‘The Big Short’ Investor Michael Burry Justifies Lululemon Tax-Loss Sale: ‘I Am Not Throwing In The Towel’

Michael Burry sold Lululemon to harvest tax losses and bought Deckers as a temporary proxy.

• Lululemon fell to an 8.5-year low of $91.14 on Monday. 
• Burry sold LULU to harvest tax losses and bought Deckers as a temporary proxy.
• The famed investor plans to repurchase Lululemon Athletica after 30 days.

 Famed “The Big Short” investor Michael Burry has executed a strategic tax-loss sale of Lululemon Athletica Inc. (LULU), swapping the beaten-down athleisure pioneer for Deckers (DECK) as Lululemon hit a fresh 52-week low on Monday. Burry clarified he plans to repurchase LULU after the mandatory 30-day wash-sale period. 

Lululemon Athletica stock inched up 0.2% overnight, ahead of Tuesday. The stock has been falling for nine straight sessions. 

Inside The ‘Proxy Swap’: Why Burry Sold LULU

On Monday, Lululemon shares plummeted to $91.28—an 8.5-year low. The selloff capped a brutal multi-month slide sparked by weak fiscal second-quarter (Q2) 2026 results, in which Americas comparable sales dropped 12% and management slashed full-year revenue outlooks.

Instead of taking more short-term losses on LULU, Burry sold his shares to claim a tax benefit. He then bought Deckers shares temporarily to keep similar market exposure while following the IRS wash-sale rules. 

“The big one is LULU. I swapped my LULU shares for Deckers Outdoor (DECK) shares as a proxy and as an investment I like in its own right. I expect whatever forces cause LULU to recover over the next month before I can buy it back again and keep the tax loss, well, those forces will affect DECK too. Both are remarkably similar though LULU is more discounted in some ways.”

The trade raised eyebrows because Burry has been a vocal Lululemon bull on the way down. Some followers read the sale as a capitulation. Burry pushed back in his Substack chat.

"I'm not throwing in the towel. I will be back after the wash period," he wrote.

The IRS wash-sale rule disallows a tax loss if an investor buys the same or a substantially identical security within 30 days before or after the sale. Burry's workaround is to hold Deckers in the meantime, which he described as maintaining "proxy exposure."

Burry's Technical Case For Lululemon 

Following Burry’s move, a subscriber said that Lululemon has decisively fallen below the key $100 level, confirming a bearish breakdown, and added that stocks that lose $100 after major declines often move toward the $60 - $80 range, even after temporary rebounds. 

Responding to the comment, Burry said, “Still, my normal MO would be to buy at 100, then wait 20% and buy at 80 or better. BUT this 100 to 75 rule seems to be stronger than most patterns, so I respect it. However, I want to keep proxy exposure. If LULU is taken out in the next 30 days, I will have lost this decision, which I base on probabilities, but not a certainty.”

LULU Stock: Retail Stance 

On Stocktwits, retail sentiment around the stock changed to ‘neutral’ from ‘bearish’ territory the previous day. 

A user said they were confused about why other major investors, particularly those known for activist or turnaround strategies, have not invested in LULU if Burry’s forensic analysis and bearish thesis have strong merit. 

Another user said, “From mid 2020 to mid 2025 this company was valued over $300. Was Wall St correct with this valuation? Doesn't look like it. Now, after buying back ~15% of their shares since 2020, they are valued at $93.”

LULU stock has crashed 55% year-to-date. 

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