The "new" Berkshire and Michael Burry: investment philosophies and lessons

This article looks at two companies – Berkshire Hathaway (BRK) and Scion Asset Management – with investment philosophies that are interesting because they show how thoughtful minds are considering the “direction of travel” of markets in an environment characterised by ongoing bullishness and low volatility.   Both of these companies are bound together by a historical focus on value investing, meaning buying cheap / undervalued assets, and selling expensive / overpriced assets.

Berkshire Hathaway is reported to have changed its approach and perspective on investing its hordes of cash under the direction of new CEO Greg Abel, who took the helm at the beginning of this year.  Berkshire has done a few things differently but is mostly staying the same, at least from my perspective.  The company has made some new investments in 2026 as it looks to intelligently deploy some of the nearly $365.5 billion of cash and cash equivalents that it has accumulated over many years^[1].  This available liquidity is in addition to a long-term investment portfolio consisting of $362 billion comprised of listed stocks and long-term bonds.  As headline grabbing as it may be, the deployment of cash and / or any shift in portfolio mix has been relatively modest so far – slight, slow and deliberate, just as I would expect for this high quality global company.  Also important for investors in Berkshire stock, the company is continuing to invest at certain times in what it believes to be one of the best value stocks out there – itself – through stock repurchases.       

Michael Burry of Scion Asset Management, who made a fortune calling the subprime mortgage meltdown just prior to the onset of the Great Financial Crisis, also is signalling his views on select stocks and sectors in the market via both long and short positions.  It is Mr Burry’s short positions (via long dated put options) that interest me most, mainly because there is a “short A.I.” thematic risk woven in, a contrary bet in today’s red hot “everything A.I.” market.  Also, a few days ago, Mr Burry wrote in his Substack blog “Cassandra Unchained” that he is questioning the appeal of BRK now under Mr Abel’ leadership, mainly because he believes the new CEO will not have the patience of Mr Buffet in terms of biding his time – perhaps over a period of many years – to deploy their substantial cash in real value opportunities during sharp downturns. 

Interestingly, this commentary by Mr Burry ties both Berkshire Hathaway and Mr Burry’s family office together, although this is coincidental to this article. 

There is plenty of publicly available information on both companies, so I will keep my comments relatively brief.  And importantly, I will try to add some value by providing my views on both situations without boring you to tears in an otherwise hot and so far uneventful second half of August.

Berkshire Hathaway: is the company really doing that much differently?

Under Warren Buffet’s and the late Charlie Munger’s incredible joint leadership for decades, Berkshire Hathaway grew its conglomerate of businesses, maintaining its identity as part-operating company (mainly insurance/reinsurance) and part passive (minority) investor in public stocks and bonds.   

On January 1^st of this year, Mr Buffet stepped down as CEO, handing the reigns of BRK to executive Greg Abel.  Mr Abel joined Berkshire in 2000 when BRK acquired MidAmerican Energy, one of its core operating businesses today. 

BRK stock has bounced around a bit in the past year, ranging between $464.01/share and $537.74/share. YtD, BRK has underperformed the S&P 500 by virtually flatlining while the S&P 500 has returned 13.7%.  However, since 2000, BRK has delivered a return nearly 2.5x that of the S&P 500.  The stock does not pay a dividend, but the company has historically bought back its shares when it thinks they are undervalued in the market.  It is difficult to value Berkshire using traditional “back-of-the-envelope” valuation metrics because of its mix of operating company and investment company.  With its investment portfolio marked-to-market at the end of each quarter, this (to Mr Buffet’s dismay) often causes wild swings in net income from quarter to quarter, making metrics based on earnings difficult to analyse.  However, one company-metric – or certainly one Mr Buffet valued – is market-to-book value, which he believed should be 1.5x or better. 

