It's interesting to see that Michael Burry bought 100k shares in LULU. Not sure what he sees in this stock but I agree with you that LULU doesn't seem to be a good buying opportunity.
I think despite all the issues the price around $120 is overly pessimistic; the market has priced in a reasonable bear case already. Things can still get worse, of course, but even modest positive news can help with rerating.
Another example why "NFA/Do your own research" isn't a generic disclaimer: everyone's situation is different, so even with similar analysis we can come to different decisions.
I honestly don't think I have any better information here; I think my edge is just the fact that I am comfortable with 2-3 years horizon. Many institutionons can afford to wait so long with a stock out of favor.
Interesting read. I appreciate thoughtful debate around this company, and I think it's worth engaging with from multiple angles.
I think the opportunity to exploit this market inefficiency is significant. The market appears to be treating the rise of Alo and Vuori as evidence that lululemon's competitive position has been permanently impaired. I'm not convinced of that conclusion.
Both brands have undoubtedly executed well, but they still have a long way to go before replicating the foundations that have enabled lululemon's superior economics. lululemon continues to benefit from meaningful brand power and scale economies, despite the recent controversies, allowing it to compete more efficiently than younger participants.
The presence of competition does not necessarily imply the erosion of a competitive advantage. I don't believe a heroic resurrection is required, only disciplined execution.
growing in China and European countries
It's interesting to see that Michael Burry bought 100k shares in LULU. Not sure what he sees in this stock but I agree with you that LULU doesn't seem to be a good buying opportunity.
$10 mn doesn’t sound like a huge position to him
Could be a small side bet?
It's interesting that I agree with all your points about risks, uncertainties and weaknesses, but decided to buy: https://theinvestlog.com/p/why-i-bought-lululemon-athletica
I think despite all the issues the price around $120 is overly pessimistic; the market has priced in a reasonable bear case already. Things can still get worse, of course, but even modest positive news can help with rerating.
Another example why "NFA/Do your own research" isn't a generic disclaimer: everyone's situation is different, so even with similar analysis we can come to different decisions.
Thanks for your insights!
I like how you laid out your bear, bull and base cases.
For myself, LULU is not an obvious opportunity.
But that does not preclude other investors with better information/skills from discovering an opportunity in LULU.
I honestly don't think I have any better information here; I think my edge is just the fact that I am comfortable with 2-3 years horizon. Many institutionons can afford to wait so long with a stock out of favor.
Interesting read. I appreciate thoughtful debate around this company, and I think it's worth engaging with from multiple angles.
I think the opportunity to exploit this market inefficiency is significant. The market appears to be treating the rise of Alo and Vuori as evidence that lululemon's competitive position has been permanently impaired. I'm not convinced of that conclusion.
Both brands have undoubtedly executed well, but they still have a long way to go before replicating the foundations that have enabled lululemon's superior economics. lululemon continues to benefit from meaningful brand power and scale economies, despite the recent controversies, allowing it to compete more efficiently than younger participants.
The presence of competition does not necessarily imply the erosion of a competitive advantage. I don't believe a heroic resurrection is required, only disciplined execution.