원문 보기
Not long ago, shares in the software company HubSpot cost $682. This spring, they were 179, down almost three quarters. If you like a bargain, that looks like the January sales. Michael Burry, the investor who saw the 2008 crash coming, ran his numbers on it. His verdict, still four and a half times too expensive.
He would not be interested until somewhere around $40. That is the difference between a cheap share and a bargain. And the number Burry uses to tell them apart is the most practical idea in his whole newsletter. He calls it IV 15. It's a price tag. Below it, he buys. Above it, he waits, however good the story sounds.
And the logic behind it will change how you look at every share you are ever tempted to buy. I'm Adam Feather. I research tax residency and where your money actually sits for people who earn well and want to keep it. I read everything Burry publishes. I'm not a financial advisor and this is not financial advice.
Burry's valuations are his own estimates, and he gets things wrong like everybody else. First, what 15% a year actually does to your money. Then, how Burry puts a price tag on a share and why he thinks about it like a baseball player. Then, the fallen stars that are still not cheap. What he has actually bought and a simple version that you can use.
Let's start with the number itself because it's more powerful than it sounds. If your money grows by 15% a year for 15 years, it multiplies roughly eight times. £10,000 becomes about 81,000. The stock market as a whole has historically managed something closer to 10% a year before inflation. Over 15 years, that turns 10,000 into about £42,000 or dollars.
Perfectly nice, but 15% gets you nearly double that. Here is an easier way to picture it. At 15% a year, your money doubles roughly every five years. 10,000 becomes 20, then 40, then 80. Three doublings in 15 years. At 10% you only get two with a little bit left over. That gap is the whole game. Five extra percentage points a year sounds trivial, but over 15 years it separates a nice kitchen from a second home.
Or between retiring at 60 and retiring at some point possibly. So the rule is simple to state. Burry only wants to buy a share at a price where he can reasonably expect 15% a year for the next 15 years. That price is what he calls IV 15, intrinsic value at 15%. Here is the important bit. Whether you get 15% depends far less on the company than on the price you pay.
A wonderful business bought at a silly price can give you 2% a year. A boring one bought cheaply can give you 20. Which brings us to part two, the price tag. The name admittedly sounds less like an investment rule and more like something that you would be hooked up to in hospital, but stick with me.
So how does he work out the price tag? This is where most people expect a magic formula, but there is not one. There is an awful lot of careful, slightly grumpy accounting. Burry is keen to say what IV 15 is not. It's not a simple price to earnings ratio, the number that you see on every finance website.
He even apologizes to Benjamin Graham, the father of value investing, for not using what he calls a 1940 version of value. A share that looks cheap on paper is often cheap for a very good reason. Instead, he starts with owners earnings, as he calls them. The cash a business really produces for its owners after you strip out the flattering bits.
He takes off the true cost of paying staff in shares. He questions how quickly the company says its equipment wears out. He assumes a normal tax rate, not a lucky one. It's rather like reading a house survey. When the estate agent says a property needs a little updating, Burry assumes it means a new roof.
And he counts the promises the company has made in its footnotes, such as leases and purchase commitments. His instruction to himself is to show no mercy and no bias. Then, he asks how long the business can keep growing and how fast. And since 2026, he adds a question nobody asked 5 years ago. How badly could artificial intelligence hurt this company?
He sorts companies into tiers by how exposed they are and gives the tiers names like castle, chapel, and stone. A castle has thick walls. Most software companies, he thinks, are somewhere between a chapel and a pile of stones. Paycom he rates as nearly a castle because it's plugged into a tangle of government tax and benefits systems that no chatbot can simply replace.
Hubspot, which sells marketing software to small businesses, he rates as stone because small businesses are exactly the customers most likely to swap software for an AI assistant. Another twist sets him apart from most analysts. Textbook valuation uses a company's own cost of borrowing and raising money to decide what its future cash is worth today.
