The Origins of Michael Burry, Online - NYTimes.

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MARCH 22, 2010, 11:16 AM

The Origins of Michael Burry, Online

By CHRIS 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 merica entered a collective swoon at the marvels of the tech bubble. Luckily, Mr. Burry!s apprenticeship occurred in the late "##$s, so unlike Paul %udor Jones, who has systematically hunted down every version of the documentary that featured him in "#&' (and has kept it off most of the )eb*, parts of Mr. Burry!s 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 "###, about the time the word +blog, was first heard in the mainstream*. )hile that particular site - www.valuestocks.net - no longer e.ists, there!s still a trace of it in this blurb at /orbes, dating from 0$$$1 2upposedly for value investors, though )arren Buffett might not agree with this definition of value. 3un by a 0&4year4old neurology resident, 5r. Michael Burry, 6aluestocks.net showcases Burry!s own 78$,$$$ portfolio, which includes some surprising choices including Pi.ar, the maker of %oy 2tory. 9as good information on how to identify net4net stocks (trading for less than assets minus all conceivable liabilities*. ccompanying all this are Burry!s incisive reports, as good as anything from )all 2treet. :ne of the site!s best features is a list of essential finance te.ts, including thumbnail reviews and links to ma;on.com (Burry!s only source of revenue, since he doesn!t accept banner ads* But further back, for "##<40$$$, you hit gold. Mr. Burry was a prolific poster to a forum called techstocks.com. )ith a name like that, there weren!t many value investors, so Mr. Burry had to found his own thread for it. 9e opened it up with uncharacteristic fervor1 )hat we are looking for are value plays. :bscene value plays. In the =raham tradition. :r here!s one of those thumbnail reviews1 %ry +)hy 2tocks =o >p (and 5own*, by )illiam Pike for the basics on fundamental measures of value. Because it isn!t 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. las, if it was as easy as buying a book, we!d all be rich. But Mr. Burry does more than summari;e books. 9e gets into his strategy, and his strategy, as early as "##', already involved shorts. )hat!s there to understand about @okeA %he business is a BI22 model. %his gets to my value?short strategy. )hen people start claiming a business deserves a special valuation above all reasonable fundamental analysis (because of the +franchise,, because there!s so little institutional ownership for a big cap growth stock, because Buffett!s in it, because global e.pansion will provide endless opportunity, because 3:C is so damned high, because it!s nearly a monopoly, because Buffett!s in itD*, that!s a short, IM:.

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4/30/2013 2:26 PM

The Origins of Michael Burry, Online - NYTimes.com

http://dealbook.nytimes.com/2010/03/22/the-origins-of-michael-burry-on...

I Eust read a bunch of =raham, and he doesn!t deal with shorts (I assume it would be +speculation,*, but CM% isn!t all that its panned to be either, IM:. Just trying to think independently, Mike %hat!s right, he!s shorting )arren Buffett!s bets because of the Buffett factor (Mr. Buffett would probably do the same, if he could*, and he!s shorting them for the basic reasoning that drives all value investing1 it!s not about getting a good company - it!s about getting a good company cheap. )hy anyone does anything else is a problem even Mr. Burry!s analysis won!t crack. F Chris V. Nicholson =o to 3elated rticle from 6anity /airGG =o to 3elated Item from 2treet @apitalistGG

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4/30/2013 2:26 PM