## Burry's Contrarian Bet: Why This Legendary Investor Is Loading Up on Two Battered Stocks

Michael Burry, the investor whose prescient short bets against mortgage securities earned him a starring role in _The Big Short_, is at it again—this time going long on stocks that have been absolutely battered in 2025. After clearing out most of Scion Asset Management's holdings in the opening quarter of the year, Burry has shifted tactics dramatically in the second quarter, emerging as a major buyer of two names that the broader market has essentially abandoned.

The strategy mirrors his historically contrarian playbook: while most investors flee, Burry and his team identify assets trading at severe discounts and position for a rebound. This time, his targets are two household names bleeding double-digit percentage losses—both down at least 40% year-to-date.

## Lululemon: Turnaround Opportunity Amid Consumer Pullback

The premium athletic apparel maker **Lululemon** [(NASDAQ: LULU)](/market-activity/stocks/lulu) has had a brutal year, with shares plummeting approximately 47% as headwinds mount from multiple directions. The company faces intensifying competition, inflationary tariff pressures, a pullback in discretionary luxury spending, and the normalization of pandemic-era fitness trends that once powered explosive growth.

Yet Michael Burry saw opportunity in the wreckage. In Q2, Scion accumulated 50,000 shares outright while also establishing 400,000 additional shares of exposure through long call options—leveraging bets that the stock will appreciate to specific price levels before expiration dates.

The fundamental picture isn't as dire as the stock performance suggests. During the fiscal first quarter of 2025 (ended May 4), Lululemon delivered both earnings per share and revenue that exceeded Wall Street consensus and improved year-over-year. Management did lower full-year EPS guidance to a band of $14.58 to $14.78, down from the prior range of $14.95 to $15.15, citing macroeconomic uncertainty and shifting consumer behavior.

What may have caught Burry's eye: Lululemon maintains an exceptionally strong balance sheet with $1.3 billion in cash and zero debt. CEO Calvin McDonald signaled the company intends to "play offense" by leveraging competitive advantages and investing in growth initiatives. The firm is also implementing selective price increases to cushion tariff impacts. Trading at roughly 13.5 times forward earnings, the valuation suggests much of the pessimism is already baked in, leaving room for multiple expansion if execution improves and consumer sentiment stabilizes.

## UnitedHealth's Undervalued Insurance Moat

The nation's largest health insurer, **UnitedHealth** [(NYSE: UNH)](/market-activity/stocks/unh), presents a different type of challenge—one rooted in operational missteps and regulatory scrutiny rather than structural industry decline. The stock has cratered 41% through August 20, despite a meaningful recovery from its lows.

The core problem: management significantly underestimated medical cost utilization in 2025. Expenses now project $6.5 billion higher than originally anticipated, forcing a drastic downward revision of full-year EPS guidance to $16—a stunning 46% cut from the initial guidance of $29.50 to $30.

Additional pressure comes from a Department of Justice investigation into billing practices associated with Medicare Advantage, the government-reimbursed private insurance program that represents a material revenue stream for United.

This is precisely the type of washout that activates contrarian investors. Michael Burry acquired roughly 20,000 shares directly and layered on 350,000 shares of call option exposure—similar to his Lululemon positioning. Notably, heavyweight investors including Warren Buffett's Berkshire Hathaway and David Tepper's Appaloosa Management also moved to capitalize on the markdown.

Despite near-term turbulence, UnitedHealth retains formidable structural advantages. As the dominant healthcare insurer in America, the company wields significant pricing power. Operationally, the firm continues generating sufficient earnings to service debt obligations while maintaining a free-cash-flow yield exceeding 9% over the trailing twelve months. A 3% dividend yield provides downside income support for patient investors.

Burry's thesis appears straightforward: United can navigate current headwinds, restore operational execution, and eventually revert to historical profitability levels. The current valuation prices in worst-case scenarios.

## The Broader Burry Narrative

Michael Burry's 2025 playbook—exit entirely, dodge April's market turbulence, then re-enter selectively at distressed levels—exemplifies the opportunistic discipline that built his reputation. His Q2 accumulation of two deeply discounted names signals confidence that both companies have overshot on the downside relative to intrinsic value and long-term prospects.

Whether betting UnitedHealth can resolve its cost crisis or Lululemon can reignite growth while managing macroeconomic headwinds, Burry is essentially wagering that patient capital will be rewarded when temporary pressures ease and market sentiment normalizes. The dual use of both equity positions and call options suggests he's layering conviction—willing to own shares for the long haul while amplifying exposure to a faster recovery scenario through derivatives.

For investors tracking Burry's moves, the message is clear: when the original contrarian re-enters the market after a prolonged absence, the targets he selects merit serious consideration—even if (or especially if) consensus opinion still views them as troubled stories.