Any fans of the 2015 film ,The Big Short will know the character of Michael Burry. But, is he based on a real person? Who is it? And what is he up to now?
The Big Short, directed by Adam McKay, has a star-studded line-up including Christian Bale, ,Steve Carrell, ,Ryan Gosling and Brad Pitt. It is based on the non-fiction book written in 2010 by Michael Lewis, which describes the real estate market of the 2000s, in particular the ,financial crisis of 2007-2008.
The film was released by Paramout Pictures in December 2015 to critical success, grossing $133 million and winning the Academy Award for Best Adapted Screeplay.
The character of Michael Burry is a hedge fund manager at Scion Capital who anticipates a collapse in the US housing market and was played by Christian Bale.
In contrast to some of the other characters portrayed in The Big Short, Michael Burry did not ask for his name to be changed. So yes, he is real person.
In the film, he is portrayed as a slightly eccentric hedge fund manager. He prefers shorts and bare feet to smart suits and he believes the US housing market is a ,bubble that is going to pop.
He looks to create a credit default swap market, so that he can profit from the housing market collapse. This idea is dismissed by the banks as foolish, but they are happy to take the other side of his bet.
He ended up betting more than $1 billion, causing some of his clients to put a lot of pressure on him to reverse his position. But he stuck to his guns and refused to change his opinion.
He was of course proved correct in his analysis, and the fund’s value increased by 489% from 2000 to 2008.
Michael Burry was born in 1971 in San Jose, California. He attended the University of California, where he studied economics, and then went on to the Vanderbilt University School of Medicine, where he earned his medical degree.
In his spare time, he studied investing and left his work at Standford Hospital to start his own hedge fund, Scion Capital, in 2000.
He initially funded it with inheritance and family loans, but his reputation grew and the fund’s returns soon brought in more investment.
In his book, Michael Lewis states that:
“In his first year, 2001, the S&P fell 11.88%. Scion was up 55%. The next year, the S&P 500 fell again, by 22.1%, and Scion was up again: 16%. The next year, 2003, the stock market finally turned around and rose 28.69%, but Burry beat it again, with returns of 50%. By the end of 2004, he was managing $600 million and turning money away.”
Burry liquidated his short positions in 2008 and closed Scion Capital that year, in order to focus on his personal investments.
In 2010, he wrote in The New York Times that the subprime markets of 2003, 2004 and 2005 showed a growing risk, which would have been clear to anyone who was looking closely. In the article, he blamed federal regulators for relying only on a small group of advisors and not heeding others’ warnings.
A new hedge fund, Scion Asset Management, was founded by Burry in 2013. In 2020, it had $121 million invested in Alphabet Inc. and $24.4 million invested in Facebook.
Burry is also a keen investor in farm land, gold and water. He is quoted as saying: “Fresh, clean water cannot be taken for granted.”
In 2021, Michael Burry stated that he was heavily short Tesla, identifying a ,bubble and predicting a collapse. At the end of the year (after a 100% rise in Tesla’s value), he revealed he was no longer short Tesla.
IMDb reported that Christian Bale wore Michael Burry’s actual cargo shorts and t-shirt in the film, and that he hoped the two of them could go to the Los Angeles premier together. Christian Bale is quoted as saying "I really want to sit next to him and see if he’s going to punch me in the f**king face”.
Yes. When he was two years old, he developed retinoblastoma in his left eye, which is cancer of the retina. He now has a prothetic eye.
This exchange with some representatives of Goldman Sachs takes some beating, especially with the benefit of hindsight, which helps to explain the film’s appeal.
Michael Burry: I want to buy swaps on mortgage bonds. A credit default swap that pays off if the underlying bond fails.
Goldman Sachs: You want to bet against the housing market?
Michael Burry: Yes.
Goldman Sachs: Why? Those bonds only fail if millions of Americans don’t pay their mortgages. That’s never happened in history… It seems like a foolish investment.
Michael Burry: Well, based on prevailing sentiment, the market, the banks and popular culture, yes, it’s a foolish investment. But, everyone’s wrong.
Goldman Sachs: This is Wall Street, Dr. Burry. If you offer us free money, we are going to take it… We’re prepared to sell you 5 million in credit default swaps on these mortgage bonds.
Michael Burry: Could we make it a 100 million?
Have you seen The Big Short? What did you think?