Dr. Michael Burry of Scion Capital

Books in the picture above that I can identify:
Atlas Shrugged is the book on top of that pile on the ground near the newspaper near his feet. Guns, Germs, & Steel is the book with the orange/gray/white side, on top of the pile of books to the right of the one with Atlas Shrugged. The 1st book near his right hand seems to be Against the Gods (eg compare it to the side of the hardcover version), but I could be wrong about that. The book under that one seems to be a hardcover copy of "Benjamin Graham: The Memoirs of the Dean of Wall St." (click here to see a pic of the hardcover's side). The red/white/blue one on the bookshelf in the back and the book underneath Atlas Shrugged both look very, very familiar to me, but I can't put my finger on what they are (assuming I'm right that I've seen them before). My guess is that the newspaper in front of his feet is the Wall St. Journal based on the format of the page.

Sources of Information on Dr. Burry

Dr. Burry's Hedge Fund:
http://www.scioncapital.com/

1996-2002 Dr. Burry's forum posts while he was learning how to manage money:
http://www.siliconinvestor.com/profile. ... rid=690845
http://www.valueinvestorsclub.com/ - search for ideas by michael99

Dr. Burry's Articles for MSN:
http://web.archive.org/web/200011191012 ... te.asp?a=0
[I emailed the current editors and they don't have any archived articles from back then; they referred me to archive.org]

Scion Capital SEC Filings:
http://www.sec.gov/cgi-bin/browse-edgar ... getcompany
http://www.adviserinfo.sec.gov (search for "Scion")

Other Good Analysis of Dr. Burry:
http://streetcapitalist.com/2010/03/24/ ... ael-burry/




The Contents of Dr. Burry's Original Websites (sealpoint.com, valuestocks.net)

Since I intend to promote myself in the same way he did, it'll be useful for me to know exactly what he had on his website.

What it May Have Looked Like:
Here's a similar website from 1999:
http://web.archive.org/web/199910132119 ... loor/3097/
Here's a post where Dr. Burry comments on this website:

Pages I don't know the exact content of:
http://www.sealpoint.com/stockpix.html - he already has a "pick of the month" page, so idk what this is for.

A Forum

Page: Valuescreen(?)
Not sure if this is the same thing as the "research" page below.

Page: Research(?)
http://www.sealpoint.com/research.html
This page had--possibly among other things--"a listing of resources on the web for researching stocks in general" and "links to good [stock screening] sites"

Page: Book Reviews
- 100 Minds that Made the Market
- The Bear Book by John Rothchild
- Buffettology by Buffett and Clark
- Common Stocks and Uncommon Profits by Fisher
- How to Pick Stocks by Fred Failey of Kiplinger's
- The Intelligent Investor by Graham
- Peter Lynch's books are "very good reading" (all of them)
- Sense and Nonsense in Corporate Finance
- Stocks for the Long Run by Jeremy Siegal
- Superstocks by Ken Fisher
- Valuation by McKinsey & Co.
- Wall Street on Sale [mentioned here and here.
- Why Stocks Go Up and Down By Pike [mentioned here, here, here]

Page: How To Be a Value Investor

Page: Portfolio

Page: Pick of the Week / Month
He references a /pow.html page several times, which I'm guessing stands for "pick of the week".

6/10/1997 - My expanded viewpoint for Coachmen is now at http://www.sealpoint.com/pow.htmlSource: http://www.siliconinvestor.com/readmsg. ... id=1569302

5/19/1998 - Great. I run a website and made it my pick of the month in February http://www.sealpoint.com/powfeb98.htmlSource: http://www.siliconinvestor.com/readmsg. ... id=4521509

Paul Senior: 10/6/1997 - Note to Mike Burry: Mike, apologies if I implied that I didn't/don't use your website.. I do, and did check Sealpoint before asking about CCN, but wrongly had stopped at stock-of-the-month, so I incorrectly assumed you didn't still own CCN...And now I do remember you saying here that you post your portfolio in the (of course) portfolio section of Sealpoint. I'll make sure in future I check that section too. Paul.Source: http://www.siliconinvestor.com/readmsg. ... id=2372474

Page: Buffett Revisited
This seems to have been a page where Dr. Burry talked about the essential eternal characteristics of Buffett's success, those elements that could not be diluted from having other people follow simple accounting formulas. Basically, if the next Warren Buffett is out there right now, what is that guy up to?

