Michael Burry Net Worth 2021 | What The Financial Genius Who Called The Housing Collapse In 2021 Invests In Today
- Michael Burry Net Worth: $300 Million
- Nationaltiy: American
- Born: 19th June 1971 (50 Years Old)
- Profession: Investor And Physician
- Children: 2
Michael Burry's net worth in 2021 is approximately $300 million.
The financial investor is best known for predicting the collapse in the US sub-prime mortgage market in the late 2000s.
Not only did the financial analyst predict the collapse he also bet against the mortgage market, much to the astonishment of his financial peers before the crises.
His story was later written about by Michael Lewis and was even made into the movie, The Big Short, where Christian Bale played the introvert investor.
Here we will look at Michael Burry's life and how he achieved the massive financial success that he has.
Early Life and Childhood
Not much is known about Michael Burry’s parents or early childhood. He grew up in San Jose, California and was born in the very same city.
Does Michael Burry Have a Glass Eye?
When he was two years old, Michael Burry had retinoblastoma, which is an eye cancer that is common in children under the age of 5. Unfortunately for Burry, this meant he had to have his left eye removed and so he wears an artificial eye.
As a teenager, Burry went to Santa Teresa High School, which is a large public high school in southern San Jose. School came easy; he had a great attention span and the ability to learn whether alone or with teachers.
After graduating high school, Burry went on to study pre-med and economics at UCLA. Subsequently, he got his M.D. from Vanderbilt University School of Medicine. He began a neurology residency at Stanford University Medical Center in California.
During this time, Burry stayed up for two nights straight in between hospital shifts to try to fix his computer. When he told his superiors, they sent him to a psychiatrist who said he had bipolar disorder.
But, having never felt depressed, Burry knew he had been misdiagnosed.
He didn’t finish his residency; while he loved studying medicine and found it easy, he thought that the practice of it was boring.
When Michael Burry was not working, his attention was on financial investment, which was only a hobby at this time. And even though he didn’t practice medicine, the Medical Board of California allowed Burry to keep his physician license active.
A Change In Career
Despite an extensive education in medicine and residencies with neurology and pathology, Barry left the medical profession to begin a hedge fund.
He already had a reputation since he had demonstrated success in value investing, an investment strategy that involves buying seemingly underpriced securities.
Value investors are often termed 'contrarian investors', i.e. those who are not afraid to go against popular public sentiment. This style of investing fit well with the young Burry's personality and would also play a pivotal role in his future success.
Burry was really successful and began to have companies like White Mountains Insurance Group and Vanguard interested. Joel Greenblatt, a prominent investor, also showed his interest.
In November 2000, Burry shut down his website and started his hedge fund Scion Capital (which is now defunct).
It was funded by Burry's family and an inheritance. Burry took his company name from The Scions of Shannara, a fantasy novel written by Terry Brooks and published in 1990.
For those who invested in him, he achieved extraordinary profits very quickly. His first full year was in 2001. In this year, the S&P 500 (Standard and Poor’s 500) fell 11.88%.
However, Burry’s hedge fund Scion rose 55%, which was phenomenal.
How Did Burry Achieve the Returns He Did?
With the internet bubble at its peak, Burry shorted overvalued tech stocks.
In finance, shorting means investing so that you profit if an asset’s value falls. Typically, when people invest, they profit if an asset’s value rises – this is called a “long” position.
Burry realised that the technology stocks were rising to levels that didn't match their earnings and in some cases companies were valued to be worth millions of dollars and had no earnings.
For Burry, this was a clear opportunity to short the technology sector.
The following year (2002), Burry did even better.
With the S&P 500 falling 22.1%, Burry’s Scion managed to rise by 16%.
Twelve months later, the stock market recovered and rose by 28.69%, however, Burry still managed to beat it with his investments rising by 50%!
In just four short years, Michael Burry was having to turn money away due to already managing $600 million.
From 2005, Michael Burry turned his attention to the subprime market.
He analysed the practices of mortgage lenders between 2003 and 2004, which led to him predicting that the real estate market would collapse from 2007.
With subprime mortgages (those lent to people with lower credit ratings), Burry predicted that when the original “teaser” rates reached renewal and were replaced with higher rates after a couple of years, they would start to lose value.
Burry’s conclusion led him to short the subprime market.
How Much did Michael Burry Make from Credit Default Swaps?
He convinced Goldman Sachs and others to sell credit default swaps (CDSs) to him against subprime deals he predicted to be vulnerable.
But this deal wasn't as simple as waiting for the housing market to crash and make money. There was still a huge amount of risk involved whilst Burry and his investors waited for the market to crash.
Every month that the market didn't crash, Burry's hedge would pay a premium to the banks. This premium was amounted to millions of dollars and Burry couldn't afford to get his timing wrong.
There is a great scene in the movie, The Big Short, which shows Wall Street bankers mocking and laughing at Burry, believing that he was essentially wrong and giving away his fund's capital.
They weren't laughing for long.
Once again, Burry was correct and saw a great personal profit of $100 million with more than $700 million gained in profit for his investors.
Eight Years of Scion Versus the S&P 500
In the same time period between 2000 and 2008, Scion Capital recorded returns of a whopping 489.34% while the S&P500 returned less than 3%.
After such successes, Burry liquidated Scion Capital to turn his attention to his personal investments.
Scion Asset Management
Burry decided to reopen his hedge fund in 2013 under the name of Scion Asset Management.
