Michael Burry's Contrarian Habits - Investing in the Unloved

Analyzes financial statements and market data exhaustively to identify undervalued assets. Focuses on understanding business models, cash flows, and industry dynamics through primary documents.

Actively seeks investments opposed to market consensus, often targeting sectors with widespread pessimism. Requires emotional detachment from popular trends.

Purchases assets at significant discounts to calculated intrinsic value. Maintains buffer against analysis errors or market volatility through conservative valuation.

Identifies opportunities in corporate restructurings, spin-offs, or distressed assets. Analyzes legal/financial complexities of unique corporate events.

Monitors large-scale economic shifts like demographic changes or resource scarcity. Connects macroeconomic developments to specific investment theses.

Seeks companies with unappealing characteristics that deter most investors. Focuses on fundamentals over superficial qualities.

Analyzes financial institutions' lending practices rather than borrower behavior. Tracks credit availability and underwriting standards.

Prioritizes protecting principal over maximizing returns. Uses position sizing and risk assessment to limit downside.

Maintains objective decision-making through market cycles. Uses systematic processes to counter cognitive biases.

Holds positions through short-term volatility to realize full value. Avoids reacting to quarterly fluctuations or news cycles.

Focuses portfolio on highest-conviction ideas. Balances diversification with meaningful position sizes in best opportunities.

Constantly reviews new SEC filings, industry reports, and global news. Maintains updated watchlists of potential opportunities.

Models investment outcomes under various economic conditions. Assesses vulnerability to interest rates, inflation, and regulation.

Reviews executive compensation structures and insider transactions. Assesses alignment between leadership incentives and shareholder value.

Maintains sufficient cash reserves to withstand margin calls or redemptions. Avoids overextension during market dislocations.

Studies historical market manias and crashes. Identifies recurring psychological dynamics in crowd behavior.

Monitors legislative developments affecting target industries. Positions ahead of policy shifts impacting valuations.

Assesses durable competitive advantages protecting profits. Analyzes patents, switching costs, and network effects.

Tracks short seller activity and borrow costs. Identifies heavily shorted companies with turnaround potential.

Examines cost structures and capital allocation discipline. Seeks companies optimizing resource use.

Ignores price momentum indicators and pattern analysis. Focuses solely on fundamental valuation metrics.

Maintains contacts across industries for ground-level insights. Shares ideas with trusted peers for feedback.

Identifies overvalued assets with fundamental flaws. Analyzes debt structures and cash flow sustainability.

Allocates capital based on conviction level and risk parameters. Avoids overexposure to single ideas.

Parses corporate filings and prospectuses for hidden risks. Scrutinizes footnotes and contractual obligations.

Verifies reported cash generation quality. Detects accounting gimmicks or unsustainable practices.

Analyzes where industries are in economic cycles. Avoids buying cyclical companies at peak valuations.

Relies on public filings over executive presentations. Reduces bias from charismatic leadership.