Michael Burry Sheds Portfolio, Bets on Makeup Company Estée Lauder
Michael Burry, known for predicting the subprime mortgage crisis in 2008, sold a major portion of his holdings during Q1 to focus on a single cosmetics stock: Estée Lauder. Analysts believe Burry expects a recession, based on the notion that makeup purchases tend to increase during economic downturns as consumers’ spending habits shift.
Michael Burry, the investor who accurately predicted the 2008 housing crash, has revealed a new set of investments that have puzzled the financial sector. Earlier this month, regulatory filings of Burry’s investment company, Scion Asset Management, showed that the firm had sold all of its holdings to focus on just one stock.
Surprisingly, it was not big tech or artificial intelligence (AI) linked, but a name that would have flown under the radar of anyone if Burry had not picked it: Estée Lauder. As it stands now, Burry’s whole investment portfolio encompasses just this stock.
Burry’s bet on makeup also included another notable move, as Scion reported puts on big tech companies like Nvidia and Chinese giants such as Alibaba, JD, and Baidu. Many believe these investments indicate that Burry is positioning himself for an upcoming intensification of the trade war, shedding Chinese holdings as well as Nvidia, which has a growing demand for AI-derived silicon.
Nonetheless, doubling down on his earlier Estée Lauder bet has analysts speculating that the famous investor might be preparing for a recession in the short term.
Burry would be betting on the validity of the lipstick index theory, which suggests that small luxury purchases like lipstick and makeup substitute for costlier alternatives during economic downturns. However, the hypothesis, first publicized by Estée Lauder’s heir Leonard Lauder, has faced increased opposition, with analysts referring to the indicator as controversial.
In May 2024, Burry allocated $10 million in gold through Sprott Physical Gold Trust, a fund that allows investors to purchase gold without having to handle custody of the precious metal. This allocation arrived early to the gold bull run that exploded this year.
Read more: ‘Big Short’ Investor Michael Burry Goes Hard on Gold, Invests $10 Million in Q1