The Year-End Anomaly
Michael Burry identifies a recurring market inefficiency at the end of the fiscal year. Institutional managers engage in "Window Dressing"—selling losing positions to hide them from annual reports—and "Tax-Loss Harvesting" to offset gains.
This creates artificial selling pressure on fundamentally sound but temporarily underperforming companies. For the contrarian investor, this is the "Black Friday" of the stock market.
The Opportunity Cycle
November - December
Managers sell "Losers"
Artificial Price Drop
Stock disconnects from value
The Burry Entry
Accumulate shares cheaply
Volume Divergence
While the retail crowd panics and institutions clean their books, value investors like Burry step in. The chart illustrates the typical volume divergence seen in distressed "quality" assets during Q4.
Red Bars: Institutional Sell-off Volume.
Blue Line: Smart Money Accumulation.
Note the spike in accumulation exactly when selling pressure peaks.
The Chosen Assets
Analyzing Burry's explicit mentions: LULU, MOH, FOUR, FNMA
Lululemon (LULU)
Consumer DiscretionaryA high-growth retailer sold off due to fears of slowing consumer spend. Burry sees a brand moat priced like a commodity.
Molina Healthcare (MOH)
Managed CareA government-sponsored healthcare play. Often sold off during regulatory uncertainty, providing a stable cash-flow floor.
Shift4 Payments (FOUR)
FintechPayment processing technology. Highly competitive sector, but often undervalued relative to its growth and transaction volume.
Fannie Mae (FNMA)
OTC / Pink SheetThe "Pink Sheet" wild card. Government conservatorship makes it risky, but the underlying asset value is massive. A deep value play.
Strategic Attribute Comparison
*Scores are qualitative estimates based on current market sentiment vs. fundamental value.
The Patience Premium
Burry explicitly states: "These are all 3-5 year holds minimum."
This visualization demonstrates the expected trajectory. Short-term volatility (Year 1-2) is high and returns may be negative. However, the value thesis crystallizes in Years 3-5 as the market corrects its pricing error.
Key Instruction:
Ignore year-one noise. The alpha is generated by outlasting the institutional selling cycle.
Your Execution Strategy
Identify Victims
Look for sound companies (high ROIC, good cash flow) that have dropped >20% in Q4 without fundamental news changes.
Ignore The Noise
Disregard analyst downgrades in December. They are reacting to price action, not value. Accumulate slowly.
Hold Through 2028
Commit to the 3-5 year timeline. Do not sell on a 10% pop in January. Wait for the full value realization.