Michael Burry Just Dumped His Biggest Stock Holding — But His Next Move May Surprise Investors
A losing stock can serve two very different purposes as year-end approaches. It can remain a bet on a business recovery, or become a way to reduce taxes on gains elsewhere. Investors don’t necessarily have to abandon the first to accomplish the second.
But there’s a catch. The IRS generally disallows a loss deduction when investors buy substantially identical securities within 30 days before or after selling. That creates an awkward stretch when a shareholder may still like a company but needs to keep some distance. Michael Burry’s latest reported trade puts the concept front and center.
Michael Burry’s Stock Exit Has a Return Ticket
On Oct. 6, MarketWatch reported that Burry sold Lululemon Athletica (LULU), described as his largest holding, and bought Deckers Outdoor (DECK) instead. Citing reports of his Substack subscriber discussion, the outlet noted that he intended to repurchase Lululemon stock after a month. That points to November, although an intention isn’t a completed trade.
Selling below your purchase price realizes a capital loss that can offset gains elsewhere in a taxable portfolio. IRS Publication 550 also permits most taxpayers to deduct up to $3,000 of excess net capital losses against ordinary income annually, carrying unused losses forward.
Deckers keeps Burry invested in consumer brands during the waiting period. It doesn’t guarantee he’ll capture a Lululemon rebound, and if LULU stock rallies while DECK stock stalls, the tax benefit could come with an investment cost.
Two Consumer Brands, Different Results
Burry’s continued interest in consumer discretionary deserves attention, but Lululemon’s falling sales and reduced outlook explain why investors remain wary. The companies’ latest earnings releases show the gap:
Metric |
Lululemon: Q2 Fiscal 2026 |
Deckers: Q1 Fiscal 2027 |
| Quarterly Revenue | $2.4 billion |
$1.02 billion |
| Revenue Growth (YOY) | −4% |
+6% |
| Operating Income | $453.7 million |
$155.3 million |
| Operating Income Growth (YOY) | −13% |
−6% |
Lululemon’s Americas comparable sales declined 12% year-over-year (YOY), while reported EPS of $2.92 also included $0.86 from tariff refunds and associated interest. Subtracting that benefit leaves $2.06 per share, underscoring how much the refund supported reported profit.
Conversely, Deckers’ HOKA and UGG brands continued growing in the first quarter of fiscal 2027. HOKA sales rose nearly 8%, while UGG sales advanced almost 5%. Deckers also held $1.6 billion in cash with no outstanding borrowings. Granted, declining operating income shows that sales growth hasn’t eliminated expense pressure.
Key Takeaway
Burry’s reported sale looks like tax management while preserving a recovery bet. It offers no evidence that Lululemon’s operating troubles have ended. At roughly 11 times forward earnings, Lululemon offers a low valuation, but further earnings cuts could undermine that apparent bargain.
My verdict? Avoid Lululemon stock until it can prove a real turnaround is in place, and not some potential one-off during a single quarter. Its Americas sales decline needs to first moderate at the least. Meanwhile, Deckers deserves closer research because revenue is still growing and its balance sheet provides breathing room, although caution remains warranted.
While tax-loss harvesting is a valid strategy, investors should buy businesses they want to own to buy-and-hold long term, and not just within Burry’s 30-day tax calendar.
On the date of publication, Rich Duprey did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.