Michael Burry, physician-financier, founder of the hedge fund Scion Capital
Michael Burry is a rare example of a person who changed his profession as a doctor to an investor's portfolio and was able to achieve success by managing capital.
A physician by training, Burry rose to fame with the "Big Short" against subprime mortgages in the United States and went down in history as an investor who could wait patiently, read the primary sources, and go against the crowd.
His approach is not about secret signals and insider trading, but about simply using data.
The 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 strategy in my work.
Michael Burry was born in 1971. He studied economics at university and then graduated from Vanderbilt Medical School and began a career as a physician.
At the same time, while still a student, Burry kept detailed notes on company analysis: he published analyses of financial statements, argued with popular opinions and honed his own style of thinking. Over time, his passion grew into a profession: in 2000, he founded the hedge fund Scion Capital.
Scion’s early years yielded impressive results on a classic value approach, culminating in the 2005–2007 short bet against mortgage-backed securities: Burry took a hard look at the credit pools, the terms of the securitizations, and realized that the risks were underpriced by the market. He used credit default swaps to hedge the position against collapse, and achieved a remarkable result for the fund and its investors.
After the crisis, Burry temporarily stepped away from capital management, then returned through Scion Asset Management. Since then, he has remained an independent thinker, which allows him to take unpopular positions, write open letters to company management.
Michael Burry's Basic Strategy
Burry's style is best described as "reasonable value with a margin of safety." It's not about hunting for "cheap" assets at any price, but rather looking for situations where the market price is significantly lower than a conservative valuation of the business. That is, he finds undervalued companies whose stock prices are lower than their real value.
The work is based on fundamental analysis. He starts not with the chart, but with the reporting, analyzing: balance sheet, profit and loss statement, cash flows, debt structure, asset quality. It is not the beautiful wrapper that is important, but how the business makes money, what its obligations are and what its survival rate is in different scenarios.
The second pillar is the catalyst (signal). A “cheap” asset itself can remain undervalued for quite a long time. Burry looks for events that can “unlock” the company’s potential and become a signal for growth: a decision on restructuring, a change in capital policy, a change in management, industry growth, or information about development plans. If the catalyst is clear and measurable, the idea gets priority.
The third element is strict risk management. Before buying, Burry answers the question - What risk does he include in a new deal if events do not go according to plan. At the same time, he prefers concentrated portfolios: focusing on certain sectors of the economy. But this does not prevent him from using hedging to reduce risks.
The fourth element is independence of thought. Burry is not afraid to be an “early investor.” He accepts that the market may not agree with his thesis for a long time, and therefore builds in a reserve of time and patience in advance.
This approach requires internal discipline: not to check the idea ten times a day against the stock price, but to regularly recheck it against the facts - reports, contracts, cash flows. If the facts are on the side of the idea, it is not cancelled by a temporary divergence from sentiment.
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 shows that investing is not about reacting to headlines, but about depth of analysis and patience.
The secret to success consists of three simple things: reading the original sources and trusting only your own calculations; setting up risk rules in advance and sticking to them; having the courage to go against the crowd when the facts are on your side.
Start with an understanding of the business, not a price estimate; demand a “safety margin” in the valuation; look for a signal that can reveal the value; formulate a plan before the purchase, not after. This approach does not guarantee “instant miracles,” but it increases the chance of a meaningful and repeatable result - this is why Michael Burry is respected even by those who do not share his specific ideas.
