7/27/2019 The Origins of Michael Burry, Online

1/2

6/24/13 The Origins of Michael Burry, Online - NYTimes.com

dealbook.nytimes.com/2010/03/22/the-origins-of-michael-burry-online/?_r=0&pagewanted=print

MARCH 22, 2010, 11:16 AM

The Origins of Michael Burry, Online

ByCHRIS V. NICHOLSON

In his new book, Michael Lewis profiles a hedge fund manager, Michael Burry , who started

betting on the subprime crisis long before John Paulson, let alone the rest of us.

Mr. Burry , we are informed, was a resident in neurology when he slowly learned the ropes of

value investing, even as America entered a collective swoon at the marvels of the tech

bubble.

Luckily, Mr. Burrys apprenticeship occurred in the late 1990s, so unlike Paul Tudor Jones,

who has systematically hunted down every version of the documentary that featured him in

1987 (and has kept it offmost of the Web), parts of Mr. Burrys younger self are still easy to

find.

Before founding his hedge fund Scion Capital, now closed to new investors and its site

inactive, Mr. Burry started a blog (that was 1999, about the time the word blog was first

heard in the mainstream).

While that particular site www.valuestocks.net no longer exists, theres still a trace of it

in thisblurb at Forbes, dating from 2000:

Supposedly for value investors, thoughWarren Buffett might not agree with this

definition of value. Run by a 28-year-old neurology resident, Dr. Michael Burry,

Valuestocks.net showcases Burrys own $50,000 portfolio, which includes some

surprising choices including Pixar, the maker of Toy Story. Has good information

on how to identify net-net stocks (trading for less than assets minus all

conceivable liabilities). Accompanying all this are Burrys incisive reports, as good

as anything from Wall Street. One of the sites best features is a list of essential

finance texts, including thumbnail reviews and links toAmazon.com (Burrys onlysource of revenue, since he doesnt accept banner ads)

But further back, for 1996- 2000, you hit gold. Mr. Burry was a prolific poster to a forum

called techstocks.com. With a name like that, there werent many value investors, so Mr.

Burry had to found his own thread for it. He opened it up with uncharacteristic fervor:

What we are looking for are value plays. Obscene value plays.

In the Graham tradition.

http://www.forbes.com/forbes/2000/0522/6512066a.html?dbkhttp://www.businessinsider.com/watch-the-infamous-paul-tudor-jones-trader-documentary-2009-7#paul-tudor-jones-trader-part-1-1http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004http://dealbook.nytimes.com/http://dealbook.nytimes.com/http://dealbook.nytimes.com/http://siliconinvestor.advfn.com/readmsg.aspx?msgid=455844http://topics.nytimes.com/top/news/business/companies/amazon_inc/index.html?inline=nyt-orghttp://topics.nytimes.com/top/reference/timestopics/people/b/warren_e_buffett/index.html?inline=nyt-perhttp://www.forbes.com/forbes/2000/0522/6512066a.html?dbkhttp://dictionary.oed.com/cgi/entry/00316671http://www.scioncapital.com/index__letters.htmlhttp://www.businessinsider.com/watch-the-infamous-paul-tudor-jones-trader-documentary-2009-7#paul-tudor-jones-trader-part-1-1http://topics.nytimes.com/top/reference/timestopics/people/p/john_paulson/index.html?inline=nyt-perhttp://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004http://dealbook.nytimes.com/author/chris-v-nicholson/http://dealbook.nytimes.com/

7/27/2019 The Origins of Michael Burry, Online

2/2

6/24/13 The Origins of Michael Burry, Online - NYTimes.com

dealbook.nytimes.com/2010/03/22/the-origins-of-michael-burry-online/?_r=0&pagewanted=print

Copyright 2013The New York Times Company Privacy Policy NYTimes.com 620 Eighth Avenue New York, NY 10018

Or heres one of those thumbnail rev iews:

Try Why Stocks Go Up (and Down) by William Pike for the basics on

fundamental measures of value. Because it isnt offering a system, it is a good

reference across systems and may be of help in finding your own system. I think

everyone finds that he/she comes up with his/her own system after a few years.

Alas, if it was as easy as buying a book, wed all be rich.

But Mr. Burry does more than summarize books. He gets into his strategy, and his strategy,

as early as 1997, already involved shorts.

Whats there to understand about Coke? The business is a KISS model. This gets

to my value/short strategy. When people start claiming a business deserves a

special valuation above all reasonable fundamental analysis (because of the

franchise, because theres so little institutional ownership for a big cap growth

stock, because Buffetts in it, because global expansion will provide endless

opportunity, because ROE is so damned high, because its nearly a monopoly,because Buffetts in it), thats a short, IMO.

I just read a bunch of Graham, and he doesnt deal with shorts (I assume it would

be speculation), but EMT isnt all that its panned to be either, IMO.

Just trying to think independently,

Mike

Thats right, hes shorting Warren Buffetts bets because of the Buffett factor (Mr. Buffett

would probably do the same, if he could), and hes shorting them for the basic reasoning thatdrives all value investing: its not about getting a good company its about getting a good

company cheap.

Why anyone does anything else is a problem even Mr. Burrys analysis wont crack.

Chris V. Nicholson

Go to Related Article from Vanity Fair>>

Go to Related Item from Street Capitalist>>

http://streetcapitalist.com/2010/03/24/learning-from-michael-burry/http://www.vanityfair.com/business/features/2010/04/wall-street-excerpt-201004http://en.wikipedia.org/wiki/Efficient_market_theoryhttp://en.wikipedia.org/wiki/Return_on_equityhttp://en.wikipedia.org/wiki/Keep_it_simple,_stupid!http://siliconinvestor.advfn.com/readmsg.aspx?msgid=1218474http://www.nytimes.com/http://www.nytimes.com/privacyhttp://www.nytco.com/http://www.nytimes.com/ref/membercenter/help/copyright.html