In his 2001 Scion Capital Letter, Michael Burry outlined his investment strategy that focuses on individual investments, and expected returns. Here’s an excerpt from the letter:
I have no view on whether the market, broadly defined, will fall or rise during the coming year. At year-end, the situation certainly appeared dire. But it is well known that Wall Street climbs a wall of worry, making appearances, like past performance, no guarantee as to future results. The prudent view, in my opinion, is no view.
Rather, I prefer to look at specific investments within the inefficient parts of the market. I seek individual investments that will allow me to target total portfolio returns of at least 20% annually after fees and expenses on an annual basis over a period of years, not months. Such opportunities are more prevalent now than they have been in recent years, and I do not feel the current climate is particularly adverse with regard to the attainment of this goal.
The Fund maintains a high degree of concentration — typically 15-25 stocks, or even less. Some or all of these stocks may be relatively illiquid. As a result, apparent short-term returns may be adversely or positively affected by otherwise normal fluctuations in portfolio holdings.
While it has not been my observation that the Fund experiences undue volatility on a daily basis, there can be no certainty of this trend continuing. I do not view volatility as being in any manner a measure of risk, and hence the Fund is not managed to minimize volatility.
You can read the entire letter here:
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