Michael Burry: Deep Value Research
Asset Discount & Asymmetric Mispricing
Examine company balance sheets for undervalued assets and forced selling that may explain a low share price.
- Time horizon
- Months to years
- Markets
- US Equities, Special Situations
- Evidence
- research only
See the approach work through a decision
Fictional inputs illustrate the research process, from starting assumptions to a decision.
Starting assumptions. Fictional Harbor Components has $100 million in cash, $60 million in receivables, $80 million in inventory and $160 million in total liabilities. Assume no other assets, 10 million shares and a $6 share price.
Unadjusted net assets are $80 million, or $8 per share. Apply an assumed 25% haircut to receivables and 50% to inventory. Adjusted assets become $185 million; after liabilities, only $25 million remains, or $2.50 per share. The apparent discount disappears under those recovery assumptions.
What to check next. Investigate asset recoverability and obligations before calling the stock cheap. A low multiple can reflect impairment. This fictional asset test is a BrokerBridge teaching example, not a Burry trade or return.
Research criteria
- 1.Market price trades at large discount to tangible book or net-net asset value
- 2.Primary SEC filing evidence contradicts consensus market narrative
- 3.Identifiable structural catalyst or activist dynamic present
Review criteria
- 1.Discount to intrinsic asset value closes
- 2.Primary filing evidence invalidates original asset-backing thesis
Research this in BrokerBridge
- Provide Chat with the balance-sheet excerpts and footnotes. Ask it to reconcile assets and liabilities, and say: "Do not place, approve, or change any order."
- Make each recovery haircut explicit. Check debt maturities and potential dilution, then identify what filing evidence would disprove the valuation thesis.
- Keep the output as research until the evidence is checked. This lens cannot authorize execution; any later order requires the applicable Chat or strategy authority.
An explicit buy, sell or close-now request in Chat can authorize action without another approval click. Live permission can remain valid for later requests in the same chat and destination. Use the research wording above and read the Chat permissions lesson before requesting a trade.
Method and source references
The sources explain the concepts used here. Template criteria and fictional examples do not establish an edge or reproduce a named investor’s complete process.
- SEC: Beginners' Guide to Financial Statements
Defines assets, liabilities and shareholder equity. Those accounting definitions support the example; they do not establish liquidation values or an investor endorsement.
Research, not order execution
Use this lens to study a company or market. It does not place orders or grant a strategy trading authority.
Requires tolerance for extended early-stage drawdown before thesis resolution.
Known Failure Modes & Limitations
- Being early to a contrarian thesis is indistinguishable from being wrong
- Illiquidity in special situations hindering timely portfolio rebalancing
Based on publicly described methodology. Not affiliated with or endorsed by Michael Burry or Scion Asset Management.