Burry throws that out. He simply demands 15%, whatever the company's cost of money. It is his hurdle, not theirs. Put all of that into a model of the company's future cash and out comes a price. Below it, 15% a year looks achievable. Above it, it does not. And he doesn't stop at 15. For every share he studies, he works out the price for 10%, 12, 18, and 20 as well and sets price alerts at every one of those.
The lower the price, the higher the return that he would expect. There is one more rung worth knowing. Burry says a company's true value today usually sits somewhere around a 10% price or a bit above it. That has a sting in the tail. If a company buys back its own shares above that level, it's overpaying for itself and its remaining owners end up with less value per share, not more.
He calls that the depressing nuance of all the tech companies buying back shares at high prices. Which brings us to the next part, the fat pitch. Burry played baseball until he was 14 and still loves it. So, his map of the market is a baseball field. He plots every company he studies by how cheap it is against its IV 15 and how safe it is from AI.
The best landing zone he calls fat pitches. Then come those just outside and then the outfield where most of the market lives. For anyone in Britain who has never sat through a baseball game, it's a little bit like cricket but faster, louder and with considerably fewer sandwiches. The idea comes from one of the greatest hitters who ever lived, Ted Williams, the last man to bat over 400 in a full season back in 1941.
In plain terms, he got a hit four times in every 10 tries, which in baseball is close to superhuman. He divided the strike zone into 77 little squares, each the size of a baseball, and worked out how well he hit in each one. In his best squares, he hit around 400. In the worst corners, closer to 230.
So, he simply waited for pitches in his sweet spot. Warren Buffett loves this story and adds the best part. In baseball, if you watch three good pitches go by, you're out. In investing, there are no called strikes. You can watch a thousand pitches go past and nobody can make you swing. That is what IV 15 really is.
Not a forecast, a discipline for waiting. Part four, fallen but not cheap. This year, Burry used IV 15 on 46 software and payments companies. The backdrop was dramatic. On the 5th of February, Anthropic, the company behind the AI assistant Claude, launched tools that let AI agents do office work on their own.
Software shares fell 17% in 6 days as investors suddenly wondered who would need half of these programs. The Swedish payments company Klarna had already announced it was ditching both Salesforce and Workday. So, Burry went through them one by one, and the results are a master class in why a falling price is not the same as a low one.
Workday, which runs the payroll and HR systems for over 65% of the Fortune 500, had fallen from over $300 to about 116. On Burry's numbers, its IV 15 was about 21, still more than five times its price tag. Picture a house that has dropped from £300,000 to £116,000. You would assume it's a bargain. Burry's survey says it's worth about 21,000 and the roof is missing.
HubSpot, the one we started with, had fallen from 682 to 179. Its IV 15 was about 40. Its official operating profit was just 3% of sales and it ranked 41st out of 46. On his 100-point overall score, HubSpot got just under 16 and Workday about 11. In both cases, Burry added an exclamation mark, which for him is practically shouting.
Now, look at what the owners actually get. Workday sells about 9 and 1/2 billion dollars of software per year. After Burry's adjustment, its owners' earnings were about 260 million, less than 3 cents in every dollar of sales. HubSpot, about 2 and 1/2 cents. Salesforce, about 16. Paycom, the payroll company, about 30.
Salesforce, the giant of business software, had more than halved and still traded at more than twice its IV 15. At that price, Burry estimated you would earn about 8 and 1/2% per year, not terrible, but not a fat pitch, either. Salesforce also has a 50 billion-dollar plan to buy back its own shares, about 37% of its whole stock market value.
That sounds generous, but because the shares were trading close to what Burry thinks the business is worth today, he called the buyback essentially a wash. It is like paying full price for something in a sale and calling it saving. The closest to a fat pitch in that first batch was monday.com at only about a third above its IV 15, but Burry marked it down anyway because it paid its staff so heavily in shares.
