Michael Burry, the investor famous for calling the 2008 housing crash, has made two new bets that are turning heads: Lululemon (NASDAQ: LULU) and MercadoLibre (NASDAQ: MELI). Both stocks have taken a beating this year despite real underlying business strength, which is exactly the kind of setup Burry has built his reputation on chasing.
Lululemon shares are down more than 40% year-to-date after fiscal Q1 revenue grew just 4% and North American sales stayed soft. But the bull case has real numbers behind it — China revenue grew 23% year-over-year in constant currency, international revenue overall rose 16%, and the company carries no debt while sitting on $1.51 billion in cash. The stock now trades at just 10.5 times forward earnings, a multi-year low against a five-year average closer to 29 times, with a new CEO set to take over soon. MercadoLibre tells a different story: Latin America’s largest e-commerce marketplace posted 50% year-over-year revenue growth to $10.2 billion in Q2, its fastest pace in four years, yet shares fell 6% after the print because operating margin dropped 550 basis points. Hedge fund interest has cooled slightly on both names — LULU saw hedge fund holders drop and MELI lost 11 funds quarter-over-quarter — even as Burry moves in.
For retail investors, this is a classic value-versus-momentum split. Burry is betting the market has overcorrected on both names, pricing in permanent damage where the underlying growth story — China expansion for Lululemon, marketplace scale for MercadoLibre — is still intact. The risk is real: apparel names that lose momentum can stay cheap for years, and margin compression at MercadoLibre could persist if competition in Latin American e-commerce keeps intensifying. If you’re considering following Burry into either name, treat the low multiples as a starting point for research, not a guarantee — and watch the next earnings print closely for signs the margin and growth trends are stabilizing.
