Thursday, January 31, 2008

Attention K-Mart Shoppers.

A blue light special coming on homebuilders, financials, retailers, etc, near you. Wait for it though.

MarketWatch: Scion Capital shuts Asian funds to focus on U.S.


Scion Capital LLC, a $1 billion hedge fund firm run by Michael Burry, is shutting its Asian funds to focus on opportunities that will be created by a U.S. economic slowdown.


The Asian funds aren't being forced to close by client redemptions or other pressures, Burry noted. Investors can put the proceeds from the liquidation of the Asian funds into Scion's main global funds, he added in the letter.
"The primary motivation for this move is that I foresee a significant opportunity to invest in dramatically undervalued distressed assets and out-of-favor businesses over the next several years," Burry wrote.

"The sheer magnitude of the troubles facing the leading companies in what is still the world's largest and most significant economy cannot be missed," he explained. "The global credit bubble has burst, and the world has not yet learned the full impact."

Scion was one of the first hedge funds to spot problems in the subprime mortgage market in 2005. When the credit crisis erupted last year, Scion's main Value funds generated returns of more than 130%, after fees, as bets against riskier parts of subprime mortgage-backed securities paid off. Since the funds started in 2000, they have more than quintupled.


"With equities amounting to roughly one-third of assets, the Funds are awaiting not only the birth of opportunities, but the recognition of such opportunities by me," he wrote. "I patiently await a deepening of the U.S. recession and the string of bankruptcies that are sure to follow."


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