Michael Burry has a net worth of around $300 Million. He is widely known as an investor and hedge fund manager. Michael is popularly known for predicting the Great Recession in 2008 and thus making a huge profit of $700 million out of it. In this blog, we will learn about Michael Burry Net Worth, career growth, diverse portfolio, and investing strategy.
Who is Michael Burry?
Having been born in San Jose, California, USA on June 19, 1971, Michael studied Economics at the University of California, Los Angeles, and later went to Vanderbilt University where earned the degree of M.D. However, he pursued a career in finance.
He became successful in value investing quite early in his career. Although Michael does not practice medically, he keeps his license active with the Medical Board of California.
Michael Burry’s story is depicted in the film “The Big Short: Inside the Doomsday Machine,” directed by Adam McKay, where Christian Bale portrays him. The movie, based on Michael Lewis’s book “The Big Short,” focuses on Burry’s accurate prediction of the 2008 financial crisis and his investment in credit default swaps. While the film received praise for its portrayal, Burry has criticized it for taking creative liberties with certain events and characters.
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Michael Burry Profile
| Attribute | Details |
|---|---|
| Full Name | Michael James Burry |
| Date of Birth | June 19, 1971 |
| Age | 53 years (as of 2024) |
| Birthplace | San Jose, California, USA |
| Education | M.D., Vanderbilt University School of Medicine |
| Profession | Investor, Hedge Fund Manager |
| Known For | Predicting the subprime mortgage crisis |
| Hedge Fund | Founder of Scion Capital |
| Famous Investment | Shorting the subprime mortgage market (2007-2008) |
| Nationality | American |
| Net Worth | Estimated in the hundreds of millions (varies) |
| Books/Media | Featured in “The Big Short” (book and film) |
Michael Burry Net Worth 2024
As of 2024, Michael Burry is estimated to have a net worth of around $300 Million. The majority of his income comes from his investments in various stocks and hedge funds.
Let us take a look at the key instances throughout his career:
Establishment As A Fund Manager
During his stay at Stanford, Burry focused on financial investing, becoming particularly effective in value investing. He was so successful with his stock recommendations that he drew the attention of corporations like White Mountains Insurance Group and Vanguard, as well as big investors like Joel Greenblatt. Burry has stated that his investment technique is based on the 1934 book “Security Analysis,” and that his entire stock selection strategy is centered on the concept of margin of safety.
Burry created Scion Capital, his own hedge fund, in late 2000, using an inheritance and family debts to fund it. Almost immediately, he made large returns for his investors. In his first full year in 2001, he supposedly gained 55% while the S&P 500 sank 11.88%. The S&P 500 sank again the next year, but Burry rose.
In 2003, he outperformed the market again, with his investments increasing by 50%. Burry achieved these results by shorting overvalued technology equities. By the end of 2004, he was managing approximately $600 million.
Subprime Mortgage Crisis
Michael rose to prominence after it was revealed that he had placed a $1 billion bet against the subprime mortgage business before the 2008 Great Recession. Burry approached Goldman Sachs and persuaded the banking firm to offer him “credit default swaps” that bet against subprime mortgages. It was an extremely rare move for such a small fund manager. He began betting in 2005. The bet was a long-term loser. Scion had to make regular payments to cover his swaps prior to the collapse of the real estate market. This financial spend prompted his investors to revolt and demand their money back.
Burry was finally correct, and his fund generated $700 million for his investors. He made $100 million himself.
Burry said in an April 2010 op-ed for The New York Times that anyone who closely researched the financial markets between 2003 and 2005 could have easily identified the risk in the subprime markets.
GameStop and the Reddit phenomenon
Michael Burry made waves in early 2021 when he invested in GameStop, a struggling video game shop. Burry invested in GameStop because he believed the firm was undervalued and had room for expansion. However, his position received even more attention when a group of amateur investors on Reddit’s WallStreetBets site coordinated a buying campaign to drive up the stock price, forcing a short squeeze on hedge funds that had bet against it.
However, Burry cautioned that the GameStop phenomena were an indication of a market bubble and that many firms’ stock values were being propelled higher by speculation rather than fundamentals. At GameStop’s Reddit-fueled high of $483, Burry’s maximum stake could have been worth more than $1.5 billion.
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Bets against technology stocks
In addition to his investment in GameStop, Burry has made headlines for his pessimistic wagers on technology firms. Burry has expressed concern about the high valuations of businesses such as Tesla, Alphabet Inc., and Facebook, and has purchased put options on their shares.
Burry’s concern regarding tech stocks stems from his conviction that current values are not justified by earnings or revenue growth. He has warned that the market is being driven by speculation rather than fundamentals and that a correction is expected.
Burry has also invested in gold and water, which he views as safe havens in unpredictable times.
