To The Moon

$Alibaba(BABA)$ $Estee Lauder(EL)$ $Baidu(BIDU)$ $JD.com(JD)$ $MOHO RESOURCES LTD(MOH.AU)$

Michael Burry, the legendary hedge fund manager immortalized in The Big Short, has once again captured the market’s attention by making a move that few other investors would dare attempt. Known for his uncanny ability to spot bubbles — and profit massively when they pop — Burry has just liquidated his entire U.S.-listed stock portfolio, worth over $70 million, and plowed everything into just one stock: Estée Lauder (NYSE: EL).

Even more striking? At the same time, he’s betting against the broader market with over $187 million in put options, targeting some of the market’s biggest darlings, including Nvidia and major Chinese tech companies.

Is this brilliance or recklessness? A masterclass in contrarian investing — or a sign that Burry sees something ominous on the horizon?

Let’s break down what’s happening, what Estée Lauder represents to Burry, and what the rest of his positioning suggests about his outlook on the economy, the stock market, and global risk.

From a Diversified Portfolio to a Single Stock Focus

To understand the gravity of Burry’s move, let’s rewind to Q4 2024. Back then, his hedge fund, Scion Asset Management, held a relatively diversified portfolio. It was heavily weighted toward Chinese tech names such as:

• Alibaba (BABA)

• JD.com (JD)

• PDD Holdings (PDD)

• BU (Beijing United)

• Trip.com (TCOM)

These were paired with a handful of defensive value plays in consumer staples, healthcare, and utilities. It was the kind of barbell strategy that many institutional investors embraced — growth exposure in China, safety and yield in the U.S.

But in Q1 2025, everything changed.

As of the latest 13F filings, Burry sold every position in his portfolio. Everything. All the Chinese tech, all the U.S. value stocks, gone. In their place, just one equity holding remains: Estée Lauder — and not just holding, but doubling his stake from 100,000 to 200,000 shares, now worth roughly $13.2 million.

That makes it 100% of Scion’s disclosed long U.S. stock portfolio.

Let that sink in: Burry has gone all-in on a single, deeply out-of-favor company that most analysts have downgraded.

Estée Lauder’s Fall from Grace

Estée Lauder is one of the world’s most iconic beauty brands, with a rich legacy, global reach, and premium positioning in cosmetics and skincare. Yet despite that, the stock has fallen more than 80% from its 2021 highs — a stunning collapse for a company of its size and reputation.

Recent quarterly reports haven’t been kind:

• Net sales fell 10% YoY in Q1 2025.

• Operating margins shrank by several percentage points.

• Cash flow declined sharply.

• EPS has been cut in half compared to pre-pandemic highs.

The pain has been especially acute in the Asia-Pacific region, which typically generates about 31% of the company’s revenue. Weak Chinese demand, slower-than-expected recovery post-COVID, and geopolitical instability have all hit Estée Lauder hard. Analysts have responded with a wave of downgrades and lowered price targets, pushing the stock deeper into value territory.

But this is where Michael Burry sees opportunity.

A Classic Contrarian Play

Burry is no stranger to buying what others hate.

He made his name — and fortune — by shorting the U.S. housing market in the mid-2000s, when the entire financial industry believed housing was bulletproof. That single move netted $700 million for his investors and himself.

And he’s repeated the pattern before. In 2019, Burry bought into GameStop (GME), long before it became a meme stock. Back then, the retailer was bleeding market share, considered obsolete in the age of digital gaming. Yet Burry saw hidden value — in real estate, in brand loyalty, and in underappreciated turnaround potential.

By the time he exited the position in late 2020, he had reportedly made over $100 million, though he missed the Reddit-fueled rally that sent the stock to $500.

With Estée Lauder, he appears to be following the same playbook: buy when others are panicking, find intrinsic value the market is ignoring, and wait for mean reversion.

Looking Under the Hood: Why Burry Might Be Bullish

Despite its headline struggles, Estée Lauder retains some fundamentally strong metrics:

• Gross Margins: Still around 75%, among the highest in the consumer discretionary sector. This suggests pricing power and brand strength are intact.

• Price-to-Sales Ratio: At 1.67, it’s trading at a discount relative to peers like L’Oréal or Shiseido, which often fetch multiples in the 3–5x range.

• Turnaround Plan: New CEO Fabrizio Freda has laid out a strategic recovery plan focused on cost controls, supply chain improvements, and brand reinvestment.

• Emerging Market Upside: If Chinese consumer sentiment improves or tourism rebounds, Estée Lauder’s Asia-facing portfolio could see a significant boost.

• Defensive Nature: Cosmetics often behave like staples during recessions—affordable indulgences that persist even during economic downturns.

In short, this isn’t a bankrupt zombie company. It’s a premium brand going through a cyclical slump — one that could normalize as macro conditions stabilize.

