Burry's Bold Contrarian Move: Why This Legendary Investor Is Betting on Two Beaten-Down Stocks

The Master of Timing Strikes Again

Michael Burry, the hedge fund manager immortalized in The Big Short for his prescient bets against the housing market, has done it once more. After a carefully timed portfolio liquidation in the first quarter that allowed his fund Scion Asset Management to sidestep April’s market turbulence, Burry is now aggressively deploying capital into two deeply depressed equities. His latest positions suggest he’s identified significant value where most investors see only red flags.

The timing of Burry’s moves continues to raise eyebrows. His near-total portfolio exit earlier this year, combined with strategic put options on major tech names including Nvidia, proved remarkably prescient. Now, with Q2 filings revealing aggressive accumulation in two stocks down at least 40% year-to-date, Burry appears to be making another calculated contrarian play.

UnitedHealth: Finding Opportunity in Healthcare Turmoil

UnitedHealth Group (NYSE: UNH) represents one of Burry’s most notable recent acquisitions. As America’s preeminent healthcare insurer, the company has endured a punishing year, with its stock down approximately 41% despite recent gains.

The sell-off stems from fundamental operational challenges. Management’s underestimation of 2025 medical costs has ballooned into a $6.5 billion headwind, forcing a dramatic earnings revision from the initially guided $29.50-$30 per share down to just $16. These headwinds include elevated utilization rates, escalating prescription drug costs, and demographic pressures from an aging population. Adding to the pressure, federal authorities are scrutinizing the company’s Medicare Advantage billing methodologies.

Yet Burry’s confidence in the underlying business remains evident. Beyond accumulating roughly 20,000 common shares, Scion purchased 350,000 shares via long call options—directional bets that UnitedHealth will recover. Prominent investors including Berkshire Hathaway’s Warren Buffett and David Tepper similarly capitalized on the weakness.

The investment thesis centers on UnitedHealth’s structural advantages. As the sector’s largest player, pricing power remains intact. Despite current headwinds, the firm generates substantial operational cash flow, maintains a free-cash-flow yield exceeding 9%, and distributes a nearly 3% dividend. Burry and fellow investors evidently believe near-term challenges are temporary obstacles for a fundamentally sound enterprise.

Lululemon: Discounted Despite Market Skepticism

Lululemon Athletica (NASDAQ: LULU), the premium fitness apparel retailer, has suffered even more severely, declining nearly 47% year-to-date. The stock has been battered by intensifying competition, tariff pressures, consumer pullback from luxury discretionary spending, and the normalization of pandemic-era fitness enthusiasm.

Burry’s positioning is substantial: 50,000 direct share purchases combined with 400,000 shares acquired through long call options during Q2. This dual approach signals conviction in an eventual recovery.

The operational narrative, however, remains mixed. Lululemon’s fiscal Q1 2025 results (ended May 4) actually exceeded expectations, with both earnings and revenue beating Wall Street estimates on a year-over-year basis. Management’s guidance revision, however, proved disappointing—full-year EPS narrowed to $14.58-$14.78 from $14.95-$15.15, below consensus expectations. CEO Calvin McDonald attributed the caution to a “dynamic macroenvironment.”

The company’s financial position, however, provides a foundation for optimism. Lululemon maintains $1.3 billion in cash with zero debt, positioning it to weather near-term headwinds while executing modest price increases to offset tariff impacts. Trading at just 13.5 times forward earnings, the valuation has compressed to reflect most known challenges.

Burry’s thesis likely centers on this simple premise: most negative factors are already embedded in the current price, while the brand’s strength and fortress balance sheet offer meaningful upside as macroeconomic pressures ease.

The Contrarian’s Calculation

Burry’s latest moves reflect a consistent pattern: identifying moments when market pessimism has created genuine asymmetric opportunities. Both UnitedHealth and Lululemon face legitimate near-term headwinds, yet their underlying competitive positions and financial structures suggest recovery is plausible. For investors comfortable with conviction and timing, these positions embody classic deep-value investing—purchasing quality assets when sentiment reaches extremes.