Year-by-Year Links & Information

****1993**** [age 22]

early 1993 (~age 22) is the date he gives for his start in investing:
http://www.siliconinvestor.com/readmsg. ... id=5568647
1998/8/23 - I'm new at this (5 1/2 years)



****1996**** [age 25]

He joined siliconinvestor.com (formerly techstocks.com) in April of 1996



****1997**** [age 26]

his performance in 1997:
http://www.siliconinvestor.com/readmsg. ... id=5568647
1998/8/23 - Last year I got lucky for most of the year, avoided the worst of October, only to crash miserably in the last two months.
[Ed. - 1997 S&P 500; 1997 Nasdaq Composite. Seems like he may have just been riding the market to a large extent.]



****1998**** [age 27]

his performance in 1998:
http://www.siliconinvestor.com/readmsg. ... id=5568647
1998/8/23 - up 20% for the first Q of 98, now down over 20% since then.
[1998 S&P 500; 1998 Nasdaq Composite. Again, it looks like his results track the overall movement of the market pretty closely.] 


****1999**** [age 28]



****2000**** [age 29]

According to his SEC filings, he started Scion Capital in October 2000. This is also apparently when he quit his residency and moved back in with his parents.



****2002**** [age 31]

As of 3/20/2002 he had $29,400,000 under management according to his filings with the SEC:
http://www.adviserinfo.sec.gov
His minimum investment was $250,000 whereas Bo Shan's minimum investment is $1,000,000 (w/ $22 million under management). I guess smaller investors aren't worth the headache?




****2003**** [age 32]




****2004**** [age 33]

According to one press release, this was the year Michel Del Buono joined Scion as an analyst. Here's his bio from that press release:

This date contradicts another source: an article Del Buono published in Sept. 2002. That article has him listed as an analyst for Scion Capital.



****2010**** [age 39]

Mid 2010 interview with the Financial Crisis Inquiry Commission
(this was after his op-ed but before the bloomberg interview in september):
http://fcic.law.stanford.edu/interviews/view/14
full transcript of the interview:
http://www.scribd.com/doc/51751848/Mich ... tion-FCIIC
- at the very end he mentions having gotten his introduction to CDOs via Janet Tavakoli's "Structured Finance and Collateralized Debt Obligations: New Developments in Cash and Synthetic Securitization"