The “Lipstick Effect” — And Why It Matters

There’s another layer to Burry’s thinking: macroeconomic positioning.

Estée Lauder may be part of a broader defensive rotation. The “lipstick effect” is an economic theory suggesting that during recessions, consumers shift their spending from big-ticket items to smaller luxuries—like makeup, skincare, and fragrances. It’s not just a theory, either. The company’s own history supports it:

• In 2001, U.S. GDP grew just 1%, but Estée Lauder’s revenue rose 5.5%.

• During the 2008 financial crisis, GDP contracted 2.8%, but the company posted 7.7% revenue growth.

Burry may be using Estée Lauder as a defensive anchor in anticipation of a macro downturn, betting that its products will hold up better than cyclical names or tech.

But He’s Not Just Buying — He’s Shorting

While the Estée Lauder position dominates the headlines, the other side of Burry’s portfolio tells a more ominous story. He’s betting big against some of the highest-flying stocks of the last year via put options.

These are not small trades. Here's a breakdown of his disclosed put option positions:

• Nvidia (NVDA): $97.5 million

• Alibaba (BABA): $26.45 million

• PDD Holdings (PDD): $23.7 million

• JD.com (JD): $16.45 million

• BU (Beijing United): $9.2 million

• Trip.com (TCOM): $12.72 million

That’s over $187 million in bearish bets, primarily against AI and Chinese tech—two of the hottest trades in the past year.

Why Short Nvidia?

Nvidia is the poster child of the AI boom, with shares having more than tripled since early 2023. But Burry appears skeptical.

His likely rationale?

• Valuation Risk: Nvidia trades at forward earnings multiples over 40x, well above historical norms.

• AI Hype Saturation: Much of the AI growth narrative may already be priced in.

• Macro Sensitivity: High-multiple tech tends to fall hardest when rates stay elevated or recession fears return.

• Concentration Risk: Nvidia now dominates a huge chunk of the S&P’s gains—making it a tempting short for a macro bear.

Why the Turn on Chinese Tech?

Burry’s sudden reversal on Chinese tech may reflect multiple concerns:

• China’s Slow Recovery: Hopes of a post-COVID consumption boom have faded, with data showing weak retail sales, falling property prices, and youth unemployment still elevated.

• Geopolitical Tensions: U.S.-China decoupling, tariffs, and export bans have created uncertainty around Chinese ADRs.

• Capital Flight: Foreign investors have been steadily pulling capital out of China due to structural economic concerns and regulatory unpredictability.

• Tech Crackdowns: Government restrictions on tech platforms have yet to fully unwind.

Given all that, Burry may believe that recent rebounds in these stocks are unsustainable.

Reading Between the Lines: What Burry Sees Ahead

When you combine Burry’s Estée Lauder bet with his massive short positions, a clear thesis emerges:

1. A broad market correction is likely — particularly in high-flying tech.

2. China is still fundamentally weak, and investor optimism is premature.

3. Consumer defensives will outperform, especially those with global brands and historical recession resistance.

4. Concentration creates fragility — both in the S&P 500 and investor sentiment.

7 Key Takeaways from Burry’s Q1 2025 Portfolio Shift

1. Complete liquidation of all previous holdings, including Chinese tech and U.S. value stocks.

2. All-in on Estée Lauder, a cosmetics giant down 80% from its highs.

3. $13.2 million position now makes up 100% of his long stock exposure.

4. $187+ million in put options, targeting Nvidia and the same Chinese tech stocks he just exited.

5. Likely sees recession or economic slowdown, hence favoring a consumer defensive name.

6. Bearish on AI and China, believing valuations have run too far ahead of fundamentals.

7. Classic contrarian move, betting on a turnaround in a hated stock while others chase momentum.

Final Thoughts: Is This Genius or Madness?

Michael Burry is a notoriously enigmatic investor. He rarely explains his reasoning, doesn’t give interviews, and often leaves the market guessing. But his track record speaks volumes. He’s been early — often too early — but he’s usually been right.

His all-in bet on Estée Lauder may look reckless on the surface, but when framed as a defensive contrarian play, it starts to make sense. At the same time, his put options suggest a belief that market euphoria in AI and Chinese tech is about to fade — potentially dramatically.

If he’s right, Estée Lauder may not only survive the storm but thrive in it. If he’s wrong, Scion Asset Management is exposed in a way most fund managers would never dare.

Either way, Burry’s moves are worth paying attention to. He may not always explain himself — but his portfolio tells a story.

And right now, it’s a story of recession, reversal, and redemption.

Disclaimer: I want to make it clear that I am not a financial advisor, and nothing I say is intended to be a recommendation to buy or sell any financial instrument. Additionally, it's important to remember that there are no guarantees or certainties in trading or investing, and you should never invest money that you can't afford to lose.

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