Michael Burry is the guy with Asperger’s and a glass eye in Michael Lewis’s The Big Short. In 2005: Burry got Goldman Sachs and Deutsche Bank to build credit default swaps so he could short subprime housing. He made a ton of money for his investors. Joel Greenblatt was one of them. Burry read You Can Be a Stock Market Genius. He “hated the title but liked the book.” Burry didn’t know Greenblatt. And Greenblatt only knew Burry from his posts on a stock message board. Burry’s writing made a better impression than Burry ever could. When Greenblatt met Burry he gave him $1 million to invest.
I read Burry’s letters to investors. He’s a lot like early Warren Buffett. The difference is Burry had 40% cash in Q4 2001. Early Buffett never had that much. But early Buffett never saw those P/E ratios.
What’s the similarity?
Illiquidity. Benjamin Graham, Warren Buffett, and Michael Burry love illiquid stocks. In Q3 2001 Burry said he owned stocks where a 2,500 share sale could “torpedo” that stock’s market value. He also mentions a stock that “rarely trades”. Buffett says the same thing in his partnership letters.
During the subprime short: Burry took his 4-year old son to a psychologist. She diagnosed the son and his father with Asperger’s. Burry was in his 30s when he was diagnosed. I was 17.