Beauty And The Bear: Michael Burry, Estee Lauder Snub China

Both Michael Burry, the famed investor behind "The Big Short," and Estee Lauder Companies, Inc. (NYSE:EL) have strategically reduced their exposure to China – and Burry doubled his bet on the global beauty giant. 

Burry Shorts China, Buys EL 

According to its most recent SEC filing, Burry's hedge fund Scion Asset Management doubled its stake in Estee Lauder in the first quarter of 2025. 

The firm purchased an additional 100,000 shares in the world’s second-largest cosmetics company, bringing its total holdings to 200,000 shares. 

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In the same quarter, Burry closed out all of Scion’s long positions in Chinese tech companies and opened short positions in several of the same stocks including Alibaba Group Holdings, Ltd. (NYSE:BABA) and JD.com, Inc. (NASDAQ:JD). 

Burry moves could indicate concerns about weak domestic economic growth in China, escalating U.S.-China tensions and a negative outlook on the sector's near-term prospects. 

Estee Lauder Reduces China Exposure

Estee Lauder is contending with its own set of challenges in China. The company reported weaker-than-expected China sales, citing sluggish consumer demand, increased competition from local brands, and a shift in consumer preferences toward domestic products. 

Trade tensions and high tariffs have further complicated the landscape, prompting efforts to streamline operations and reduce exposure to China. 

As younger Chinese consumers increasingly favor homegrown brands and experiences over foreign luxury goods, Estee Lauder has accelerated product launches and investing in new growth markets such as India. 

Last week, Deutsche Bank upgraded Estee Lauder shares to a Buy and raised its price target on the stock from $71 to $95. The analysts said that the company's overreliance on China has been addressed and noted evidence of diversified growth beyond China and travel retail. 

Beauty And The Bear 

For both Burry and Estee Lauder, China's shifting economic climate, trade uncertainties and evolving consumer habits have made the market less predictable and less profitable. 

Estee Lauder's diversification efforts, cost-cutting and focus on new markets might have signaled to Burry that the company is well-placed to weather a downturn and benefit from a recovery, especially if Chinese consumer demand eventually returns. 

EL Price Action: Estee Lauder shares have gained more than 25% over the past month, according to Benzinga Pro. 

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