Michael Burry is an American physician, investor, and hedge fund manager. He was the founder of the hedge fund Scion Capital, which he directed from 2000 to 2008, before closing the company to focus on his own personal investments. Burry was one of the first investors to recognize and benefit from the impending crisis of high-risk mortgages.
Now, Michael Burry, of The Big Short, sees a bubble in passive investment.
Certainly, Michael Burry rose to fame and fortune betting on mortgage securities before the 2008 crisis, an operation immortalized in “The Big Short”. Now, there is a possibility that he is right about a new opportunity he sees. That’s right, Burry sees another contrary opportunity that emerges from what he calls the “bubble” in passive investment. As the money is poured into traded funds on the stock exchange and other index-tracking products that lean toward large companies, Burry says that lower value shares are being unduly neglected worldwide.
It should be noted that, during the last three weeks, its Scion Asset Management has revealed significant stakes in at least four small-cap companies in the United States and South Korea, adopting an activist approach in three of them.
Expectation
Active money managers have bled assets in recent years when investors rebelled against high rates and disappointing returns, a trend that led Moody’s Investors Service to predict that index funds will outperform active management in the United States. by 2021. The change has coincided with a period of several years underperformance for value shares and, more recently, for small capitalizations.
Thus, it is understood that the precipitation in indexed funds has punished small-capitalization shares
“There is all this opportunity, but very few active managers”
Also, Burry, who is best known for his bearish bets, said his passion is “to invest a lot of time in undervalued and overlooked situations”. In addition, I affirm that he is resorting to activism in some cases because there is no “critical mass of smaller value-seeking active managers.”
In this way, it is time to bring up that, during this month, Burry requested GameStop Corp., a video game vendor, and Tailored Brands Inc., a men’s clothing retailer, to repurchase shares. Shares of custom brands rose 7.6% and GameStop 4.9% in New York on Wednesday. Scion also recently increased its positions in two small-cap companies in South Korea, Ezwelfare Co., and Autech Corp., and revealed its intention to collaborate with the management of Autech, a manufacturer of delivery and ambulance trucks in which the company de Burry now has almost 10% stake.
Source: Heejin Kim and Myungshin Cho | Bloomberg
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