September 2010 interview with Bloomberg:
Links to the video clips:
http://www.bloomberg.com/news/2010-09-0 ... -gold.html
Link to the full transcript of the interview:
http://www.scribd.com/doc/37453934/Mich ... Transcript
- Admitting that CDS on subprime MBS was what forced taxpayers to bail out AIG: "I think, yes, [derivatives] caused some of these bailouts that we've had to do of AIG and these sorts of things, which are a huge cost to the taxpayers."
- How he finds ideas: "I essentially just read news. I search. I'm reading a lot. I read a lot of news. And, you know, I rarely use screening tools. I basically follow my nose on news stories. And more often than not, it's a dead end, but sometimes it produces something of value."
- On the current stock market environment: "Smaller hedge funds are going out of business because nobody trusts the small ones. They all want to go with the big ones. All this is draining liquidity and draining some of the demand for smaller and micro cap stocks and smaller issues of bonds and that sort of thing."
- On his investment ideas: "I'm looking for an original thesis. I want a thesis that I haven't heard about or seen or in -- and I don't take others -- others -- the theses of others very well. So I'm looking for an original thesis and it leads me to disparate areas." This seems very different from Phil Fisher, who said that most of his good ideas came from other smart money managers. What's strange is that many other hedge fund managers talk about investing in water and agricultural land, so that wouldn't seem to agree with what Dr. Burry is saying here.
- A current investment idea he's interested in: "I'm very interested in smaller tech companies. I think -- what I'm interested in are companies with a secular growth profile or a secular history that I think will play out that is generally not dependent on what the government does, which is kind of hard to find. I'm looking for good products, good management, good market position, competitive dynamics. So I'm -- so I think digging around in smaller, secular growth stories, I think it -- they've been neglected. I think it's especially true in Asia. Smaller companies in Asia, I think, are neglected. There are some very cheap companies there." I'm not exactly sure what he means by "secular growth profile", "secular history", or tech companies that are/aren't "dependent on what the government does".
- "I think the way I go about investment is just very different. I think Paulson and a lot of those others got the trade from Greg Lippman. I think a lot of hedge funds get their trades from Wall Street and get their ideas from Wall Street. And I just like to find my own ideas. I don't need to talk with fund managers to get their ideas. I want to find my own ideas."
- "Warren Buffet was an inspiration for me go to into money management. And I largely patterned my early career after what I'd read about him in 'The Making of An American Capitalist' by Roger Lowenstein, which I thought was a phenomenal book."
- "I think I first started really investing in high school, then certainly all through college I was addicted to all that stuff."
- "My Friday nights [in college] would be spent at either one of two places, Office Depot or a bookstore. I was interested in business. I was interested in starting a business and I was interested in markets."
- he got his job writing for MSN because a guy at MSN Money stumbled across his website
- "I think I received some reputation for value investing during the dot-com and doing well with it."
- The first people to contact him when he announced he was starting a fund: "a lot of individual investors but also people who were analysts at other – at mutual fund companies or one guy was a PM. Generally it was lower level people but definitely institutional contacts. But then there’s the brokers. There’s brokers from Morgan Stanley and that sort of thing, that would call and they’d have some business ideas; then came some of the pretty well-known hedge fund guys."
- On the benefit of being backed by Joel Greenblatt: "It was life changing. The business was going to be the business regardless but it was life changing because it really opened some doors early on. I was having trouble getting a prime broker. I’d go to Bear or whoever and they would not necessarily pay much attention. So once he was involved, I got my prime broker very quick and the account really quick and that sort of thing."
- "The hedge fund industry increasingly even since I started has – (audio break) – if you’re volatile, you’re risky period and I have never thought that volatility is equivalent to risk or that risk is derived from volatility. That’s never been part of my mindscape. I think Wall Street loves using volatility as a measure of risk. There’s tremendous social proof in it. There’s all the Nobel prizes, but I think it’s flat wrong."
- On whether there's a bubble in US Treasury bonds: "I don’t know. There’s not much more of a bond bubble than there was in Japan 10, 15 years ago. It can go on a while I think. We’re very important to the world. We’re the number one consuming economy by far. Even when China overtakes us in terms of overall GDP size, we’re still going to be the number one consuming economy. We’re very important to the world and I think that needs to be kept in mind."



****2011**** [age 40]

April 2011 speech at vanderbilt in which he gives a history of the subprime crisis:
http://www.youtube.com/watch?v=fx2ClTpn ... re=related
- at 0:19 he mentions "the generations-old acceptance and assumption that [housing] prices always go up" as an indicator of a problem. I had the same reaction when I learned that people defined the US treasury bill as a "risk free" investment.
- at 28:35 he recommends opening a bank account in Canada.
- from around 29:00 to 31:00 he talks about what signal to look for that will show that the end is near. He doesn't seem to have a clear idea of what it will be; he just says that it won't be a treasury auction failing. This is in contrast to Kyle Bass, who seems to have a more specific idea of how things will play out and seems to have spent far more time thinking about this crisis; if you watch Bass at the 2011 AmeriCatalyst conference he shows that what is likely to happen is that the yield that governments need to offer to investors to get them to buy is likely to go higher and higher until the interest govs are paying on their debt is more than they can pay with their tax revenue. in an August 2011 roundtable w/ bill gross + others, one of the guys (an NYU professor) said that institutional investors are treating the US as the highest point during a flood, and will probably flee other gov. bonds to US debt, until the whole thing collapses.

