How to Invest Like Michael Burry: Learn from the Best with New Gen

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Michael Burry / 14 December, 2021

Karla García Gil Journalist

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Michael Burry is an investor and hedge fund manager, born on June 19, 1971, in San Jose, California. His net worth as of 2021 is $300 million, with more than $100 million under management.

Unlike other renowned investors, for Burry, finance was just a hobby. His academic background was in medicine. He studied at the University of Los Angeles, completed a doctorate at Vanderbilt Medical School and finished his residency as a neurologist at Stanford. It was in his spare time, outside of shifts, that he was involved in finance.

By 2004, he was already managing around 600 million dollars; however, despite the fact that many investors were willing to manage his capital, he turned them down, thinking about the possibility of finding better opportunities. This led him to study many proposals and in 2005 he began to look at high-risk markets.

In that same year, Burry analyzed dozens of bonds linked to mortgages, which made him realize that many high-risk mortgage loans were being granted, and that many families would not be able to pay the acquired debt, which turned those assets into a time bomb. With this, he foresaw an impending real estate crisis, which would begin in 2007 and from which he profited by persuading two large banks to issue CDIs, which he would then buy.

Michael Burry's biography: What is his investment style?

Michael Burry's biography: What is his investment style?

Born on June 19, 1971, in San Jose, California, victim of a cancer that caused him to lose an eye at the age of two, Michael Burry spent his childhood as a withdrawn child without many social skills.

It was the audacity of that move that catapulted Burry as a financial visionary, earning him close to $1 billion at the outbreak of the subprime credit crisis.

Burry retired in 2008 and devoted himself to managing his own capital; however, in 2013 he opened a new investment fund called Scion Management in which he bets on undervalued industries such as gold, water and agricultural land.

For the billionaire, growing food is the most feasible way to invest in water. That is, taking advantage of water-abundant areas and transporting the harvested food for sale in areas of scarcity.

2008 crisis and other predictions

The subprime credit or real estate crisis of 2008 was one of the biggest economic crises of this century. It was caused by the lack of confidence in the credit risks in the United States in 2007, something that quickly spread worldwide. Michael Burry realized that loans had been granted to people with a high credit risk, a situation that would cause a chain of defaults and lead to a financial bubble.

As well as this prediction, Burry has glimpsed others; for example, that most companies today are overvalued, and that for some -even the most successful ones- it represents a risk to allow the introduction of the sale of products through bitcoins.

On the other hand, the selection of his latest assets (water and fertile land) is not random, for years he has predicted that water is the most valuable asset as it will eventually become scarce, therefore, he maintains investments focused on it, hoping to have privileged access to the vital liquid, while maintaining reserve assets, such as gold, and assets with a wide margin of safety, such as small technologies.

Investment style

Michael Burry, on multiple occasions has proclaimed himself a value investor, and has said that he bases his investment choices on Benjamin Graham’s concept of “margin of safety”, as do other great investors, including Warren Buffett.

The margin of safety can be defined as the difference between the final price of an asset and its intrinsic value. The objective is to invest in assets whose intrinsic value exceeds the final price, thinking that in the medium or long term the asset will reach or exceed the price of the intrinsic value, a move that could be similar to what we do when we take the opportunity to buy a product at a bargain.

If you want to invest like Michael Burry, contact your financial advisor.

 

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