THE APEX TIMES
Michael Burry Adds to Lululemon, Saying LULU’s Value Beats Microsoft
The hedge fund founder cited tariff-driven margin pressure and a long-term rise in tangible book value as he boosted a stake in Lululemon after the retailer cut guidance.
Michael Burry, the hedge fund founder known for contrarian investing, said he has increased his position in Lululemon Athletica, arguing that “relative value” in LULU now outweighs Microsoft. His comments surfaced alongside fresh market reaction to Lululemon’s latest quarterly results, which came with softer guidance and renewed investor concern about demand.
Lululemon’s outlook has deteriorated since its fiscal first-quarter update, with the company warning that its business is slowing heading into the second quarter. According to the report, Lululemon expects Q2 revenue of about $2.45 billion to $2.48 billion, roughly 2% to 3% lower than a year earlier, and it also reduced its full-year 2026 revenue forecast to $11.0 billion to $11.15 billion. That is below a prior range of $11.35 billion to $11.5 billion.
Burry attributed the first-quarter profitability pressure largely to tariffs and related trade costs. He argued that those items, rather than a breakdown in the underlying business, were the main drivers of weaker gross margins in the period. The report also noted that Burry viewed the earnings call as light on “meaningful updates,” while saying markets may be underestimating Lululemon’s financial baseline.
In his assessment, Burry highlighted Lululemon’s tangible book value per share, a metric that roughly compares a company’s balance-sheet value to its share count after excluding intangible assets. He said tangible book value per share has doubled over the last three-plus years, from about $20 per share to about $40 per share. He also pointed to what he described as high returns on equity and capital as part of that longer-term picture.
Despite those positives, Burry acknowledged the market pessimism around the stock. The report said he noted that of 32 Wall Street analysts covering LULU, only 2 have buy ratings, which he characterized as the least cheerful consensus he has seen for a company in its financial situation, absent significant legal or regulatory liabilities.
The report said Burry increased his stake after Lululemon shares fell into the low-to-mid $110 range following the post-earnings selloff. It also stated that Lululemon’s shares have declined about 45% year-to-date, even as retail sentiment on Stocktwits remained strongly bullish.
For context, Microsoft is a large-cap technology company that investors typically treat as a long-running cloud and software franchise, while Lululemon is a consumer brand that depends on product cycles, inventory discipline, and global demand for athletic apparel. Burry’s specific claim was that the relative value in LULU and PayPal (PYPL) outweighed Microsoft “at this time,” effectively reframing his portfolio priorities around valuation rather than sector familiarity.
Still, important details remain unclear from the reporting. The post did not provide the size of Burry’s added position in Lululemon (such as number of shares or dollar amount), nor did it cite any specific regulatory filing or update that would let outside investors verify the precise level of ownership. It also did not lay out a specific timeline for whether the stake increase is tied to any particular catalyst beyond the valuation and balance-sheet framing.
Why It Matters
- Burry’s “relative value” framing highlights how a prominent value investor is comparing a consumer brand’s balance-sheet metrics against a mega-cap technology leader’s market price.
- Guidance cuts at Lululemon are becoming the key near-term debate, even as Burry’s comments suggest he thinks profitability pressure is more policy-driven than business-structure driven.
- The market reaction to Lululemon’s earnings illustrates how quickly sentiment can shift when revenue expectations soften, potentially affecting other consumer stocks with similar demand-cycle risk.
- If Burry’s thesis spreads, it could encourage more investors to revisit valuation metrics such as tangible book value in beaten-down retail names, rather than focusing only on near-term revenue trajectories.
- The contrast with Microsoft also indicates that even widely held technology positions can be deprioritized by contrarian investors when they believe alternative assets offer better risk-reward.
Key Facts
- Michael Burry said he boosted his Lululemon position and that “relative value” in LULU (and PYPL) outweighs Microsoft.
- Lululemon warned of slowing business ahead of Q2, with Q2 revenue expected at about $2.45 billion to $2.48 billion.
- Lululemon cut its full-year 2026 revenue forecast to $11.0 billion to $11.15 billion, down from a prior range of $11.35 billion to $11.5 billion.
- Burry attributed Lululemon’s Q1 margin weakness largely to tariffs and other trade-related costs.
- Burry said Lululemon’s tangible book value per share doubled from about $20 to about $40 over roughly the last three-plus years.
- The report said Burry increased his stake after LULU shares fell into the low-to-mid $110 range.
- Burry cited analyst coverage showing only 2 buy ratings out of 32 and described the consensus as unusually pessimistic for the company’s financial condition.
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