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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 profilesa 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 offmost 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 siteinactive, 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 eists, there!s still a trace of it in thisblurb at

/orbes, dating from 0$$$1

2upposedly for value investors, though)arren Buffettmight 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 Piar, 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 tets, including thumbnail

reviews and links toma;on.com(Burry!s only source of revenue, since he doesn!t accept banner ads*

But further back, for "##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 I22model. %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 epansion will provide endless

opportunity, because 3:Cis so damned high, because it!s nearly a monopoly, because Buffett!s in itD*,

that!s a short, IM:.

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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

Origins of Michael Burry, Online - NYTimes.com http://dealbook.nytimes.com/2010/03/22/the-origins-of-michael-b

4/30/2013