet against the housing market, which means if the Housing market falls then he is the one generating profits.
In 2008 as expected by Michael Burry, there was a huge fall in Housing market and major financial institutions such as Bear Stearns, Lehman Brothers, and AIG fall and seized to exist
Due to Credit Default Swap and bet against the market trend, Michael Burry generated approximately $725 million in profits for his clients. Thus conducting personal research and not following the heard can make millions to its investors.
Michael Burry, Warren Buffett and Charlie Munger are some of the famous investors who follow Contrarian investment style.
Michael Burry Net Worth
Michael Burry’s Net worth in the latest filing in April 2023 is around $1.2 billion.
His net worth would have been much higher, if he had not sold his Gamestop shares when the share was trading at 10-20 $ which peaked at around 81.25 $. Michael Burry sold his stake in Gamestop stock quite early before stock touched 20$
If he would have held the stock at its peak, he would have easily made $100 million in net profits.
How much did Michael Burry make in
2007–08 ?
Michael Burry and his Scion Capital fund made around $725 million in Financial crisis of 2007-08, out of which $ 100 Million was pocketed by Michael Burry.
He made this profits by shorting the overvalued and under-regulated Mortgage Backed Securities linked to housing market.
Michael Burry's Portfolio in 2023
Below is the latest list of stocks present in Michael Burry’s Portfolio 2023 (Q2)
| Stock | Percentage of Portfolio |
| Expedia Group Inc. | 9.82% |
| Charter Communications | 8.25% |
| Generac Holdings Inc. | 7.37% |
| Cigna Group | 6.93% |
| CVS Health Corp. | 6.21% |
| MGM Resorts International | 5.92% |
| Stellantis N.V. | 5.12% |
| Vital Energy Inc. | 5.07% |
| Signet Jewelers Ltd. | 4.98% |
| Warner Bros. Discovery Inc. | 4.22% |
| GEO Group Inc. | 3.86% |
| Liberty LiLAC Group C | 3.48% |
| NexTier Oilfield Solutions Inc. | 3.21% |
| RealReal Inc. | 2.99% |
| Star Bulk Carriers Corp. | 2.94% |
| Crescent Energy Inc A | 2.28% |
| Nexstar Media Group | 2.24% |
| Comstock Resources Inc. | 2.08% |
| New York Community Bancorp | 2.02% |
| iHeartMedia Inc. | 1.96% |
| Hanesbrands Inc. | 1.63% |
| Qurate Retail Group Inc. CL A | 1.33% |
| Costamare Inc | 1.09% |
| Hudson Pacific Properties Inc. | 0.95% |
| Ishares Msci Japan Small Cap | 0.83% |
| Franklin FTSE Japan ETF | 0.73% |
| Euronav NV | 0.72% |
| iShares MSCI Japan ETF | 0.56% |
| Precision Drilling Corp. | 0.51% |
| Safe Bulkers Inc | 0.37% |
| Ishares Msci Japan Value ETF | 0.33% |
Michael Burry’s Wiki page Link
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