Scion Asset Management, LLC is a fee-only firm headquartered in Saratoga, California. This firm does not manage money for individual clients – it provides advisory services to investment funds. To find an advisor that does, consider using SmartAsset’s free financial advisor matching service.
Scion Asset Management Background
Scion was founded in 2013 by Michael J. Burry, often referred to as the "Big Short" investor because of the eponymous movie about himself, a role played by Christian Bale. Besides his link to Hollywood, Burry emerged more recently in the news after his stake in GameStock soared nearly 1,500% in early 2021.
That drama was followed in May of that year when Scion, in an SEC filing, revealed it was the owner of puts against 800,100 Tesla shares, worth roughly $534 million. A put is a bet that a security will go down in price. By the end of June, Scion reportedly increased its bet against the electric car manufacturer, holding put options on 1.1 million Tesla shares. Scion also bet against Cathie Wood's Ark Innovation ETF, a growth fund that produced returns of 86% between August 2020 and August 2021. Tesla is the fund's largest holding.
Besides Burry, the firm’s management includes chief operating officer/chief financial officer George Serra and chief administrative officer Jonathan Hallam. It’s important to note, however, that the private investment funds count as members of Scion Asset Mangement’s client base. We look further into the company’s client base below.
Scion Asset Management Client Types and Minimum Account Sizes
Scion Asset Management only provides discretionary investment advice to four investment funds in total. The company’s Form ADV lists all four as pooled investment vehicles.
Additionally, all private investment funds are based in the Cayman Islands or Delaware. The firm says that investors in the private investment funds may also include high-net-worth individuals, foundations, trusts, charitable organizations, family offices, a fund of hedge funds, corporations and businesses, pension plans and endowments.
The firm does not require a minimum investment amount for a separately managed account, but it does for its private investment funds. For Scion G7 and Scion G7 Offshore funds – which serve as feeders into the Scion Master G7 funds – the firm generally requires a $1.5 million minimum investment. For the Scion Value G7 fund, however, the firm requires a minimum account size of $500,000. The firm may also change the minimum or make an exception at its sole discretion. The firm requires each investor in a private fund to be a qualified purchaser, a qualified client or an accredited investor.
Services Offered by Scion Asset Management
Scion Asset Management implements an investing approach that aims to simultaneously diversify their clients’ portfolios and increase clients’ success rates. The firm may invest in a range of securities, including equities, exchange-traded funds (ETFs), government securities, corporate debt, convertible securities, options, warrants, equity swaps and credit default swaps, as well as derivative instruments.
Institutional advisory services include:
- Discretionary investment management
- Fundamental investment analysis
- Market judgement
- Risk management
- Technical investment analysis
Scion Asset Management Investment Philosophy
Scion says it values fundamental research and strives for long-term capital appreciation. The firm also describes its approach as one that seeks out undervalued securities when conducting investment research. Through this method, the firm analyzes the stock market from a range of approaches, which may include technical and macroeconomic factors. Scion Asset Management also says it works to provide clients with a diverse mix of portfolio opportunities it believes will increase their chances of investment success.
The firm may also use leverage and derivative strategies to increase the rate of client success. The advisory also believes in using fundamental analysis methods to assess market conditions from a holistic standpoint. When it comes to risk, Scion Asset Management says it works to identify, measure and observe any risks that may affect a client’s investments.
Fees Under Scion Asset Management
Though Scion Asset Management doesn’t list a fee schedule on its website or firm brochure, the company charges clients both a management fee and incentive allocation/performance-based fee for investment services. The management fee requires clients to pay up to 2% annually. The firm says it deducts asset-based fees from the investor’s capital account in advance and on a monthly basis. Scion Asset Management may also adjust the fee for clients or investors through a separate agreement, without notifying the other clients or investors in a fund. In addition, the firm may also reduce or waive management fees at its discretion.
For incentive allocation fees, Scion Asset Management will earn up to a 20% share in the appreciation amount of each client’s account. The firm says it bases its incentive allocation fees on each year’s performance. It charges the fees on Dec. 31 each year.
What to Watch Out For
Scion Asset Management does not have any disclosures of legal or regulatory action, according to its most recently filed Form ADV.
As noted above, this firm does not manage money for individuals. If you are seeking that type of firm, consider using SmartAsset’s free financial advisor matching service.
Potential clients should note that Scion Asset Management retains the authority to shift their clients’ investment activities without providing notice. The firm explains that it may expand or reduce clients’ investment strategies to strategically meet market conditions. Therefore, it may buy or sell securities without obtaining specific client consent.
Employees within the firm may also use personal trading accounts to purchase the same securities it may recommend for its clients. However, firm professionals may nullify such transactions if they pose a conflict of interest for clients.
Opening an Account With Scion Asset Management
You’ll generally have two options if you’re interested in opening an account with Scion Asset Management. If you live near Saratoga, you can stop by the firm’s office to speak with a representative. You can also set up an appointment with an employee by calling the firm at (408) 441-8400.
All information was accurate as of the writing of this article.
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