Michael Burry is a renowned American physician, investor, and hedge fund manager who gained widespread fame for his foresight in predicting the 2008 financial crisis.
With a current net worth of $300 million, Burry’s career has been defined by unconventional investment strategies, astute market predictions, and his willingness to challenge the status quo.
His work has earned him recognition as one of the most insightful investors of his generation, and his personal story was famously portrayed in “The Big Short,” both in Michael Lewis’ bestselling book and its film adaptation.
Early Life and Education
Michael Burry was born on June 19, 1971, in San Jose, California. From a young age, Burry showed signs of intellectual brilliance, though his childhood was marked by the tragic loss of his left eye to retinoblastoma, a rare form of cancer.
This condition led him to wear an artificial eye for the rest of his life. Burry attended Santa Teresa High School and later enrolled at the University of California, Los Angeles (UCLA), where he majored in economics and pre-med.
After completing his undergraduate studies, Burry went on to earn a medical degree from Vanderbilt University School of Medicine.
Though Burry started his career in medicine, his passion for investing took precedence. He chose not to complete his residency in neurology at Stanford University Medical Center, and instead, focused on building a career in financial markets.
His background in medicine, combined with his analytical skills, would later become an essential part of his investment philosophy.
The Launch of Scion Capital
In 2000, Michael Burry founded Scion Capital LLC, a hedge fund that would later become famous for its significant returns.
Burry was not your typical hedge fund manager; instead of relying on traditional Wall Street wisdom, he drew upon his deep knowledge of financial markets and his background in value investing.
He adopted a strategy inspired by the 1934 book, “Security Analysis”, which emphasized the concept of margin of safety in investments.
In his first year with Scion, Burry achieved an impressive 55% return while the broader market, as measured by the S&P 500, lost nearly 12%.
This early success caught the attention of major investment firms, such as Vanguard and White Mountains Insurance Group.
By 2004, Burry had grown his assets under management to over $600 million, establishing himself as one of the most talented fund managers of his time.
The Subprime Mortgage Bet
Burry’s rise to fame came when he made an unconventional bet against the subprime mortgage market leading up to the 2008 financial crisis.
In 2005, Burry became increasingly concerned about the housing bubble and the risky nature of the subprime mortgage market.
After extensive research, he concluded that the mortgage-backed securities (MBS) tied to subprime loans would eventually collapse, leading to a major market correction.
Burry used a financial instrument called credit default swaps (CDS) to short the subprime market.
This move was highly unusual for a relatively small fund like Scion, and it involved persuading Goldman Sachs and other major firms to sell him these swaps.
While his predictions initially seemed wrong, as the market continued to climb, Burry’s strategy caused his investors to become restless and demand their money back.
However, Burry’s intuition proved correct. By 2007, the housing market began to unravel, and mortgage-backed securities lost substantial value.
As the market collapsed in 2008, Burry’s bet paid off, and Scion earned $700 million for its investors, while Burry personally made $100 million.
His decision to bet against the housing market became one of the most successful trades in financial history.
The GameStop Saga
In 2020, Burry made headlines once again with his bold bet on GameStop, the struggling video game retailer.
Burry revealed that he had acquired over 3 million shares of GameStop and urged the company’s executives to make significant changes to improve the business.
What followed was a Reddit-driven short squeeze that propelled GameStop’s stock price from around $4 per share to a peak of $480 per share in January 2021.
This surge, largely driven by individual investors on the Reddit forum r/WallStreetBets, caught Wall Street off guard. At its peak, Burry’s 1.7 million remaining shares were worth $816 million, a massive increase in value.
Burry, who had initially paid an average of $4 per share for his position, was not directly involved in the retail-driven price surge but was likely able to profit significantly from his timely investments.
Despite selling a large portion of his holdings before the price spike, Burry’s role in the GameStop saga solidified his reputation as an investor capable of identifying unconventional opportunities in the market.
Scion Asset Management and Later Investments
After liquidating Scion Capital in 2008, Burry re-launched his hedge fund in 2013 under the name Scion Asset Management.
While much of his public focus was on the subprime mortgage bet, Burry shifted his attention toward more long-term investments in sectors such as gold, water, farmland, and major tech companies like Facebook and Google’s parent company Alphabet.
Burry continued to make waves with high-profile short positions. In late 2020, he made significant bets against Tesla stock, predicting that the company’s soaring valuation would eventually collapse.
Reports also indicated that Burry took out put options on over 800,000 Tesla shares, betting on a fall in the stock’s value.
Additionally, he reportedly placed $31 million in put options against ARK Investment Management.
These moves exemplified Burry’s contrarian approach to investing, as he consistently positions himself against what the broader market perceives as overvalued assets.
Media Attention and Popular Culture
Michael Burry’s career and unique investment style gained wider recognition after his involvement in the subprime mortgage crisis was chronicled in Michael Lewis’ 2010 book, The Big Short: Inside the Doomsday Machine.
The book became a bestseller and was adapted into a 2015 film directed by Adam McKay.
In the film, Christian Bale portrayed Michael Burry, capturing his eccentric yet insightful approach to financial markets.
The movie received critical acclaim and earned multiple Academy Award nominations, including Best Adapted Screenplay.
Bale’s portrayal of Burry garnered a Best Supporting Actor nomination, cementing Burry’s place as a key figure in the world of finance.
Personal Life
Burry lives in Saratoga, California, with his wife and son. While much of his personal life is private, it is known that his son was diagnosed with Asperger syndrome, which led Burry to delve into the condition’s characteristics.
In interviews, Burry has expressed that he suspects he may also have Asperger’s syndrome, a possibility he explored after researching the condition in depth.
Despite his massive success, Burry maintains a relatively low profile and has chosen to stay out of the limelight for the most part.
He is often described as a reclusive figure, preferring to focus on his investments and personal life rather than pursuing public recognition.
Michael Burry’s Legacy and Influence
With a net worth of $300 million, Michael Burry’s career is a testament to the power of independent thinking and the ability to go against the grain.
His foresight in predicting the subprime mortgage collapse, as well as his more recent investments, has solidified his place as one of the most successful investors of the 21st century.
Burry’s investment strategy emphasizes deep research, data-driven decisions, and the willingness to take risks that others might consider too unconventional.
His impact on the world of finance continues to influence investors, both professional and amateur, as they look to follow in his footsteps.
As the financial markets evolve, Burry’s legacy as a financial maverick is likely to endure for years to come.
Michael Burry’s story is not just one of wealth, but also of vision, conviction, and the ability to navigate complex markets with a unique perspective.
