Michael Burry never intended to become a financial guru, but after he shorted the subprime lending crisis he became worth nine figures.
Updated Apr 19, 2023
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If you’ve seen The Big Short, you might recognize the name Michael Burry. The 2015 Oscar-winning film depicted the American investor, physician, and hedge fund manager during one of the darkest times in American economic history.
The film highlights how Burry made an estimated $300 million net worth by correctly predicting the housing market crash of 2008 and betting against subprime mortgages. His bold move paid off, and he continues to be a successful investor and entrepreneur.
Initially studying finance as a hobby, Michael Burry was the founder of Scion Capital LLC in 2000 before focusing on his personal investments following the Great Recession. Burry is known for his eccentricity and savvy investments, from shorting the subprime mortgages to being one of the first to buy meme stocks like GameStop and pulling his money out of stocks to invest in assets like gold and farmland.
So what is the successful hedge fund manager investing in now? Find out how Burry’s bets took him from the operating room to Wall Street.
June 19, 1971 in San Jose, California
Became a millionaire
Physician, investor, hedge fund manager, entrepreneur
Sources of wealth
Scion Asset Management, stocks, real estate
Government real estate, farmland, infrastructure, gold
Michael James Burry was born in 1971 in San Jose, California and attended Santa Teresa High School. He studied economics at the University of California, Los Angeles before obtaining an MD at Vanderbilt University School of Medicine. He started a residency in neurology at Stanford University Medical Center, but left to start his own hedge fund. He still has an active license with the California Medical Board, though he doesn’t practice.
While he was at Stanford, Burry taught himself value investing principles based on Benjamin Graham’s 1934 book Security Analysis. Drawing the attention of other investors and firms like White Mountains Insurance Group, Burry founded Scion Capital in 2000, earning his investors enormous profits by making a 55% return on his first investment. By 2004, he was managing $600 million in assets.
Burry made a lot of money from his hedge fund Scion Capital by shorting overvalued tech stocks at the peak of the internet bubble. In 2005, Burry noticed the subprime real estate market, analyzed lending practices, and correctly predicted that the real estate bubble collapse as early as 2007.
He shorted the market and persuaded Goldman Sachs and other investment firms to sell him credit default swaps against subprime deals in a $1 billion bet. He didn’t make any money for a while. Many of his investors were unsure of his strategy and withdrew their money from Scion Capital.
But in the end, the infamous Burry bet made millions. Investors pocketed $700 million because Burry accurately predicted the housing market crash and made a personal profit of $100 million before the financial crisis even began.
In 2013, Burry reopened his hedge fund under the name Scion Asset Management as an exempt reporting advisor. Since then, he's focused on investing in gold, farmland, tech stocks, and private prisons.
Michael Burry continues to make waves in the investing world. In 2021 Michael Burry made a $534 million bet against Tesla stock before dropping his bet against the car company. He also reportedly has $31 million worth of put options on ARK Investment Management.
Michael Burry was also one of the first to jump on the GameStop train, buying in before the meme stock short squeeze. He may have inadvertently encouraged thousands of retail investors to boost the share price of the gaming retailer.
Michael Burry's net worth is an estimated $300 million.
Michael Burry recently sold his tech positions and has bought stock in companies that he thinks will hold against a possible recession. The $41 million portfolio of his hedge fund includes private prison companies like GEO Group and CoreCivic, telecommunications firms like Qurate Retail, Charter Communications, and Liberty Latin America, and aerospace company Aerojet Rocketdyne. Besides his stock market portfolio, Burry has also invested in farmland, gold, and cash.
Michael Burry’s biggest holdings these days seem to be in private prison stock given the recent filings of his hedge fund. He recently made a big bet on GEO Group and CoreCivic, two private prison operators. Scion Asset Management owns 2.02 million shares of GEO and 725,000 shares of CoreCivic. Together, the two make up over 50% of the hedge fund's portfolio.
Burry is betting on these companies as a safe haven in case of a stock market downturn. Private prisons are often funded through REITs, although their popularity fell in 2021 after Joe Biden announced that his administration would no longer use private prisons for correctional facilities.
GEO Group stock price has fallen over 66% since 2017, while CoreCivic stock has fallen almost 70%. Both stocks have been volatile over the past year, in line with broader stock market trends.
Big Spring Correctional Facility, a private prison owned and operated by GEO group.
Image source: geogroup.com
While investing in private prison REITs might not be for everyone, real estate has traditionally been a good hedge against inflation. If you’re interested in diversifying your portfolio, check out real estate investment apps like Landa, where you can buy shares of rental properties for as little as $5. Or if you prefer to invest in commercially managed real estate, take a look at EquityMultiple, where you can earn a target return of 10% to 25%.
Farmland has been a great investment for Michael Burry and many others. Burry started investing in farmland around 2010. We don’t know for sure if he still invests in agricultural land, but given its performance in recent years, he likely allocates a portion of his portfolio to farmland.
Historically, farmland has outpaced traditional investments and has a negative correlation to stocks. Agricultural land has piqued the interest of institutional investors in the last decade, with investments growing from $2.3 billion to $11.7 billion in 2020.
Farmland yields provide a low-volatility source of passive income with an average annual return of 11% from 1992 to 2020. It has become a popular hedge against inflation among wealthy investors.
Warren Buffet bought a 400-acre plot of farmland for $280,000 in 1986, tripling its earnings and increasing its worth five times over. Bill Gates is also a fan of farmland—he's the largest landowner in the U.S. with 270,000 acres worth $690 million.
Want to invest in farmland like Burry, Gates, and Buffet? Check out investment managers like FarmTogether that allow accredited investors to dip into a variety of farmland funds. If you'd rather buy shares of U.S. farms, check out agriculture apps like Acretrader.
Michael Burry is big on taking bets against assets. Today he’s betting against the stock market and thinks gold could be the winner. While he hasn’t said if he owns gold now or how much he might own, he thinks the precious metal could be not only a hedge against a crypto bear market, but a winner amid a crypto meltdown.
Gold has had steady returns over the long term and is considered an effective hedge against inflation and recessions. Since 2013, it’s returned 12.3%. While that’s a lot less than the S&P 500’s return of 153%, it has outperformed the stock market in the past year. Gold is a resilient asset class, rising 4.6% compared to the S&P 500 decline of 8.9%.
If you’re looking to hedge your portfolio, gold could be worth considering. For example, Vaulted allows you to buy gold bars made by the Royal Canadian Mint, while Hard Assets Alliance lets you invest in both gold and silver.
Michael Burry is a value investor and follows in the footsteps of successful old-school investors like Ben Graham and Warren Buffet. Burry knows how to spot a good deal, but looks to invest with a margin of safety.
Fundamental analysis is a key tool Burry uses to find companies trading at a discount. Burry prefers to invest in companies whose stock is selling at less than two-thirds of their value and looks for opportunities to take advantage of different market prices.
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