Summer 2011 Article for Vanderbilt Magazine (this seems to be the text of the speech he gave at Vanderbilt in April '11):
http://www.vanderbilt.edu/magazines/van ... to-mayhem/


July 2011 25-min bloomberg video on dr. burry:
http://www.bloomberg.com/video/72756316/
- Q: What is that stuff on his PC screen?
- Q: What are those books behind him on his shelf?
- they interview a guy at whitemountain who also posted on the forums
- they show a clip w/ warren buffett mentioning MB while giving testimony
- Michel Del Buono is a guy who's interviewed who used to work with MB
- they mention he got paid by MSN Money to write articles (haven't heard that mentioned anywhere else)
- quit his residency at 29, which would have been around the year 2000
- he mentions that he was living w/ his parents when he started scion capital (to save money)
10:10 - MB thinks a lot of hedge fund managers get their ideas from wall st (as opposed to unique research)
10:17 - he reads a lot of news (i would guess so that he can find companies that are being hit w/ bad news that could unfairly hurt their stock)
11:10 - they say that greenblatt actually championed burry to the other firms that invested with him (as opposed to the other firms having found burry on their own?)
11:24 - white mountain bought a share for $500,000 and gave him $10 million to invest (Q: What's the difference between those two things?)
11:27 - within a month of starting his fund he had $200 million under management (this seems to contradict the SEC filings)


2012.06 Speech at the UCLA Graduation
Video: http://www.youtube.com/watch?v=1CLhqjOz ... ure=relmfu
Transcript: http://www.scioncapital.com/PDFs/2012UC ... on_Web.pdf
00:00-02:15 - gives a brief intro of what Burry studied at UCLA and his path to success afterward
03:00 - he says he invested his summer earnings (during college) in stocks and futures, and he remembers being "starved for information"
03:30 - now we have the opposite problem: we're in "an age of infinite distraction". 
04:30-05:00 - he thinks we may see a second great recession in the next 10 years and a US debt-to-GDP ratio around 200 in another 20 years. He drops a reference to "reflexivity", a term coined by George Soros; I wonder how many of the students will understand what that word means. He refers to Greece being at 160% when things started to go sour, so he seems to be implying that we'll see the same kinds of things we're seeing in Greece now.
05:00 - 06:00 - he makes the point that all this was predictable and preventable. His one sentence summary of how to predict these situations: "When the entitled elect themselves the party accelerates, and the brutal is inevitable."
~06:50 - he describes the situation young people are inheriting as "unfair", which reflects the common way of thinking about it. But if young people are getting the benefits of all of the inventions of the generation before them, is that fair? I think the whole concept of "fair" is complicated/murky/partisan.
07:49 - the lesson he got from his moving-bricks experience as a kid was that hard work is not sufficient to get anything accomplished.
08:00 - he TOTALLY bashes traditional education and professors right in front of them. It reminds me a lot of Steve Jobs' commencement speech at Stanford.
~08:27 - he says he read Liar's Poker before graduating and it nearly convinced him he shouldn't go into finance.
08:48 - he says his interest in medicine faded while studying the economics of health care in '94
09:50 - he says he got divorced, and even applied to law school(!) because he wasn't sure of what direction he should go in
11:00 - he says his initial reaction when seeing a subprime MBS was to wonder if he could ever figure it out (ie it sounded like he was intimidated, which is a relief b/c that stuff still seems complicated to me)
11:00 - 11:40 - he gives a few examples of how his job involves figuring out what questions he needs to get answers to in order to make a decision, and then finding out the answers to those questions. This is exactly the conclusion I've come to about how to make investment decisions. It has a lot of similarities to the process of learning to program.
~13:18 - he says the CDS bet was a "negative-carry trade". Haven't heard that term used much.
14:30 - he says that within 2 weeks of his NYT op-ed, rather than getting a collegial message from someone in the government, all six of his defunct funds were audited (by the IRS, I guess, right?), and (later, I guess?) the FCIC demanded all his emails and lists of people he'd spoken to going back to 2003, and then later the FBI "showed up" (what's that mean?). He says he spent $1 million in legal and accounting costs.
15:10 - he says the summer after the NYT op-ed the Fed put out a report saying that nothing in traditional economics could have predicted the subprime problem. He says the bureaucrats' ignorance is "willful" (which is something I'd concluded as well; when predicting these guys' behavior you need to realize that it's all about the incentives they're subject to).
17:25 - he starts making very specific predictions about the future: healthcare will be worse, etc. Then he says that these things are already happening.
18:00 to the end - he talks for a couple minutes about how you should try to avoid doing things that have a short-term benefit but make you worse off over the long term. For example if you go to work on Wall St or in Washington you'll feel pressure to do these kinds of things. He also emphasizes that you can stand apart from the crowd and make decisions for yourself.


