Plenty of influential investors have been trimming or offloading stakes in Nvidia as the AI boom draws a growing number of sceptics. But none has attracted attention quite as much as Michael Burry, says Bloomberg. The hedge funder, famous for correctly betting against the US housing bubble ahead of the 2008 financial crisis – as chronicled in Michael Lewis’ The Big Short – has become a fixation. “We’re obsessed with contrarian investors” who make “concentrated ‘hero bets’ on macro outcomes”.
Burry’s allure is especially strong among online retail investors, who have helped drive the values of firms such as data-intelligence specialist Palantir into the stratosphere, says the Financial Times. Hence the recent fury of the group’s “voluble” boss, Alex Karp, when Burry informed his 1.4 million followers on X that he had taken a sizeable $900 million short position on Palantir’s stock. Karp described Burry as “bat-crazy”. Yet arguably, he has had the last laugh. Within a fortnight, Burry announced that he is winding down his hedge fund Scion Asset Management – a measure of what a “brutal era” this has been for many bearish investors as the stock market has marched relentlessly higher.
Who is Michael Burry?
At 54, Burry stands out even among the colourful characters who are attracted to short selling. A self-described loner (who has nevertheless married twice) he told Michael Lewis that “my nature is not to have friends… I’m happy in my own head”. Born in 1971, and raised in San Jose, California, he lost his left eye to a rare form of cancer called retinoblastoma at the age of two and has worn a prosthetic eye ever since, says Investopedia. He later discovered he also has Asperger’s syndrome. After studying English, economics and medicine at the University of California, Burry was initially bent on pursuing a medical career. “However, his new hobby – picking stocks – engaged him more than the messy world of medicine,” says the FT. When his residency ended in 2000, he quit the profession and set up an investment firm, naming it Scion Capital, after The Scions of Shannara, a 1990 fantasy book by Terry Brooks.
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Burry started out as a value investor, buying into unloved companies he felt were extremely undervalued. A lover of heavy metal, he developed a reputation as a head-banging, fiercely contrarian money manager. “If you are going to be a great investor, you have to fit the style to who you are,” he told Lewis. “The late ’90s almost forced me to identify myself as a value investor… I thought what everybody else was doing was insane.”
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By 2005, he had trained his focus on what a collapse of the US housing market would do to mortgage bonds – later crediting his insights to his neurodiversity, says The Guardian. As he observed: “Only someone who has Asperger’s would read a sub-prime mortgage-bond prospectus.” Burry’s decision to bet against the mortgage market prompted anger from investors, who felt he was abandoning a profitable strategy. However, between November 2000 and June 2008, the fund returned 489%. Those investors who stuck with him made $700 million, while Burry made personal profits of $100 million.
Yet for many professionals, Burry’s performance since then has been “distinctly ho-hum”, says the FT. Burry, who has launched a new subscription newsletter called Cassandra Unchained, has seemingly retired from investing before – closing Scion Capital after his bets against subprime mortgage bonds paid off in 2008 before reopening as Scion Asset Management a few years later. As he wrote on X shortly before filing for the wind-down of his fund: “Sometimes we see bubbles. Sometimes, there is something to do about it. Sometimes, the only winning move is to not play.”
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