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Scion Asset Management


Poor Charlie
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So Scion is all Burry's own money now correct?

 

My understanding is Burry does take outside money. 

 

 

Filing is FYE 2015.  This is his first 13F since closing down Scion Capital in 2008.

 

 

 

I thought it interesting to see all the TBTF banks.  I remember him saying in an interview he doesn't invest in large financials because they're impossible to analyze.

 

 

 

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

 

I have nothing to back this up but I doubt Burry is generating anything close to the returns he did at Scion Capital.  This is not an indictment of his investing abilities, it's more a reflection of the market environment post financial crisis.  He tends to invest in very distressed equities and resource companies (a la fairfax) which have not done as well as they did pre-crisis. 

 

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

 

I have nothing to back this up but I doubt Burry is generating anything close to the returns he did at Scion Capital.  This is not an indictment of his investing abilities, it's more a reflection of the market environment post financial crisis.  He tends to invest in very distressed equities and resource companies (a la fairfax) which have not done as well as they did pre-crisis. 

 

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

Do you mind sharing Cornwall's returns ? Thank you in advance

Cheers

GK

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

I've observed that too and my hypothesis on this is that they have been taking the view that the crisis (in a broad sense) is still ongoing and have underestimated the power of central banks to cause equity bubbles, thereby underperforming the broad indexes.

 

Bridgewater/Dalio, on the other hand – who may not have spotted the CDS opportunity back in 2007 – have been working under the same assumption (i.e. an ongoing deleveraging) but anticipated very well the CB actions. Therefore, they've done extraordinarily well, especially with regard to their huge AUM. Same might be true for Soros and Druckenmiller (though I don't really know). Then there are guys who got bailed-out by CBs, some of them without really realizing it, and I'd argue this is true for a lot of value guys who bought in 2009. This is certainly true for WEB who knew exactly that he was bailed out, and also for Berkowitz, Ackman et al. of whom I think have not understood this.

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

 

I have nothing to back this up but I doubt Burry is generating anything close to the returns he did at Scion Capital.  This is not an indictment of his investing abilities, it's more a reflection of the market environment post financial crisis.  He tends to invest in very distressed equities and resource companies (a la fairfax) which have not done as well as they did pre-crisis. 

 

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

Do you mind sharing Cornwall's returns ? Thank you in advance

Cheers

GK

 

52% gross / 40% net

 

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

 

I have nothing to back this up but I doubt Burry is generating anything close to the returns he did at Scion Capital.  This is not an indictment of his investing abilities, it's more a reflection of the market environment post financial crisis.  He tends to invest in very distressed equities and resource companies (a la fairfax) which have not done as well as they did pre-crisis. 

 

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

Do you mind sharing Cornwall's returns ? Thank you in advance

Cheers

GK

 

52% gross / 40% net

Where do you find information on cornwall post crisis/do they file?

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The filing is as of 12/31/15, so that's before the big 30% drop in BAC.

 

Its possible that its leftover from investments made in 2012

 

Scion Asset Management began around Q4 2013. 

 

 

 

I think anyone who has read Burry will find that portfolio as stated very disturbing.  How can he be long BAC and C now?  There is something else going on here.

 

I have nothing to back this up but I doubt Burry is generating anything close to the returns he did at Scion Capital.  This is not an indictment of his investing abilities, it's more a reflection of the market environment post financial crisis.  He tends to invest in very distressed equities and resource companies (a la fairfax) which have not done as well as they did pre-crisis. 

 

More generally, it’s interesting to observe all the sub-prime 'heroes' post-crisis.  A surprising number have performed poorly over a multi-year period (Bass/Paulson/Whitney/Eisman/Whitebox/etc).  As far as I know only Cornwall Capital have maintained their impressive returns.   

 

I still think there are very few investors of Burry’s caliber.  He's one of only a handful of managers I would invest with.

 

Do you mind sharing Cornwall's returns ? Thank you in advance

Cheers

GK

 

52% gross / 40% net

 

Thanks Poor Charlie.  Sounds like what one should expect if what they say they are doing is still working.

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Just answered my own question - these are high cost shares :)

 

What do you mean these are high cost shares? You don't think Burry could see value in

BAC and Citi at huge discounts to tangible book value?

 

Like most of my thinking (:)) this is purely hypothesis-driven - Burry has consistently generated remarkable returns over the TR which can be reliably tracked.  Therefore I hypothesize he has continued to do so, and tried to reconcile that with the 13F which is admittedly just part of a single time point.  I asked myself why I would hold that portfolio.  And during 2008-09 I would have bought BAC and C (or think I would have - my dad did at least :)) because I would have assumed they'd be bailed out.  And leverage would work in my favor in that case.  Same for things like CYH/ HCA.  These are highly leveraged and inconsistent with Burry's classic aversion to debt.  My assumption is that this basket was a secular bet on US QE policy and a rebound in highly leveraged sectors that were beaten down during the dislocation.  Of course, it's also possible he's just been drinking heavily since "Big Short" times and is now buying up the same institutions he publically decries just to pass the time..

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As to the current attractiveness of BAC and C, while I think their capital position and asset quality are somewhat improved post-crisis, they are now caught up in the typical reflexive regulatory backlash that closes a credit cycle.  The derisking climate is going to substantially reduce the ROE and scope of operations for the megabanks.  Concurrently they will have greater difficulty seeking a second bailout which is why their stocks are in decline - secular credit close and no parachute.  Burry knows all of this, and has likely sold off his megabanks positions by now along with his almond farms and heaven knows what else.

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