Michael Burry has begun to significantly increase his positions in MercadoLibre, Adobe, PayPal, Lululemon and Zoetis in recent weeks. These are not the popular AI front-page stories, but large, quality companies that have found themselves out of the spotlight and temporarily pressured by sentiment, competition or short-term issues. That's where Burry looks for opportunities - in the "forgotten corner" of the market, not in the parabolic charts of the day.
In his newsletter, he refers to these headlines as part of a "mass whale fall happening away from the main spectacle" - that is, the big catches that come outside the main market show. Zoetis calls it a "fat pitch" but also adds that it will require patience. His approach has been consistent: to be highly skeptical of bubbles and accounting gimmicks in parts of the tech/AI sector, while slowly piecing together a portfolio of companies where he believes the combination of a quality business and deteriorating sentiment will generate attractive returns over time.
Burry's view of the market: bubble on one side, whale fall on the other
Burry has long been a skeptic of a period when stories break away from reality and the market stops addressing returns on capital. In the AI euphoria, two things in particular bother him:
the parabolic charts of parts of the tech sector
creative handling of the numbers - for example, extending the accounting life of AI servers and accelerators that artificially improve reported earnings
For the average investor, he says, the takeaway is simple: reduce exposure to stocks that are "going vertical" and don't bet that the same pace will continue indefinitely. A recurring theme in his communications is that shorting such stories is very risky and expensive, and therefore it may make more sense to hold more cash and wait for more reasonable prices than to try to time the bubble precisely.
Alongside this caution, however, Burry makes a second move: he actively seeks out large but temporarily unpopular companies. This is where he includes MercadoLibre $MELI, Adobe $ADBE, PayPal $PYPL, Lululemon $LULU and Zoetis $ZTS. These are not "cheap scraps" but quality businesses that have gone through a correction, are solving specific problems or are just not in vogue. In his vocabulary, this is "whale fall" outside the mainstream investor focus.
MercadoLibre: the Latin American ecosystem in the shadow of big tech
MercadoLibre is the dominant player in e-commerce and digital payments in Latin America. It combines marketplace, logistics and fintech (Mercado Pago) in regions where digital payments and online commerce are still at a relatively early stage. On paper, it is a structural growth story for years - increasing internet penetration, improving infrastructure, moving away from cash.
Why Burry could add here:
The company is the region's "default" choice for merchants and customers, but it also faces currency volatility, political risk and country economic cycles. This often pushes valuations lower than would be consistent with pure business quality.
High investments in logistics and fintech may reduce profitability in the short term, but they nevertheless build barriers to entry and reinforce network effects.
From a counter-cyclical investor's perspective, this is the type of situation where the market is dealing with noise (currencies, politics) while the Burry may see a long-term growth ecosystem with increasing monetization.
Adobe: quality software in the age of AI and licensing controversies
Adobe is one of the key suppliers of creative and document software - Creative Cloud, Photoshop, Premiere, Acrobat and other tools are the de facto standard in many industries. At the same time, the company has been pushing AI features in recent years (Firefly, generative tools in Creative Cloud), but negative sentiment has also arisen around this - some in the community have criticised licensing terms, pricing policies or the way Adobe approaches AI.
For Burry, Adobe may be attractive for several reasons:
It's a high-margin, high-stickiness business - switching to a competitor is often challenging, especially in enterprise.
The company generates stable cash flow, has an established subscription model and the ability to cross-sell within the ecosystem.
Short-term pressures (regulation, acquisition moves, AI competition) may have pinched valuations enough to make risk-reward look more attractive from a long-term investor's perspective than headlines about "Adobe's problems" would suggest.
PayPal: the disappointed star of the payments world
PayPal has been the darling of the market for several years - benefiting from the digitisation of payments, e-commerce and the "fintech as growth at any cost" trend. But then came the sobering: slowing growth, pressure from competitors (Apple, banks, new fintechs), a weaker outlook and deteriorating sentiment. The stock fell from overbought multiples to levels that were starting to look more like a "normal" financial firm.
This is a typical profile for Burry:
A former growth star who is out of favor after a string of disappointments - but the business is still profitable, generates significant free cash flow and has a strong brand.
Room to improve margins and use cash (e.g. buybacks) can generate decent returns even if growth is not what it used to be.
The market tends to be extremely harsh on companies that "fail the growth story" and sometimes gets overshot the other way in the process. This is where a value investor may see an opportunity.
Lululemon Athletica: a premium brand after sentiment cooled
Lululemon is a premium brand in the sports and leisurewear segment that has long ridden a wave of strong growth, high margins and almost cult status among customers. But it has recently begun to run into several problems: slowing growth in some markets, questions around saturation, and competitive pressure in a segment that is not nearly as empty as it was a few years ago.
For Burry, Lululemon could be interesting as:
a strong brand that still has room to grow, but the market is no longer willing to pay it at any price
a business with optimization potential (costs, expansion outside traditional markets, new product lines)
an example of "quality growth" at a lower growth valuation - if margins and pace of expansion can be stabilized, even a return to more normal multiples can yield a decent return
Zoetis: the "fat pitch" in animal health
Zoetis is a global leader in animal health - from veterinary pharmaceuticals for pets to farm animals. It is a segment that has different cycles than human pharma and the rest of the market: some of the demand is very stable, others respond to trends like "pet humanization", i.e. the growing willingness of people to spend more on the health and comfort of pets.
Burry specifically referred to Zoetis as a "fat pitch," which in his vocabulary means a combination of several things:
a quality business with a high return on capital
a long-term structural growth trend (more pets, more spending on pet care)
a valuation that doesn't start at extreme multiples after corrections and short-term problems
He also adds that patience is needed with Zoetis - it is the type of company where the story does not turn in one quarter, but over a horizon of years. But for an investor willing to endure volatility and not looking for an instant "AI shot", it can be an attractive combination of stability, growth and a reasonable price.
What the average investor can take away
Burry never gives a "portfolio copy guide," but his actions do send several signals:
He warns against chasing parabolic charts and how easy it is to ignore accounting details and investment returns in the euphoria
he himself looks into segments that are not in vogue but have solid businesses and real cash flow
He is not afraid to combine growth names (MercadoLibre, Lululemon) with more "boring" Zoetis-type stories if the price/quality ratio makes sense to him.