Michael Burry, physician-financier, founder of the hedge fund Scion Capital
Michael Burry is a rare example of someone who traded his medical career for an investor's portfolio and was able to achieve success in capital management.
A physician by training, Burry rose to prominence with the "Big Short" bet against subprime mortgages in the United States and went down in history as an investor who could wait patiently, read the source material, and go against the crowd.
His approach is not about secret signals and insider trading, but rather about simply using data.
A financier's investment strategy is based on effective analysis, cold calculation, and strict adherence to rules.
Therefore, his story is useful not only for professionals, but also for any private investor who wants to make informed decisions. To some extent, I myself adhere to this very strategy in my work
Michael Burry was born in 1971. He studied economics at university and then graduated from Vanderbilt Medical School to begin his career as a physician.
At the same time, while still a student, Burry kept detailed notes on company analysis: he published financial analysis, debated popular opinion, and honed his own thinking. Over time, his passion blossomed into a profession: in 2000, he founded the hedge fund Scion Capital.
Scion's early years yielded impressive results using a classic value approach. The highlight was a short bet against mortgage-backed securities from 2005 to 2007: Burry carefully analyzed the loan pools and securitization terms and realized that the risks were undervalued by the market. He used credit default swaps to hedge the position against collapse, achieving outstanding results for the fund and its investors.
After the crisis, Burry temporarily stepped away from capital management, later returning through Scion Asset Management. Since then, he has remained an independent thinker, allowing him to take unpopular positions and write open letters to company management.
Michael Burry's Core Strategy
Burry's style is best described as "reasonable value with a margin of safety." It's not a hunt for "cheap" assets at any cost, but rather a search for situations where the market price is significantly below a conservative business valuation. In other words, he finds undervalued companies whose stock prices are below their intrinsic value.
His work is based on fundamental analysis. He starts not with the chart, but with the financial statements, analyzing the balance sheet, profit and loss statement, cash flows, debt structure, and asset quality. What's important isn't the pretty wrapping, but how the business makes money, what its liabilities are, and what its viability is under different scenarios.
The second pillar is the catalyst (signal). A "cheap" asset can remain undervalued for quite a long time. Burry looks for events that could unlock the company's potential and signal growth: a restructuring decision, a change in capital policy, a management change, industry growth, or information about development plans. If the catalyst is clear and measurable, the idea takes precedence.
The third element is strict risk management. Before making a purchase, Burry answers the question: What risk do you expect to incur in a new trade if things don't go as planned? He prefers concentrated portfolios, focusing on specific sectors of the economy. However, this doesn't prevent him from using hedging to mitigate risk.
The fourth element is independence of thought. Burry isn't afraid to be an "early investor." He accepts that the market may take a long time to agree with his thesis, and therefore builds in time and patience.
This approach requires internal discipline: don't test your idea ten times a day against the stock price, but regularly re-check it against the facts—reports, contracts, cash flows. If the facts support your idea, a temporary divergence from popular sentiment doesn't invalidate it.
If you boiled down Michael Burry's philosophy to a single phrase, it would be: do your homework better than anyone else and manage risk before you buy. His journey demonstrates that in investing, it's not the speed of reacting to headlines that wins, but the depth of analysis and patience.
The secret to success lies in three simple things: reading the primary sources and trusting only your own calculations; setting risk guidelines in advance and adhering to them; and having the courage to go against the crowd when the facts are on your side.
Start with understanding the business, not just pricing; demand a "margin of safety" in your valuation; look for a signal that can reveal value; formulate a plan before the acquisition, not after. This approach doesn't guarantee "instant miracles," but it does increase the chance of a meaningful and repeatable result—which is why Michael Burry is respected even by those who don't share his specific ideas.