He has invested in farmland, gold, and water.
People were able to see a glimpse into Scion Asset Management’s portfolio due to 13F forms. These are required by the SEC when there are fund holdings topping $100 million.
In 2019, Scion’s 13F showed Burry held many large-cap stocks as well as $103,528,000 in assets.
Most recently, Scion Asset Management has invested $121 million in Alphabet Inc. (the parent company of Google) and $24.4 million in social media giant Facebook.
These were the fund’s largest investments.
Michael Burry’s Personal Life
Little is known about Burry’s personal life.
He still resides in California but lives in Saratoga, which is only around 13 miles directly west of his childhood city.
Saratoga is well known locally for its high-end restaurants and wineries while being a city that has a small-town feel.
In 2016, Coldwell Banker Home Listing Report said the town had the most expensive houses in the whole of the U.S.
Also, it is believed that over 70% of households here have an income over $100,000. The city is also ranked as one of the most educated small towns in America.
As you can see, Michael Burry fits in well with the demographic. Another notable person who lives in Saratoga is Steven Spielberg.
The Difference with Burry
Why was it that Burry was succeeding massively when the S&P 500 wasn’t? Why could he see what others couldn’t? How did Michael Burry net worth get so high?
Burry felt different his whole life. He knew he only had sight in his one working eye, but he still found it difficult to look people in the eye.
This was worse when people were talking to him too. He felt awkward due to his noticeable left eye. He assumed he found face-to-face interactions difficult because of this and he also struggled to read nonverbal signals.
He continued to blame his glass eye and was self-conscious, especially when other kids called him cross-eyed.
Social interaction was a challenge for him with sports too.
Despite being a good athlete, physically brave, well-built, and competitive, he didn’t like team sports at all. He used his eye as an excuse – after all, his depth perception was off, and he had limited vision in his periphery.
He liked swimming because it didn’t require interaction.
Consequently, he spent a lot, if not most, of his time alone. He considered himself to be someone without friends.
After all, he’d managed to go through high school, UCLA, and med school without creating any lasting bonds.
He did, however, return to his alma mater in 2012 as a guest keynote speaker to talk about his experience in finance and life.
Michael Burry and Love
Yet, for someone who prefers being alone, Burry has been married twice.
His first wife was of Korean descent.
He is still married to his second wife, a Vietnamese American who he met internet dating.
In his dating profile, he was rather frank. He described himself as “a medical resident with only one eye, an awkward social manner, and $145,000 in student loans.”
Michael Burry's Son – and His Asperger Diagnosis
A pre-school teacher noticed certain behaviours in Nicholas, Burry’s four-year-old son.
She noted that he didn’t sleep well, he wasn’t able to concentrate on the teacher when she was talking, and he had a very active mind.
Burry, being a doctor himself, wondered if she was hinting at A.D.H.D but he had strong feelings and thought it was being over-diagnosed and believed that many parents sought a medical reason to explain poor behaviour in their children.
Burry watched his son more closely and did come to realise that he did have trouble with social interactions, despite being intelligent. His wife managed to persuade Burry to get his son tested. The result was Asperger’s syndrome. On learning of his son’s diagnosis, Burry begin to recognise the traits in himself.
Quotations by Michael Burry
Like many scientists Burry focus' on finding out the truth of a situation and cares little about accolades and awards.
That is what motivates him to look further than anyone else, finding out the truth and it is a mindset that has served very well.
Here are some of the best Michael Burry quotes:
"I don't believe anything unless I understand it inside out. And even if I understand something, it is not uncommon that I disagree with the accepted view (even if it's a Nobel Laureate)".
"I have always believed that a single talented analyst, working very hard, can cover an amazing amount of investment landscape, and this believe remains unchallenged in my mind".
“It took all my energy to look someone in the eye. If I am looking at you, that’s the one time I know I won’t be listening to you.”
“My compliments tended not to come out right. I learned early that if you compliment somebody it’ll come out wrong. For your size, you look good. That’s a really nice dress: it looks homemade.”
The above quote shows the insecurities that even a multi-million pound financial analyst can have and want to improve upon. Burry has always found social interaction to be a difficult proposation.
"My natural state is an outside. I've always felt outisde the group and I've always been analyzing the group".
"the late 90s almost forced me to identify myself as a value investor, because I thought what everbody else was doing was insane".
"The borrowers will always be willing to take a great deal for themselves. It's up to the lenders to show restraint, and when they lose it, watch out"
“My nature is not to have friends. I’m happy in my own head.”
Michael Burry Net Worth Summary
- Michael Burry grew up in San Jose, California where, at the age of two, he lost an eye due to retinoblastoma. He has worn an artificial eye ever since.
- Burry found many parts of his schooling easy, particularly if he was interested in the subject. However, he struggled socially and found it difficult to make friends.
- He studied to become a physician. Despite being great at the learning side of things, he struggled with the practical side.
- Burry began a hedge fund and found a talent that meant he was much more successful than the S&P 500.
- As his investments grew, so did his profile, and he even had to turn down offers.
- In his personal life, Michael Burry married twice. He had two children with his second wife.
- When Burry’s son was diagnosed with Asperger’s, he recognised the traits in himself. Having always struggled socially, he presumed it was because of his lack of self-confidence because of his eye.
- It could be said that Michael Burry’s net worth and success is actually down to the fact that he is on the autism spectrum, having obsessed for a long time on certain aspects of the financial markets that led him to gain his net worth of $300 million.