Michael Burry likes water, is he onto something?

HFA Padded
Rupert Hargreaves
Published on
Updated on
When the film adaptation of Michael Lewis’ book The Big Short was released last year, it caused a stir. At the end of the movie, it is revealed that one of the film's heroes, Dr. Michael Burry the first institutional investors to discover the problems with and bet against the US subprime market, has now refocused his investing efforts on one commodity: water. But can water really be considered to be an asset class? This topic came up at the IMN's Alpha Hedge West Conference on September 8-9, 2016. Discussing "Water As An Asset Class” five hedge fund managers weighed in on how they are placing bets on the commodity to profit from several key developing trends.
water photo michael burry
Michael Burry likes water, is he onto something? Photo by photographykatjajust (Pixabay)

Michael Burry: The water trade 

Raul Pomares of Sonen Capital LLC identifies three themes that will drive the price of water and water assets over the next few years. These themes include 1) population growth, which will mean a greater global demand for food and water; 2) Urbanization, will lead to more demand for food but due to space constraints will make water scarce in key areas.; 3) Climate change, the big variable. Climate change could lead to droughts disrupting the world’s already fragile water infrastructure. In each of these scenarios, engineers will find themselves trying to develop ways of 1) improving water use efficiency/reuse, 2) improving water purity, and 3) protecting water resources from environmental changes. According to the 2030 Water Resource Group, global demand for water could exceed supply by 40% in 2030. Two-thirds of the world’s surface is covered in water, so for the time being, there’s plenty of this commodity to go around. Nonetheless, the majority of this water is undrinkable and improving the quality of existing water sources is becoming big business. Michael Underhill of Capital Innovations, LLC’s presentation focused on this topic. He believes the most compelling technology right now is graphene technology where water goes through a filter/screen and comes out pure. Middle Eastern state ABU Dhabi is using its oil wealth to back the development of this technology and US defense giant Lockheed has also devoted a portion of its R&D to the technology. [swpm_payment_button id=2022964]

This content is exclusively for paying members of Hedge Fund Alpha

Insider Strategies and Letters to Shareholders from the Top Hedge Funds and Maximize Your Portfolio Growth with Hedge Fund Alpha

Don’t have an account?

Subscribe now and get 7 days free!
This article is only available for Premium Members
Subscribe today and get :
Insider Strategies and Letters to Shareholders from the Top Hedge Funds
Exclusive Access to coverage of Private, Closed-Door Investor Conferences
Hedge Fund Manager Research Currently Producing 21% – 40% Returns Annually

Don’t have an account?

Subscribe now and get 7 days free!
HFA Padded

Sign up now and get our in-depth FREE e-books on famous investors like Klarman, Dalio, Schloss, Munger Rupert is a committed value investor and regularly writes and invests following the principles set out by Benjamin Graham. He is the editor and co-owner of Hidden Value Stocks, a quarterly investment newsletter aimed at institutional investors. Rupert owns shares in Berkshire Hathaway. Rupert holds qualifications from the Chartered Institute For Securities & Investment and the CFA Society of the UK. Rupert covers everything value investing for ValueWalk