As far as its investment philosophy, Berkshire can most aptly be described as a value investor, reluctant to buy anything that is deemed expensive whether in a passive or active (M&A) capacity.  Messrs Buffet and Munger largely steered clear of companies that they perceived carried risk that might make them vulnerable to technological transformation.  The “dynamic duo” were arguably the mother-of-all value investors.  This means that Berkshire sat on its growing cash hoard, while its long-term investments were concentrated mainly in large (dividend-paying) stocks like Coca-Cola (KO), Visa (V), Wells Fargo (WFS), Bank of America (BAC), Apple (AAPL) and a few others.  From an operating company perspective, BRK has traditionally stuck to its knitting as far as its businesses, acquiring companies that can slot into its existing core businesses which currently include insurance/reinsurance (GEICO), freight railroads (BNSF Railways), and utilities & energy (Berkshire Energy), among others. 

For context, it is certainly true that momentum investing has largely taken centre stage since the pandemic, outperforming value investing now for several years running.  This has left Berkshire with little new to do as far as new investments, so the company has had to be content running its core businesses and sitting on its growing cash pile.  At the end of 2019 (before the first pandemic quarter), Berkshire had cash and cash equivalents of $128 billion and an investment portfolio (“long term investments” on the balance sheet) of $257 billion.  At the end of 2025 – six years later and just as Mr Buffet was stepping down as CEO – the company’s cash and cash equivalents had ballooned to $366 billion, and the investment portfolio had increased to $362 billion.  Investors in Berkshire Hathaway are cult-like, appreciating the company’s approach and patience, even though they could increasingly be considered out of touch with the times. 

BRK had been the largest holding in my portfolio for many quarters, although I was selling in 2025 at levels above $510/share simply because the shares had run too much in my opinion.  Nonetheless, given my portfolio construct, I perceive BRK as an important cornerstone as one of the smartest value plays available, in some respects not dis-similar to a non-diversified value ETF.

Since Mr Buffet handed the reigns of Berkshire to Mr Abbel, the press has been writing that the company has suddenly changed its investment philosophy, implying that this could change the risk profile of the company.  It is true that the company has made some alterations to its stock portfolio this year, including selling positions in Visa (V), Mastercard (MA), Diageo and Domino’s Pizza, among others, in the first quarter.  BRK also started positions in Alphabet (GOOG) and Delta Airlines (DAL) this year, companies that do not necessarily fit the “old mantra” of value.  In spite of these changes, the company remains heavily concentrated (63% of $363 billion long-term investment portfolio at end of 1H2026) in five names: AAPL (20%), AXP (14.9%), KO (9.8%), BAC (9.1%) and GOOG/GOOGL (8.8%, new).

From an operating perspective, BRK has announced / made a couple of sizeable acquisitions this year, including closing OxyChem in January ($9.4 billion, announced 2025) and announcing the acquisition of Taylor Morrison Home Corp in June ($6.4 billion, 3Q26 business).

As far as stock buybacks, BRK has traditionally bought back its own shares when it believes they are under-valued, which Mr Buffet apparently felt was below 1.5x market-to-book.  I looked back at the company’s history of stock buybacks (since 2007).  The company had no buybacks between 2007 and 2017, and modest amounts of buybacks in 2018 and 2019.  However, in the two years following the pandemic when BRK shares were under pressure along with the market generally, Berkshire bought back over $50 billion (aggregate) of its own shares (in 2020 and 2021).  In 2022 and 2023, the company bought small amounts of stock back, and the repurchases stopped completely in 2024 and 2025.  Recall that the shares came off their highs in mid-2025, which seems to have motivated the company to restart its repurchases this year.  YtD in 2026, BRK has repurchased $4.4 billion of stock (through June 30^th), most of this in the second quarter. 

When I think about the company’s investment and share repurchase activity in the first half of 2026 since Mr Abel took over as CEO, there is a difference in approach.  However, I do not consider the changes material in the context of the amount of cash and cash equivalents and long-term investments on the company’s balance sheet.  As an investor, I believe that the subtle changes are in fact warranted to get Berkshire better positioned for the likely growth drivers in the coming years.  This will entail taking more risk in stocks that are considered growth (rather than pure value) stocks.  Having said this, the last thing I expect is for Berkshire to go all-in on anything.  I suspect that the company will continue to support its own shares through buybacks when they come under pressure.  The company certainly has enough resources to continue to do this. 

In a nutshell, the company’s new philosophy is perhaps coming around to the idea of “if you can’t beat them, join them”, by taking some calculated bets on companies that in the past might have been deemed too far off-the-beaten-path as far as pure value plays.  This is what seems to have rattled Mr Burry in his commentary a few days ago. 

