Michael Bury is an experienced investor.
He is one of the legends of Wall Street, making him one of those financiers whose every word is watched intently by millions of investors.
Investors watch his strategies and the business choices he makes. When you acquire shares of a company, it is common for the prices of those shares to rise. Such was the case recently with Geo Group shares (GEO) – Get a free report.
He bought, through his firm Scion Asset Management, 501,360 shares worth $3.31 million in the company, which invests in private prisons and mental health sites, as of June 30, according to regulatory filings.
Since he disclosed his stake in Geo on August 15, the group’s shares have risen 34.2%. Geo Group shares have gained 19% since January.
The huge bet
The investor earned his reputation as a stock trader by successfully betting on the U.S. housing crash in 2007. He then became a household name after the 2015 film “The Big Short,” which depicted his bet on the subprime crash. , which triggered the 2008 financial crisis.
What most people tend to forget is that on the other side of Bury’s mortgage-backed debt obligation (CDO) bet, there was a prestigious investment bank Goldman Sachs. CDOs are loans, mortgages and other assets that investment banks package and offer to institutional investors.
In the book “The Big Short: Inside the Doomsday Machine” by Michael Lewis, it is said that Bury decided to bet on the implosion of the subprime market after noticing that many people could not actually afford to pay their mortgages. But lenders were finding new financial instruments to justify providing more money.
“It was a clear sign that lenders had lost it, constantly lowering their own standards to increase loan volumes,” Bury said.
Lenders sold these loans to Goldman Sachs, Morgan Stanley, Wells Fargo and other “too big to fail” banks, which packaged them into bonds and sold them off. These practices nearly brought the financial system to its knees. They caused the worst financial crisis since 1929.
For several months, Bury has again been sounding the alarm about the state of the economy. He thinks he will inevitably fall into recession. He says he foresees a household debt crisis that would pose a serious threat to the economy.
“Remember the savings glut problem? Enough more. The anti-covid helicopter money has taught people to spend again and it’s addictive. Winter is coming,” Bury warned last August.
“Winter is Coming” appears to be a reference to the HBO series Game of Thrones. The characters use the phrase as a warning.
A mystery bet
“13.48% of stocks closed above their 200 days moving average yesterday,” Bury, who runs away hedge fund Scion Asset Management said on Twitter on Oct. 1. “The bottom in 2009 was 1.2%. The bottom in 2020 was 2.8%. Currently at 2007 levels.”
He then confirmed that dire forecast by liquidating nearly his entire US stock portfolio in the second quarter.
But he resumed stock purchase in the third quarter, according to regulatory filings. As of September 30, Scion’s portfolio of US-listed companies included six companies.
He bet on the Aerojet RocketDyne (AJRD) – Get a free reportCharter Communications (CHTR) – Get a free reportCorecivic (CXW) – Get a free reportGeo Group, Liberty Latin America (LILAB) – Get a free report and Qurate Retail. In total, its equity portfolio totaled $41.3 million, up $38 million from three months earlier.
A few days after revealing these new bets, Bury just sent out a cryptic message that suggests he’s also betting big on a crash, or a company stock, or an industry, or even an asset class.
“You have no idea how short I am,” Bury tweeted on Nov. 15. The tweet has since been deleted, as is often the case with all of his posts.
Bury did not disclose his position. It leaves social media users to speculate. They engaged in a guessing game mostly involving tech group names. Bury liquidated the Alphabet and Meta Platforms shares it held in the second quarter.
What is certain is that Bury has made headlines again because many are wondering if he is really talking about a bet or talking about his height. The financier is said to be 5ft 6in tall.
Short selling a stock is a bet that the stock price will fall.