저자: MichaelBurry · 외국인
요약 보기
2005년 Burry는 주택시장 붕괴에 $8B 규모의 CDS 공매도 포지션을 잡았으나, 초기 손실과 투자자 반발로 2006년 말 포지션을 $2.3B로 축소하고 헐값에 일부 매도했다. 2007~2008년 주택시장 붕괴로 약 $800M 수익을 냈지만, 전량 유지했을 경우 대비 큰 기회손실이 발생했다. 이후 IRS 감사와 대중 반발 속에 2008년 Scion을 폐쇄했다.
다듬은 글
Michael Bur's strategy to bet against the housing market in 2008 was so controversial, his own investors tried to sue him. Why? Because the very move of shorting the housing market that would make them millions also locked up all their money. This is the story of how Bur had to fight his own clients before he could save them.
In 2005, Michael Bur made what seemed like an insane decision. He stopped buying stocks and instead put a bet of $8 billion against the housing market. This came despite spending years building Scion Capital into one of the most successful hedge funds in America, delivering returns of over 240% for his investors.
Everyone trusted him as a stock-picking genius who could spot undervalued companies better than anyone on Wall Street. But now that $8 billion position was locking up their money and causing panic. Now, when I say $8 billion, that doesn't mean Bur actually spent $8 billion. That number represents what's called the notional value, which is the total amount of mortgage bonds he was betting against.
Bur was paying annual premiums of about 8% of his funds value, which came out to roughly $44 million per year. Over the course of his trade, he paid around $100 million in total premiums to maintain his $8 billion position. The problem was that nobody else thought the housing market was going to crash.
In 2005 and 2006, housing prices were rising. Everyone from Wall Street executives to regular homeowners believed that real estate will always rise and never fall. But Bur had studied the housing market and bad loans that were added to those MBS products and figured out that the housing market was going to crash.
And he was right about it. But the thing about being right too early is that it looks exactly the same as being completely wrong to everyone else. Bur was paying millions of dollars in premiums for his credit default swaps while the housing market kept rising. During this time, his fund wasn't even making money.
In fact, it was losing money. By the third quarter of 2006, Scion Value Fund was down 17% for the year. This was devastating for a fund that had previously given investors returns of over 240%. Bur also had tried another desperate move to save his trade. In August 2005, he wrote a proposal for a second fund called Milton's Opus that would be dedicated entirely to buying credit default swaps.
The idea was to raise fresh capital without touching Scion's existing positions. But the funds never got off the ground. Some investors couldn't understand the concept at all. They didn't get why Goldman would sell those swaps if they were such a good bet. But others who understood it within weeks of Bur explaining his strategy, those same potential investors started calling Goldman directly asking how they could short housing just like Scion Capital was doing.
Because of this, Bur was trapped in an impossible dilemma. If he didn't explain the trade, nobody would invest. But if he did explain it, people would copy him, driving up the cost of the swaps and potentially ruining the entire trade. The Milton's Opus fund died quickly and Bur was left alone to fight his battles with the original Scion investors who wanted him destroyed.
Bur's investors trusted him to pick stocks and make money for them. They thought they had not invested in his fund to make some crazy bet against the entire housing market that was draining their capital every single month. Because of this, slowly the investor revolt started and then exploded. Investors who had made fortunes with Bur suddenly turned against him.
They demanded explanations from Bur. They couldn't understand why he was throwing away their money on this crazy trade that no one understands. Some of them even thought he had lost his mind. Their questions turned into anger and the anger turned into threats. By late 2006, investors were demanding their money back and threatening lawsuits if Bur didn't give it to them.
They didn't care about his research or his analysis. All they saw were the monthly statements showing their accounts going down while everyone else in America was getting rich off real estate. Before things got completely out of control, Bur tried to protect his trade by using a legal loophole called a side pocket.
This essentially locked up the CDS positions and blocked investors from withdrawing money from the fund. But this move only made the investors even angrier as they felt trapped. They gave him legal threats. Those legal threats put Bur in an impossible position. If enough investors demand redemptions at the same time, he would be forced to liquidate the fund.
That meant he would have to sell his credit default swaps at exactly the wrong moment, right before they were about to pay off. In December 2006, Bur did seriously consider shutting down the entire fund. The pressure was unbearable. He'd spent years researching his trade. He knew he was right, but his own clients were about to force him to give up just months before his trades became profitable.
To save the fund from complete collapse, Bur had no choice but to make painful adjustments. He closed his Hong Kong office. He cut salaries across the board. He laid off staff members who had been loyal to him. And worst of all, he had to reduce his position from $8 billion to just $2.3 billion in notional value.
That was a reduction of more than 2/3 of his original bet. He sold those credit default swaps for almost nothing for less than a penny on the dollar for many of them. The banks and counterparties who bought these positions from him knew Bur was in trouble and took full advantage of it. The timing of this for sale was brutal.
Bur was selling these positions in late 2006, right before the housing market started to crack. Within months, those same credit default swaps that he sold for pennies would be worth lots of money. But he never got to invest on them because angry investors and lawsuit threats had forced him to sell early.
This is where the real tragedy of the story becomes clear. Bur didn't just lose out on some extra profits. He lost out on billions. When the housing market finally collapsed in 2007 and 2008, Bur's remaining $2.3 billion position paid off big. He made around $100 million for himself personally and roughly 700 to $725 million for his investors who had stayed with him.
The total profit was approximately $800 million. That sounds like a massive win, and it was, but it was only a fraction of what he should have made. If Bur had been able to hold on to his full $8 billion position, the math would be pretty straightforward. Using proportional returns, instead of making $800 million, he would have made somewhere around $2.8 billion in total profits.
That's $350 million for himself instead of 100 million and about $2.45 billion for his investors instead of 725 million. His investors who threatened to sue him didn't just hurt themselves, they cost everyone in the fund billions of dollars in potential returns. When Bur finally proved he was right and the housing market collapsed exactly as he predicted, there was no apology from the investors who had threatened him.
There was no gratitude for the 500% returns he delivered to those who stayed through the entire trade. Most of them just took their money and left. From 2005 to 2007, Bur had fought for two years against skeptical and angry investors, dealing with constant stress and legal threats, only to have them act like nothing had happened once he was proven correct.
But the nightmare wasn't over for Bur even after his victory. In 2008, the IRS started auditing him, not once, but multiple times. The audits were exhausting and expensive. On top of that, there was public backlash. Some people blamed him and other investors who bet against the housing market for profiting from a crisis that destroyed millions of lives.
Bur was fed up with the whole system. Despite his incredible success, he decided to close Scion Capital in 2008 and return all outside investor money. Michael Bur didn't survive the greatest financial collapse because he was the smartest guy in the room. He survived because he refused a break when everyone else demanded he should quit.
His investors didn't destroy him, they destroyed their own fortune. And that's the cost they paid for panicking before the truth was revealed. The investors who demanded their money back in 2006 missed out on 500% returns, while those who stayed quiet became wealthy beyond imagination.
댓글 0