In summary, I endorse Mr Abel’s approach, as I believe the company will be prudent and has enough cash that it can take intelligent risks, either around its core operating businesses or periodically, in select thematic plays by taking passive positions in companies that are poised to capitalise on generational trends like A.I.  I can never fathom Berkshire as an “all in” sort of company, so I am confident that Mr Abel – given the decades he has worked alongside Mr Buffet – will only take calculated risks that largely fit the investment philosophy of the company.  Let’s see how the shares respond in the coming quarters.

Where has Michael Burry placed his bets?

Michael Burry has his own investment firm, Scion Asset Management.  Although Dr Burry’s^[2] bet on subprime is approaching 20 years old, he was so incredibly right back then – and so contrarian – that investors simple cannot ignore what he has been doing since then.  (If subprime and the GFC do not resonate with you, check out “Too Big to Fail” by Andrew Ross Sorkin.) 

Dr Burry started Scion Capital in 2000 to manage his own and other third-party money.  He closed Scion Capital in 2008 after the firm made a windfall during the subprime crisis by correctly and controversially being short subprime.  The hedge fund re-opened a few years later in 2013 as Scion Asset Management (“Scion AM”), managing Dr Burry’s fortune alongside third-party money.  

In November 2025, Dr Burry announced that he was again closing his hedge fund to third party money, but would continue to invest his own money in select investments, following similar themes that have defined his investment career.  The closure of the hedge fund to outside investors meant that Scion AM no longer had to report its holdings and trades to the SEC and other regulatory bodies each quarter.  As a result, the last official filing of Scion AM was a 13F for the period ended September 30, 2025, filed November 3^rd, which you can find here.

According to the last public filing of Scion Asset Management, the hedge fund had regulatory assets under management (“RAuM”) of $154.93 million, most of which was believed to be Michael Burry’s own money.  Reflecting the difference in valuation methodologies, the RAuM was supporting a portfolio valuation of $1.38 billion on the same date, according to TipRanks.com.  The difference between these two amounts reflects the fact that the portfolio valuation reflects the notional value of the underlying shares connected to each option position, not the cost or value of the options themselves.  (As you will read later below, two of the fund’s largest positions at the time were put options on Palantir Technologies and Nvidia.)  TipRanks.com notes that Scion AM generated a return of 393.4% since January 2016.  The graphic below from TipRanks.com compares the return of Scion AM (orange line) to the average hedge fund (purple line) and the S&P 500 (blue line), since the beginning of 2016.

Since Dr Burry closed his hedge fund to third party investors, the availability of information and access to his thought process is less.  However, for the disciples of Dr Burry, they are fortunately able to obtain insights into his thinking and portfolio strategy via his Substack Cassandra Unchained, although you will need to pay a monthly subscription fee or access to this site.  Dr Burry also writes on X from time to time.  As a matter of disclosure, I am not (yet) a subscriber to Cassandra Unchained, but I do keep tabs on what Dr Burry is doing via normal media channels, which arguably report his moves late but nonetheless cover market-grabbing trades.

My interest in looking at Mr Burry’s activity is because he has a history of long / short activity that is interesting and contrarian, and he is often correct.  Being short nearly anything since the pandemic has been betting against a rising tide, as his contrarian approach involving short positions has been at odds with momentum investing, which has pushed global stocks higher for several years running.  There are many examples today in which company fundamentals are completely ignored, resulting in super-stretched valuations.  Unfortunately for most asset managers and hedge funds, they are measured against benchmark indices.  As a result – and like it or not – these portfolio managers often have to close their eyes and pile into crowded trades involving well-known momentum stocks, or they risk lagging the returns of their benchmark indices.  Underperforming the benchmarks can prove detrimental quickly to attracting third-party money.  In fact, I suspect this is one reason that Dr Burry decided to close Scion AM to third-party money – now he answers to no one but himself. 

As history has shown, Michael Burry has an uncanny ability to filter out the noise around him and hone in on markets, sectors, or companies that he believes have gotten ahead of themselves.  This is not easy today in an environment characterised by FOMO.  Whether you agree with his trades and rationale or not, Dr Burry has earned the respect of investors enough that they should pay careful attention to what he is doing with his own fortune as far as his investment choices.    