2014.09.09 - Real Estate Crowdfunding Firm Seeks Lending Revolution
http://www.businessweek.com/news/2014-0 ... revolution

Questions for Dr. Burry

Q: You value-invest in companies on a relatively short time scale; what would happen if you had a market crash followed by a bear market for 3-5 years, before any of your stocks could pay off? This type of situation seems to be why Buffett stresses the importance of picking stocks that you could stay invested in for 10 years.

A: My guess is that if it looked to him like the market would continue to go down for a while, he'd just eat his losses. But bear markets seem to be relatively short unless there's some kind of new law/regulation that has been introduced and will prolong it (eg I've heard the Great Depression was prolonged by governments' increasing tariffs on imports in an attempt to fix the problem). I'm pretty sure Dr. Burry was hit by both the '98 crash and the post-9/11 crash, although I'm not sure to what extent. I remember reading that he was largely out of the US market in the '08 crash (he was looking at Asian companies instead), and that he jumped back into the US market after the '08 crash.


Q: There are many people out there who have spent tons of time reading all the investing books out there, but few of them have had your level of success. What do you think separates you from them?

A: Probably multiple things depending on which other trader we're talking about.
- 99.9% of those he was competing against probably don't read as much as he did, maybe because the immediate opportunity cost for them was higher. In other words, if Dr. Burry had been getting invited to all the hot parties when he was growing up, reading books would have been more painful and he probably would not have been able to put in the hours to get himself to his current level of success. I've read about a lot of successful people and have gotten the impression that this is a very common reason for their success (some examples: Michael Bloomberg, Mark Cuban, Steven Spielberg, Warren Buffett). I know it's definitely true for me.
- Some traders may read but not learn from what they're reading; other traders may learn things from reading but not get enough real-world trading experience; others may stick to a narrow type of investing.
- Most/all of those traders probably don't promote themselves as much as Dr. Burry did. You need to 1) be able to manage money (pick stocks) abnormally successfully AND 2) promote yourself so that people know what you can do. His stuffy writing style combined with the fact that he was a doctor seem likely to have helped him project an image of high intelligence, which may have made readers more likely to follow his lead.
- Another biggie is Dr. Burry's willingness to go out on his own; being comfortable as a loner is a rare trait.


Q: What led you to use technical analysis in the first few years you were learning, and only later discover value investing?

A: My guess would be that TA is more popular, and so if he was getting his info from bookstores and the web, he'd be more likely to run into TA books than value investing books.