Dr. Michael Burry has received a great deal of well-deserved attention recently as a result of Michael Lewis’s The Big Short and the Vanity Fair article Betting on the Blind Side. Yesterday a reader provided a link to Burry’s techstocks.com “Value Investing” thread (now Silicon Investor) and today another reader has supplied a link to Burry’s Scion Capital investor letters. The site also sets out a time-line of Burry’s commentary on the financial crisis illustrating that, though it was not prevented, it was “eminently predictable and preventable”.
Burry is a superb writer. Here is a brief extract from the first quarter 2001 letter:
When I stand on my special-issue “Intelligent Investor” ladder and peer out over the frenzied crowd, I see very few others doing the same. Many stocks remain overvalued, and speculative excess – both on the upside and on the downside – is embedded in the frenzy around stocks of all stripes. And yes, I am talking about March 2001, not March 2000.
In essence, the stock market represents three separate categories of business. They are, adjusted for inflation, those with shrinking intrinsic value, those with approximately stable intrinsic value, and those with steadily growing intrinsic value. The preference, always, would be to buy a long-term franchise at a substantial discount from growing intrinsic value.
However, if one has been playing the buy-and-hold game with quality securities, one has been exposed to a substantial amount of market risk because the valuations placed on these securities have implied overly rosy scenarios prone to popular revision in times of more realistic expectation. This is one of those times, but it is my feeling that the revisions have not been severe enough, the expectations not yet realistic enough. Hence, the world’s best companies largely remain overpriced in the marketplace.
The bulk of the opportunities remain in undervalued, smaller, more illiquid situations that often represent average or slightly above-average businesses – these stocks, having largely missed out on the speculative ride up, have nevertheless frequently been pushed down to absurd levels owing to their illiquidity during a general market panic. I will not label this Fund a “small cap” fund, for this may not be where the best opportunities are next month or next year. For now, though, the Fund is biased toward smaller capitalization stocks. As for the future, I can only say the Fund will always be biased to where the value is. If recent trends continue, it would not be surprising to find the stocks of several larger capitalization stocks with significant long-term franchises meet value criteria and hence become eligible for potential addition to the Fund.
Buy my book The Acquirer’s Multiple: How the Billionaire Contrarians of Deep Value Beat the Market from on Kindle, paperback, and Audible.
Here’s your book for the fall if you’re on global Wall Street. Tobias Carlisle has hit a home run deep over left field. It’s an incredibly smart, dense, 213 pages on how to not lose money in the market. It’s your Autumn smart read. –Tom Keene, Bloomberg’s Editor-At-Large, Bloomberg Surveillance, September 9, 2014.
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[…] Burry, Predictor of Mortgage Collapse, Bets on Farmland, Gold, Bloomberg has a great profile on Dr. Michael Burry and his recent investments. Says Bloomberg: Michael Burry, the former hedge-fund manager who […]
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[…] 23, 2010 by greenbackd Dr. Michael Burry has been a very popular topic on Greenbackd recently as a result of Michael Lewis’s The Big […]
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After listening (60 Minutes) to Dr. Burry’s rational and thought provoking analysis of what was allowed to occur in the market, it is beyond comprehension as to why this man is not sought out as a resource of sane advice to a public bewildered by conflicting opinions and selective ‘facts’.
On the contrary, he seems to have suffered the Cassandra syndrome.
He should know that his fundamental understanding of how these markets are currently working and obvious capability to turn that to an advantage is highly valued.
I would hope that we have not heard the last of Dr. Burry; and look forward to any prognostications or future advice he may wish to share.
Heaven knows we need it.
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[…] most striking about this sketch of Phil Fisher is that it could just as easily be a discussion of Mike Burry or Warren Buffett. It leads me to conclude that great investors are like Leo Tolstoy’s happy […]
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Michael, I was inspired by the piece I saw on 60 minutes. I dont live far for your location and I’d love to have the opportunity to have coffee with you. I’m 37 years old and have worked on Wall Street, Lehman Bothers and traded at the Chicago Board of Trade and now I manage my own money. It would be on horor to meet you and talk over coffee. Please let me know if you have a free minute to meet. Thanks and it was truly great to see your story. Kirk C. Anderson
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Did you find out where his blog was at by any chance? I’d love to see the stock analyses he had posted back in the day.
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