Looking at Scion AM’s last 13F filing and Dr Burry’s posts and articles since then, his largest positions are believed to be the following:

• Short positions: PLTR puts (believed to be the largest position), NVDA puts, QQQ puts (NASDAQ index, and recently exchanged for SOXX (semi-conductor ETF) puts); short positions in Oracle (ORCL), Caterpillar (CAT), Nebius Group (NBIS), and Micron Technology (MU), and retains a short on the SOXX (although not puts).

• Long positions: Adobe (ADBE), MercadoLibre (MELI), Zoetis (ZTS), JD.com (JD), PayPal (PYPL) and HCA Healthcare (HCA); he also has legacy long positions in Molina Healthcare (MOH) and Lululemon (LULU).

Michael Burry uses a barbell approach – Scion AM is short shares (or long puts) of companies / sectors which he believes are over-valued or over-hyped, and long shares of companies which he believes are relatively cheap and have been over-sold.  This is the “classic” hedge fund approach as far as combining long and short positions that represent the view of the portfolio manager.

From a thematic perspective, his views might be expressed in a summary fashion as follows:

• A.I. including hardware, is expensive. Dr Burry clearly things A.I. hardware companies – and especially semi-conductor companies – are wildly over-valued.  Moreover, from the perspective of related A.I. hardware, he believes that some companies are depreciating their A.I. related assets too slowly because things are changing so quickly, meaning earnings are being over-stated.  He points specifically to the hyper-scalers, which are spending hundreds of billions of dollars to construct data centres to handle growing A.I. needs.  He is also concerned about circular financing, meaning essentially vendor financing against future sales.  These concerns largely explain nearly all of his short positions, of which the largest seem to be PLTR and NVDA.

  
  

• Software companies, healthcare, and out-of-favour retail stocks look cheap.  In some respects, the play on software companies is a different type of contrarian A.I. play.  He is long several software companies (ORCL, ADBE for example) that have been hammered because investors believe A.I. will fundamentally change their businesses for the worse.  Therefore, Michael Burry thinks these companies have been over-sold, and he views them as a value play.  As part of his overall portfolio strategy, healthcare (MOH, ZTS) is a classic defensive sector, and the out-of-favour retail plays (LULU) also are a value-play on brands that he deems “sticky” but that have been over-sold.

I am certainly no Michael Burry, but I would like to focus on a few of his specific positions and provide my own perspective.  Some of the ownership amounts, basis and option features cannot be validated and are second-hand.  Prices are as of close on Aug 18^th 2026.

• PLTR ($171.54/share, YtD return -3.5 %): Apparently this is one of Dr Burry’s largest put positions.  He is believed to hold put options out to March 2027 with strike prices in the low- to mid-$100s.  The company recently served up amazing 2Q26 earnings, and revised its future guidance higher.  Nonetheless, I agree with Dr Burry – the valuation looks insane.  PLTR’s forward P/E ratio is 107.5x, and the company’s price-to-sales is 72x.  However, the PEG is 2.32x, not entirely unreasonable, and it is hard to argue against the company having delivered quarter after quarter of exceptional growth.  I don’t own PLTR, and I think it is expensive so can understand Dr Burry playing this name from the short side.  if I were to be short/own puts on a stock, I would do so on a massively over-valued company like TSLA with poor recent operating results and a stretched valuation.  It is important though to note that PLTR and TSLA have one thing in common – a devoted retail base that could care less about fundamentals.  These loyal investors have figuratively “drunk the punch” of each companies’ outspoken and vocal CEO, including their many promises about the future that are needed to justify rather ridiculous valuations.  In cases like this with flows driven by retail investors, it can be very costly for an investor to be caught short on the wrong side of a trade, no matter what fundamentals might suggest.