Cheap is not enough if the owners keep getting diluted. The lesson for the rest of us is uncomfortable. A share that has fallen 70% can still be expensive. It only feels cheap because you remember what it used to cost. Your memory, however, is not evaluation. This brings us to part five, what Michael Burry actually bought.
What does a fat pitch look like when it arrives? In July, Burry bought two. The first was Flutter Entertainment, the world's biggest online betting company. If you are American, you know it as FanDuel. If you're British, you know it as Paddy Power and Betfair. He bought it about $107. The second was DraftKings, its main American rival, at around $26.
Together, they made up one full position in his portfolio. Both shares had been hammered by a new threat, prediction markets run by firms such as Kalshi and Polymarket and sold through trading apps like Robinhood. They let people bet on events by calling the bets financial contracts. That lets them operate in every American state without paying gambling taxes.
Burry's view is that a loophole sitting next door to one of the most heavily taxed and regulated industries in America will not stay a loophole for very long. Politicians, in his experience, rarely leave tax on the table. He also notes something he likes to see on a chart. As Flutter's share price hits its lows, the number of shares being traded was swelling.
Buyers were turning up. Someone, somewhere was starting to swing. There's something rather fitting about all of this. Michael Burry has spent his whole career betting against the crowd. Now, he owns the companies that take the crowd's bets. He also likes that Flutter is carrying a fair amount of debt, which sounds odd until you hear his reasoning.
The debt, he says, should force the company to stop buying other businesses and start paying down what it owes and buying back its own cheap shares. Sometimes a mortgage is the best financial discipline a person ever had. Flutter has not been plain sailing, by the way. In August, it reported that profits from its American business had fallen by about 70% as competition and those prediction markets hit.
Burry held on. A fat pitch doesn't mean the ball goes straight over the fence. So, what else is in his portfolio? Well, quite a lot, as it turns out, and almost none of it has anything to do with artificial intelligence. In his own words, they are the big, cheap stocks away from the AI fireworks. Here are a dozen of them and why he likes each one.
Start with the one closest to home for British viewers. Lululemon, the maker of very expensive yoga leggings, its shares have fallen hard, and Burry thinks it's far too cheap for the strength of its brand. I covered his case on Lululemon in a full video on its own. In October, Burry sold it to lock in a tax loss and bought Deckers, the company behind Ugg boots and Hoka running shoes, as a stand-in until he can buy it back.
Swapping yoga leggings for sheepskin boots is not a sentence I expected to say about a hedge fund manager. Then, Fannie Mae and Freddie Mac, the two giant American mortgage companies the government rescued in 2008. Burry has held them for a long time, betting that the government eventually lets them return to private hands on terms that favor shareholders.
When that decision comes, he says, it will land like Thor's hammer on everyone betting against them. So far, Thor is taking his time. And this month, Burry changed how he holds the bet. He sold the ordinary shares and bought the company's junior preferred shares instead, which stand further up the queue if Washington proves less generous than shareholders hope.
Fiserv is the dullest company on this list, and that is meant as a compliment. It runs the payment systems behind thousands of banks and shops. Burry admits that he bought it a little early, above the price his own rule called for, which he put in the low to mid 30s. But even at the price he paid, he expects returns in the low teens within a year.
He also noticed that the company's own directors were buying shares with their own money, which is always a good sign in Burry's eyes. Sprouts Farmers Market is an American grocery chain for people who read the labels. Organic, local, a bit posh. Burry says its shares are squarely in his fat pitch zone.
Its customers are loyal and well-off. It earns unusually high returns, and it buys back its own shares at sensible prices. So the number of shares keeps falling. It has kept hitting new lows, and Michael Burry has kept on buying. Zoetis is the world's biggest maker of medicines for animals, from pets to farm herds.
Burry has always admired it and says it now is extremely out of favor. In his words, it has no COVID bump, no AI attachment, and no mojo at the moment. That's exactly when he likes to buy. For both Sprouts and Zoetis, he has recently swapped some of his shares for long-dated options, a way of betting on a big rise over several years for a small upfront cost.
