Dr. Michael Burry Turns His Hand To Angel Investing

Discussion in 'Wall St. News' started by dealmaker, Oct 28, 2015.

  1. dealmaker

    dealmaker

    By Rupert Hargreaves on October 28, 2015 in Business

    Dr. Michael Burry, the doctor turned value investor, who was one of the first hedge fund managers to bet against the subprime mortgage market and is the focus of the upcoming film, The Big Short has now turned his hand to angel investing.

    Michael Burry: Angel investing
    Dr. Burry has thrown his weight behind PeerStreet Inc., an online platform for financing real estate deals founded by Brett Crosby and Brew Johnson. Brett Crosby joined PeerStreet from Google Inc. where he was the head of consumer-product marketing while Brew Johnson’s used to hold a position as former general counsel for a travel website acquired by TripAdvisor.

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    PeerStreet is looking to tap investors’ demand for crowdfunding opportunities. The startup has partnered with a number of small, non-bank lenders whose short-term commercial-property loans they can fund using a throng of individual investors. But unlike other property funding start-ups, PeerStreet is focused on raising money for debt while other types of crowdfunding tend to buy physical properties.

    According to Bloomberg, the originators will hold a portion of the debt funded by investors on their balance sheets, which should give them an incentive to issue high-quality loans.

    Warm reception
    The Los Angeles Business Journal notes that during its private testing phase earlier this year, PeerStreet funded more than $35 million in real estate-backed securities across 78 properties. The net yield to investors ranged between 7% and 12% during this period. Most loans have a term of six to 24 months.


    During the first quarter, PeerStreet raised $6.1 million in seed capital from a number of investors including Michael Burry.

    In an interview with Bloomberg, Dr. Burry said he liked what PeerStreet was trying to accomplish as, “These guys are really out to solve a market inefficiency,” and “A number of large markets are not adequately being served by the financial sector, so it really is time for new thinking.”

    CrowdfundInsider reports that Dr. Burry was also convinced to invest in PeerStreet due to the quality of the startup’s management:

    “There could be a problem here if you try to be all things to all people. Like I’ve often said, Chipotle didn’t invent or reinvent the burrito. They just had a management, an approach and a focus that made them more successful than other burrito shops. And I think that’s what these guys can do in this space.”