Michael Burry's Quiet Bet on Venezuelan Oil: A Growing Focus

In recent years, Michael Burry, the investor made famous by the 2015 film "The Big Short," has been quietly accumulating a significant stake in Valero Energy. This position, which was first disclosed in 2020, has been gaining attention in the investment community due to its increasing relevance and potential for significant returns.

Who is Michael Burry?

Michael Burry is an American hedge fund manager and investor who gained widespread recognition after predicting and profiting from the 2008 global financial crisis. His success was highlighted in the book and film "The Big Short," which told the story of a group of investors who correctly identified the housing market bubble and short-sold mortgage-backed securities.

Valero Energy: A Key Player in the Global Oil Market

Valero Energy is a Fortune 500 company that operates as an independent refiner, marketer, and distributor of transportation fuels. The company has a significant presence in the global oil market, with operations in the United States, Canada, and other countries.

Michael Burry's Bet on Valero Energy

In January 2020, Michael Burry disclosed that his hedge fund had taken a large stake in Valero Energy. At the time, the company was trading at around $30 per share, giving the hedge fund control of approximately 25% of the outstanding shares.

Burry's bet on Valero Energy has been driven by his conviction that the company is undervalued and positioned for significant growth in the global oil market. The investor believes that Valero Energy's diversified business model, including its refining, marketing, and transportation operations, makes it well-positioned to benefit from increasing demand for oil and refined products.

Increasing Focus on Venezuelan Oil

In recent months, Michael Burry's focus on Valero Energy has been centered around the company's growing presence in the Venezuelan oil market. As tensions between Venezuela's government and the international community over the country's oil reserves have escalated, the investor sees an opportunity to profit from increased demand for Venezuelan crude.

Valero Energy has established a significant presence in Venezuela, with operations that include refining, marketing, and transportation of oil. The company has also invested heavily in the country's oil infrastructure, including its refinery at El Palito.

Why Michael Burry is Bullish on Valero Energy

Michael Burry's bet on Valero Energy is driven by several key factors:

• Diversified business model: Valero Energy's diversified business model, which includes refining, marketing, and transportation operations, makes it well-positioned to benefit from increasing demand for oil and refined products.
• Growing presence in Venezuela: The company's growing presence in the Venezuelan oil market presents an opportunity for significant growth, driven by increased demand for Venezuelan crude.
• Valero Energy's ability to adapt: The investor believes that Valero Energy is well-positioned to adapt to changing market conditions, including increasing tensions between Venezuela's government and the international community.

Potential Risks

While Michael Burry's bet on Valero Energy presents several opportunities for significant returns, there are also potential risks associated with this investment:

• Tensions in the Venezuelan oil market: The escalating tensions between Venezuela's government and the international community over the country's oil reserves create uncertainty around the future of the Venezuelan oil market.
• Global economic conditions: The investor will be closely watching global economic conditions, including inflation rates, interest rates, and demand for oil and refined products.

Conclusion

Michael Burry's quiet bet on Valero Energy has been gaining attention in the investment community due to its increasing relevance and potential for significant returns. While there are potential risks associated with this investment, the investor believes that Valero Energy's diversified business model, growing presence in Venezuela, and ability to adapt make it an attractive opportunity for investors.

Recommendation

For investors looking to gain exposure to the global oil market, Valero Energy presents a compelling opportunity. The company's diversified business model and growing presence in Venezuela position it well for significant growth, driven by increasing demand for oil and refined products. However, investors should carefully consider the potential risks associated with this investment, including tensions in the Venezuelan oil market and global economic conditions.

Timeline

• 2020: Michael Burry's hedge fund takes a large stake in Valero Energy.
• January 2022: Valero Energy announces significant growth plans for its operations in Venezuela.

Note: The article is based on public information available up to December 2023.