Geoffrey Seiler, The Motley Fool

Sat, May 24, 2025, 7:05 AM6 min read

• Famed investor Michael Burry became bearish on the stock market in Q1, but he doubled down on his position in Estee Lauder.

• The beauty company has struggled due to a sluggish recovery from Chinese consumers, especially in the retail travel market.

• However, the company has a solid portfolio of luxury brands that have strong global distribution.

• 10 stocks we like better than Estée Lauder Companies ›

Legendary investor Michael Burry is known for making big bets. In fact, he became famous for being one of the first investors to recognize the 2008 subprime mortgage crisis, and he bet heavily against the housing market by buying credit default swaps on subprime mortgage-backed securities. Credit default swaps essentially act like insurance against default, so when the underlying mortgage-backed securities collapsed, Burry profited handsomely. He was later portrayed in the movie The Big Short by Christian Bale.

As such, it was quite notable when it was revealed that Burry sold off his entire investment portfolio in the first quarter, except for one stock: cosmetic company Estee Lauder (NYSE: EL). In fact, he doubled his position in the stock during the quarter.

Burry didn't stop there, though. Not only did he sell his entire stock portfolio, but he also bought put options on Nvidia and several Chinese ADRs, including Alibaba, PDD Holdings, and JD.com, among others. By buying put options, he was betting that these stocks would decline in price.

This was likely due to the uncertainty over trade tensions and tariffs, and it's unknown if Burry has since closed out these positions. If he covered the put options quickly, he would have made a nice profit in the market downturn.

Perhaps the more relevant thing for investors today, though, is why Burry is so bullish on Estee Lauder when he was willing to sell everything else in his portfolio and essentially bet against the U.S. and Chinese markets.

For those unfamiliar with Estee Lauder, it is a global beauty conglomerate with brands across cosmetics, skincare, fragrance, and haircare. It primarily operates in the prestige segment, positioning its portfolio as a collection of high-end, luxury beauty brands. In addition to its namesake brand, it also owns Clinique, MAC, Bobbi Brown, La Mer, Tom Ford Beauty, and other brands.

Much of Estee Lauder's struggles stem from its exposure to China and the duty-free shopping retail market. The company's sales have slumped in China as consumer spending in the country following Covid has been slow to recover. However, these issues have been even more pronounced in its global travel retail business.