Shares of Canadian clothing retailer Lululemon Athletica (LULU) are rising on reports that famed investor Michael Burry has bought the beaten-down stock.
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Burry, who refers to himself as a a value investor, famously bet against the subprime housing market ahead of the 2008 financial crisis, a trade chronicled in the book “The Big Short.” In his Substack post, Burry referred to the Lululemon stock purchase as a “full-sized stake” without saying how much he invested in the Vancouver-based athletic apparel retailer.
This is not the first time Burry has owned LULU stock. He has held a position in the company several times in recent years. He regularly refers to Lululemon’s shares as “undervalued.” The latest purchase by Burry comes with Lululemon’s stock down 43% this year. The shares have sunk amid an escalating public feud between company founder Chip Wilson and Lululemon’s board of directors.
Lululemon’s revenue by channel. Source: The Fly
An AI Warning from Michael Burry
Wilson is upset with the new CEO hired by Lululemon’s board of directors, as well as several new board appointees. He has set-up a proxy fight that will be decided by shareholders at the company’s annual meeting this June. Burry seems unphased by the internal battle raging at the company.
The investor did, however, issue a fresh warning about artificial intelligence (AI) stocks in his latest Substack post. Burry writes that the AI boom is creating market distortions similar to those seen during the dotcom era of the late 1990s. He adds that many undervalued stocks are being overlooked as capital flows into AI-related investments and calls the current situation an “asset bubble.”
Is LULU Stock a Buy?
Lululemon Athletica’s stock has a consensus Hold rating among 20 Wall Street analysts. That rating is based on one Buy and 19 Hold recommendations issued in the last three months. The average LULU price target of $178.38 implies 23% upside from current levels.