Aura Copper mines copper in Brazil. Michael Burry's reasoning for buying it is beautifully simple. Every data center the tech giants are building needs enormous amounts of copper, and big new copper discoveries have nearly dried up. A new mine takes around 18 years to get going. He also liked that the The new management made three difficult promises in 2025 and kept all three, which in mining is almost unheard of.
QXO is a building supplies company run by Brad Jacobs, a serial entrepreneur who built two large American companies before it. The shares are well down and Burry bought both the ordinary shares and a special type of preferred share that pays over 7% per year. He says those preferred shares are usually mispriced, partly because the standard Wall Street software calculates them wrongly.
Once again, he is reading the small print of the people's computers. Skip. Temple and Webster is an Australian online furniture shop, a sort of Wayfair from down under. It is now a fairly large holding and he has promised a full write-up soon. And then there are his Chinese and Hong Kong shares. JD.com, the online retailer, is one of his three biggest positions, bought at just below his IV 15.
And this month he bought BYD, the Chinese electric car maker that now sells more electric cars than Tesla, after its shares fell back to a price that he had been waiting for. Hong Kong, he says, is in one of the longest bear markets on record, longer than any American one since before 1929, even though many of the companies themselves are doing extremely well over there.
Look at that list and a pattern jumps out at you. Groceries, animal medicine, copper, building supplies, betting, furniture, mortgages. Not a single chatbot among them. These are businesses with real customers and real profits that the market has stopped paying attention to because it is too busy watching AI.
Burry expects all of that to change. He thinks that when the AI boom turns to bust, money will rush back into exactly these kinds of companies just as it did in the year 2000. And he is careful to add that his more exotic bets are not for everyone. For most people, he says, holding shares that are already cheap and keeping some cash for future bargains is good enough.
You don't need to like betting companies or Chinese retailers to see the pattern. He waits for a price, he buys when it comes, and he explains exactly why. Most of us will never build a 15-year cash flow model, and you don't need to. The value of Burry's rule is the habit, not the spreadsheet. First, decide your price while you're still single, so to speak.
Write down the price at which you'd be delighted to own something while you're still calm and long ahead of the three cheerful articles that will make you want it at any price. You can even borrow Michael Burry's ladder in a simple form. Give every share you like three prices: fair, good, and steal.
Fair is what you think it's worth, good is about a third below that, steal is half. Then, set an alert at each one and let the market do the work. [snorts] Second, let the price come to you. Almost every broker and finance app lets you set a price alert. So, set it and then walk away. That's exactly what Burry does, just with more decimal places.
Third, remember Buffett's line, "There are no cold strikes. You're never obliged to buy." And missing a share that keeps rising costs you nothing but pride. If you want one rough sum to keep in your head, here it is. Over long periods, if a company's shares stay at roughly the same valuation, your return is about its dividend plus the rate its profits grow.
A company paying 3% and growing profits 7% per year should give you something like 10%. To get to Burry's 15, you need either much faster growth or to buy cheaply enough that the valuation can rise as well. That second route is the one that Burry takes. And fourth, be suspicious of anything that only looks cheap compared with where it used to be.
Ask what it's worth, not what its price used to be. And if all of this sounds like more effort than you want to spend, that's a perfectly good answer, too. Burry himself says most people are best off just putting their money into an index fund. The 15% rule is for people who want to pick their own pictures.
So HubSpot fell three quarters and was still too expensive. Flutter fell and Burry swung. The difference wasn't the story or the fall, it was the price tag he'd written down before either happened. 15% a year for 15 years turns $10,000 into about $80,000. Getting it depends on paying the right price and that mostly means being willing to wait.
If you want to read a company the way that Michael Burry does from its own accountnd it also gives you free access to eight other books I've written which dive more deeply into similar topics. for you and I look forward to seeing you in the next one.
Comments 0