  
  

• NVDA ($219.74/share, YtD return +17.8%): Dr Burry is reported to both be short NVDA and to own puts that expire January 2027 at strike prices of $110-$115/share.  With a forward P/E ratio of 25.6x and a PEG of 0.62x, the stock might be slightly expensive but it far from over-valued.  It is hard to argue with the fact that the company has delivered incredible numbers quarter after quarter for many years, and is a dominant chip fabricator (without the added baggage of  being a foundry).  I believe Dr Burry’s negative view on NVDA is because with gross margins above 70%, rapidly growing new chip manufacturing capacity will be a key driver going forward, putting the company’s profitability under pressure.  This could even encourage some of NVDA’s largest customers to design their own chips.  Dr Burry is also concerned with circular financing in the semi-conductor sector, and specifically, involving NVDA.  I own NVDA stock.  My view is that the company is currently fairly valued.  I could see the shares selling off with the market, but I think the stock will always find support in the mid/high $180s unless competition begins to erode the company’s dominance. 

  
  

• SOXX ($531.39/share, YtD return 76.5%):  This is the clearest indication of Dr Burry’s negative outlook on semi-conductors, a sector that has been on fire much of this year as investors have piled into “picks & shovels” of the A.I. trade.  Dr Burry is reported to be short the SOXX at $643/share, although he liquidated his SOXX put position recently at a loss in order to free capital.   As far as valuation, I find the SOXX ETF a very mixed bag of different types of semi-conductor companies at various ranges of valuation, making it a difficult ETF to value – much less to bet against – in this environment.  And in any event, Dr Burry retains his bearish bet on semi-conductors by continuing to own puts on the largest two components of the SOXX – NVDA and MU.  As part of his portfolio rebalancing after selling SOXX puts, Dr Burry established a broader bearish “short tech” bet by buying longer-dated QQQ puts, which I can undertand given his views.  Apparently, he has also increased cash in his fund to 12% of AuM, another sign of defensiveness.

These positions are only a handful of Dr Burry’s positions, but they are the ones that I find the most interesting.   Like most investors today, I have little doubt that A.I. will profoundly change the world, leading to an increase in global productivity across a wide range of industries.  Investors and pundits can disagree as to the cost of the roll-out, as well as the  timing of adaptation of A.I., and how A.I. will effect productivity improvements from quarter to quarter in the coming years.  Even so, it is difficult to deny that these changes are coming.  I think Dr Burry agrees with this, but I also think that he recognises vulnerability of tech generally, and specifically, of the semi-conductor sub-sector.  The high operating margins of many chip companies – especially those involved in the design and manufacture of memory chips – does not seem sustainable.  History has shown that operating margins like these draw in competitors, as production capacity is added (currently occurring) and end customers (for example, Apple) search for ways to reduce their own costs by considering competitive offerings, or even by going into chip design themselves. 

It is hard to completely refute the idea of investors getting ahead of themselves by not recognising the inherent cyclicality of the semi-conductor business, and playing the momentum game.  We might or might not be in the midst of this, although I suspect not.

I never short specific stocks although I have occasionally bought company-specific puts mainly as a hedge on long portfolio positions.  If I were to be a more active investor in this respect and have more conviction, I would consider buying long-dated puts on TSLA and SPCX – two massively over-valued companies although they have a retail bid – and perhaps CRWD, INTC and even PLTR.  All have high volatility, making options very expensive.  This follows the mantra that some companies might be great companies and will prosper operationally in the future, but their stocks can get ahead of themselves causing them to become over-valued quickly from a fundamental perspective.  However, never count out the power of a retail army of supporters!  I do subscribe to Dr Burry’s approach of owning downside protection via QQQ puts, which I also own. However, I own QQQ puts mainly as a hedge against my long tech positions rather than to express an outright view that the NASDAQ is about to be clobbered.  

Conclusion

I hope you have found these “deep dives” into Berkshire Hathaway and Scion AM (Michael Burry’s thinking) interesting and helpful to you as an investor.  Writing this article has made me think harder about some of the things I am doing with my own portfolio.   

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^[1] Note that this is the balance sheet line item “Cash and short term investments”.  Of this amount, Berkshire has a “hard hold” of at least $30 billion to support its insurance/reinsurance businesses (to pay out on catastrophic claims), with the rest freely available and invested nearly all in US Treasury bills.

^[2] Michael Burry does not have a Ph.D., but rather earned a Doctor of Medicine (M.D.) degree from the Vanderbilt University School of Medicine in 1997.