Michael Burry Joins Minerva as Adviser to Short Fund

Michael Burry has joined Minerva as an adviser to its newly launched short-focused hedge fund, the firm announced at the fund’s launch. Burry will take part in developing the fund’s research and investment planning.

Burry founded Scion Capital in 2000 and later managed Scion Asset Management. He drew public attention for using credit-default swaps to bet against U.S. subprime mortgages before the 2008 financial crisis, a trade that produced large gains for his investors. In recent years he has taken concentrated, often contrarian positions in equities and other markets.

Minerva describes the new vehicle as short-focused and designed to take positions that profit when targeted securities fall in value. Common tools for such strategies include borrowing shares to sell short, buying put options and using derivatives that increase in value as an underlying asset declines. Minerva plans to use its research and risk frameworks to identify securities it views as vulnerable and to size and time positions accordingly.

Short strategies carry specific risks. Funds can incur large losses if positions move against them, and uncovered short positions can, in theory, lead to unlimited losses. Short squeezes can force rapid covering at higher prices. Operational and regulatory factors for short-focused funds include borrowing costs for shares, margin requirements and reporting obligations for sizable short positions.

Minerva did not disclose specific portfolio holdings, initial capital commitments or the investor base. The firm said it has begun deploying capital and establishing trading and research processes for the fund.