Michael Burry Investment Strategy
1. Value Investing
Burry is a big fan of value investing, which means he looks for stocks that are undervalued by the market. He tries to find companies whose stock prices are lower than their actual worth. For example, if a company has solid earnings and a strong balance sheet but its stock is cheap, Burry sees this as a good opportunity.
2. Focus on Fundamentals
He focuses on the fundamentals of a company. This means he digs into the company’s financial statements, such as its income statement, balance sheet, and cash flow statement. He looks for companies with low debt, strong earnings, and a good return on equity (ROE). For instance, if a company consistently makes money and has little debt, Burry might see it as a safe investment.
3. Contrarian Investing
Burry often takes a contrarian approach, which means he goes against the crowd. When most people are selling, he might be buying. For example, during the housing bubble, while everyone was investing in real estate, Burry was betting against it by shorting mortgage-backed securities. This paid off when the market crashed, and he made a fortune.
4. Cyclicals and Small-Cap Stocks
Burry likes to invest in cyclical stocks and small-cap stocks. Cyclical stocks are those that go up and down with the economy, like companies in the auto or construction industries. Small-cap stocks are companies with a small market capitalization, often overlooked by big investors. He believes these stocks can offer big returns if timed correctly.
5. Scion Capital and “The Big Short”
At Scion Capital, his hedge fund, Burry made a name for himself by betting against the subprime mortgage market. He used something called a credit default swap (CDS) to make this bet. A CDS is like insurance against the default of a loan. When the housing market crashed, the value of these swaps skyrocketed, making Burry a lot of money.
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6. Margin of Safety
Burry emphasizes the importance of having a margin of safety. This means buying stocks that are so undervalued that even if something goes wrong, there’s still a cushion to prevent big losses. For example, if he buys a stock at $10 that he believes is worth $20, even if the stock only goes up to $15, he still makes a profit.
7. Focus on Debt
Burry pays close attention to a company’s debt levels. He avoids companies with high debt because they are riskier, especially in economic downturns. For instance, during a recession, companies with too much debt might struggle to pay their bills, leading to bankruptcy.
8. Patient and Long-Term View
Burry is patient and takes a long-term view. He doesn’t worry about short-term market fluctuations. Instead, he focuses on the long-term potential of his investments. If he believes in a company, he’s willing to wait for years for its stock to reach its true value.
9. Use of Options and Hedges
Sometimes, Burry uses options and hedges to protect his investments. Options give him the right to buy or sell a stock at a certain price, which can be useful in managing risk. Hedges are like insurance policies that protect against losses in other investments.
10. Recent Strategies
In recent years, Burry has focused on inflation and potential market crashes. For instance, he has invested in assets like farmland and water, which he believes will hold their value even if inflation rises. He’s also warned about bubbles in assets like cryptocurrencies and tech stocks, suggesting that investors should be cautious.
By following these strategies, Michael Burry has managed to achieve significant success in the financial world. He doesn’t follow trends but instead relies on deep research and a strong understanding of the market’s fundamentals.
Wrap Up
Michael Burry’s financial journey offers a unique blend of medical knowledge and economic acumen, leading him to become one of the most notable figures in the investment world. Renowned for his early prediction of the 2008 financial crisis, Burry has consistently demonstrated a keen ability to identify undervalued assets and strategically position himself against market trends.
His approach to value investing, focus on fundamentals, and willingness to take contrarian positions have earned him substantial profits, including a $700 million gain during the subprime mortgage crisis. Burry’s investment philosophy emphasizes patience, a deep understanding of market dynamics, and cautious optimism, making him a pivotal figure in modern finance.
FAQs About Michael Burry
Q1. Who is Michael Burry?
Ans. Michael Burry is a prominent investor known for predicting the 2008 financial crisis and profiting from it. He founded Scion Capital and is known for his value investing strategies.
Q2. What is Michael Burry’s investment strategy?
Ans. Michael Burry focuses on value investing, fundamentals, and contrarian positions. He often invests in undervalued assets and takes a long-term view, emphasizing the importance of a margin of safety.
Q3. How did Michael Burry predict the 2008 financial crisis?
Ans. Michael Burry predicted the 2008 financial crisis by identifying the risk in subprime mortgages. He used credit default swaps to bet against the housing market, resulting in significant profits when the market collapsed.
Q4. What is Michael Burry known for?
Ans. Michael Burry is best known for predicting the 2008 financial crisis and his portrayal in the movie “The Big Short.” His successful investment strategies have made him a notable figure in the financial world.
Q5. How much did Michael Burry profit from the 2008 crisis?
Ans. Michael Burry profited approximately $700 million during the 2008 financial crisis by betting against subprime mortgages through credit default swaps.