Is Michael Burry's Latest Contrarian Bet About to Pay Off Again? Two Beaten-Down Stocks Tell the Story

The Plot Twist: From Selling Everything to Going All-In

Michael Burry made headlines when Scion Asset Management liquidated nearly its entire portfolio in Q1, a move that proved prescient as markets cratered in early April. Now the plot has twisted dramatically. Fresh 13F filings reveal Burry has shifted into offense mode in Q2, aggressively accumulating two stocks that have gotten absolutely pummeled—both down over 40% year-to-date. The question isn’t whether Burry sees value; it’s whether the market will eventually agree.

This pattern is vintage Burry. The investor famous for betting against the housing market bubble, immortalized in The Big Short, has a track record of buying when everyone else is selling. He’s not chasing momentum—he’s hunting for distressed opportunities others have abandoned.

UnitedHealth: When Healthcare’s Biggest Player Hits a Wall

UnitedHealth (NYSE: UNH) sits as America’s largest healthcare insurer, yet the stock has been decimated, falling nearly 41% through August. The damage stems from a perfect storm: management drastically underestimated medical costs, now projecting expenses $6.5 billion higher than originally guided. This forced them to slash full-year earnings guidance to $16 EPS from an initial $29.50-$30 range—a gut-punch that sent investors fleeing.

Adding fuel to the fire, the DOJ is scrutinizing the company’s Medicare Advantage billing practices, creating regulatory uncertainty on top of operational headwinds.

Yet Burry sees differently. His Scion fund bought roughly 20,000 shares outright and deployed 350,000 shares via long call options—essentially betting the stock rebounds to or above specific price points. He’s not alone; Warren Buffett’s Berkshire Hathaway and David Tepper’s Appaloosa Management also nibbled on this dip.

The underlying math still works. UnitedHealth generates sufficient operational cash to service its debt and maintains a free-cash-flow yield exceeding 9% over the past year. The dividend yield hovers near 3%. As the largest player in its sector, the company retains significant pricing power. Burry appears convinced the near-term turbulence is temporary and that United can recover its historical trajectory.

Lululemon: Luxury Spending Takes the Heat

Lululemon (NASDAQ: LULU), the premium activewear brand, has fared even worse—down roughly 47% this year. The headwinds are multifaceted: intensifying competition, tariff pressures, consumer hesitation around luxury purchases, and fading pandemic-era exercise tailwinds have all converged.

Yet Burry struck again. Scion acquired 50,000 shares directly and 400,000 through long call options in Q2. On the surface, Lululemon’s actual operational performance hasn’t cratered. In their fiscal Q1 ending May 4, the company beat both EPS and revenue estimates on a year-over-year basis. Management, however, trimmed full-year EPS guidance to $14.58-$14.78 from $14.95-$15.15, citing a “dynamic macroenvironment.”

The balance sheet is fortress-like: $1.3 billion in cash, zero debt. CEO Calvin McDonald signaled the company would “play offense” and implement modest price increases to offset tariff impacts.

Trading around 13.5x forward earnings, Lululemon looks like a classic Burry contrarian play. The stock price has already discounted most concerns. The company’s strong balance sheet and brand moat can weather near-term turbulence. With a solid long-term runway ahead, today’s depressed valuation could look like a steal in hindsight.

The Bigger Picture: Why Burry’s Playbook Still Works

What ties these moves together? Burry is essentially buying when markets have overshot downside risk. Both UnitedHealth and Lululemon face real headwinds, but neither is broken. Both maintain financial cushions and market positions that should allow them to navigate the cycle and emerge stronger.

Whether the market embraces this thesis in the coming quarters will reveal whether Michael Burry has struck gold again—or if this contrarian bet needs more time to simmer.