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Michael Burry’s Exact Stock-Picking Playbook (And a Real Case Study Using His Q2 2025 Portfolio)
Michael Burry is famous for betting against the housing market in The Big Short, but his real genius isn’t just spotting one once-in-a-generation trade — it’s running a disciplined, repeatable process that finds opportunities where most investors aren’t even looking.
Here’s exactly how Burry picks stocks — step by step — and a case study using his latest Q2 2025 portfolio to show how this method works in practice.
Step 1: Margin of Safety Comes First
Burry only buys when the price is well below what he thinks the business is worth. This gap — the margin of safety — is his number one rule. It gives him breathing room if the market stays wrong longer than expected.
Step 2: Hunt Where Others Aren’t
He loves areas of the market that are ignored, hated, or misunderstood. Roadkill sectors, fallen angels, ugly headlines — that’s where he starts digging. Less competition means better odds of mispricing.
Step 3: Screen for Hard Fundamentals
He focuses on:
- Free cash flow — real, after-capex cash.
- Enterprise value vs. operating earnings — EV/EBITDA is a favorite.
- Clean balance sheets — low or manageable debt.
- No accounting trickery — hidden liabilities are dealbreakers.
Step 4: Don’t Fear Small or Unpopular
Burry is happy to buy smaller-cap stocks or illiquid names if they’re mispriced. These are often overlooked by big funds and can offer huge upside when they eventually rerate.
Step 5: Price Discipline Matters
He waits for the right entry — often near lows — but only if the fundamentals check out. Price alone isn’t enough; the business has to be solid.
Step 6: Control the Downside
For Burry, risk = permanent loss of capital. If the facts change, the thesis breaks, or the balance sheet turns ugly, he’ll sell. Quickly.
Step 7: Build a Focused Portfolio
He runs a concentrated book — usually a dozen or so core names — so winners move the needle, but not so few that one mistake is fatal.
Step 8: Sell When Value Is Realized
When the stock hits fair value (or gets overvalued), he trims or exits. He redeploys capital to new opportunities rather than holding just to hold.
Step 9: Be Patient
He’s willing to look wrong before he looks right. Time is a key ingredient in this recipe.
Case Study: Burry’s Q2 2025 Portfolio
Here’s how his process shows up in his latest disclosed holdings:
1. Estée Lauder (EL) — 21.5% of Portfolio
Shares cratered earlier this year thanks to weak China demand and inventory issues. Burry clearly sees margin of safety here: a global luxury brand priced as if its problems are permanent, not cyclical.
2. Lululemon (LULU) — 21.1%
Down almost 35% from its highs, punished for slowing growth. Burry’s bet says the brand’s pricing power, margins, and global expansion runway are intact — making today’s price too cheap.
3. Bruker (BRKR) — 18.3%
Life sciences tools company with recurring revenue, knocked lower by soft guidance. Fits Burry’s pattern of buying temporarily unloved, fundamentally strong businesses.
4. Regeneron (REGN) — 14%
A cash-flow machine with a fortress balance sheet. This is a quality core holding, giving him steady growth while others panic elsewhere.
5. MercadoLibre (MELI) — 13.9%
The e-commerce and fintech leader of Latin America, pulled back enough in 2025 to give Burry a rare valuation entry point. This is one of his long-term compounders.
6. UnitedHealth (UNH) — 11.1%
This is the quintessential Burry trade. The stock was rocked not just by political headlines but by federal investigations into billing practices and the shocking murder of its CEO earlier this year. Most investors ran; Burry stepped in.
His reasoning likely includes:
- Investigations are serious but not existential.
- The CEO’s death does not impair the company’s long-term earnings power.
- The selloff created a deep-value setup in one of the most cash-generative businesses in America.
What This Portfolio Shows
When you put all six together, you see Burry’s strategy in full color:
- Contrarian courage: Buying when fear is highest — cosmetics, athleisure, healthcare.
- Balance sheet discipline: None of these are debt time bombs.
- Sector spread: Consumer, biotech, healthcare, fintech, life sciences — a diversified but focused portfolio.
- Clear upside: Each name has a credible path to rerating once the panic fades.
My Final Take
Michael Burry’s stock-picking style is neither mystical nor reckless. It’s disciplined value investing with a contrarian twist — focus on margin of safety, protect the downside, wait patiently, and cash out when the market finally gets it right.
His Q2 2025 portfolio isn’t random — it’s a masterclass in buying quality businesses at moments of maximum pessimism.
DISCLAIMER: This analysis of the aforementioned stock security is in no way to be construed, understood, or seen as formal, professional, or any other form of investment advice. We are simply expressing our opinions regarding a publicly traded entity.
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