The 'Big Short's' Michael Burry Has Seen His Largest Position Fall Over 50% This Year. Should Investors Sell the Stock?
2026-09-04 17:28
•Bram Berkowitz •The Motley Fool
•• • Axe Cap view
Why Michael Burry’s Bet on Lululemon Isn’t a Clear Signal for JSE Investors
Lululemon’s sharp decline underscores risks in consumer discretionary stocks but offers limited direct insight for South African investors.
Michael Burry’s Lululemon stake dropping more than 50% this year speaks to how quickly fortunes can turn in US consumer brands. The company’s struggles around fading brand appeal and weak North American sales are red flags that even stellar gross margins can’t completely offset. For JSE investors, the signal is clear: retail is vulnerable to fickle trends and economic pressure, which is worth keeping in mind when analyzing local counters like Woolworths and Shoprite. Still, Lululemon’s CEO change and Burry’s willingness to add below $100 suggest a potential rebound if the company innovates successfully. That said, South African retailers face their own challenges—weak consumer demand and currency volatility—so don’t assume a turnaround there will mirror theirs. Watch the USD/ZAR exchange rate closely, as rand weakness could further squeeze margins for import-heavy retailers. this is just our opinion and not financial advice
Avoid chasing US consumer discretionary trends via stocks like Lululemon; instead, watch rand levels and consider selective exposure to resilient local retailers like Shoprite. Hold off on buying Woolworths until there’s clearer evidence of stabilizing local demand.
- USD/ZAR
- Shoprite
- Prolonged US consumer demand weakness
- Further rand depreciation
6/10
Michael Burry's largest hedge fund position, Lululemon (LULU), has plummeted over 52% this year following weak earnings and a second consecutive full-year guidance cut. The luxury apparel maker reported a 9% comparable sales decline, citing negative brand sentiment, weak North American sales, and stale product lines. Despite the struggles, Burry remains invested and would buy more below $100, though analysts are divided with some slashing price targets significantly lower.
Our take is based on reporting first published by The Motley Fool.