Iconic Investor Insight of the week

For the week of July 11th

Today’s quote comes from Dr Michael J Burry. He was profiled in Michael Lewis’s book, “The Big Short” which later became a movie where Burry’s role was played by Christian Bale. He considers himself a value based investor who’s style is based on Graham and Dodd’s 1934 book “Security Analysis”. He once said, “All my stock picking is 100% based on the concept of a margin of safety”. He currently runs the hedge fund Scion Asset Management which manages nearly $292 million. His last reported 13F (the form hedge funds have to submit to the SEC) showed that his largest position (17.86% of his portfolio) was put option contracts on Apple.

Sometimes markets err big time. Markets erred when they gave America Online the currency to buy Time Warner. They erred when they bet against George Soros and for the British pound. And they are erring right now by continuing to float along as if the most significant credit bubble history has ever seen does not exist. Opportunities are rare, and large opportunities on which one can put nearly unlimited capital to work at tremendous potential returns are even more rare. Selectively shorting the most problematic mortgage-backed securities in history today amounts to just such an opportunity.

— Dr. Michael Burry