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Michael Burry’s ‘proxy swap’ comes with a 30-day countdown

by Invest Daily Pro
October 6, 2026
in Investing
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Michael Burry’s ‘proxy swap’ comes with a 30-day countdown
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Last November, Michael Burry told his Substack readers that tax-loss season was “a great time of year to find great companies being sold down too far.” He named Lululemon Athletica (LULU) as a holding and said owning big losers at year-end did not bother him.

On Monday, October 5, 2026, he joined the sellers. Burry booked a tax loss on Lululemon, his largest single holding, and moved the money into Deckers Outdoor (DECK), the maker of HOKA running shoes and UGG boots, according to Stocktwits. Deckers shares rose on the news, according to TipRanks.

This is not a change of heart. Burry plans to buy Lululemon back once a 30-day tax window closes, the report said.

Until then, a shoe company holds his seat. To me, the trade is smarter than it looks and riskier than he lets on.

Read More: Lululemon receives a warning as customers turn to rivals

The tax rule that put Deckers in Lululemon’s seat

The wash-sale rule bars investors from deducting a loss if they buy a “substantially identical” security within 30 days before or after the sale, according to the SEC’s Investor.gov. Deckers is a different company, so Burry’s Lululemon loss counts now.

Some early coverage labeled the move a wash sale. It is the opposite: a proxy swap avoids one, locking in the deduction while keeping sector exposure.

The timing is the cleverest part. Burry wrote that he tries to beat a selling rush that arrives in late October and peaks in early December. If he sold around his post, his earliest clean buyback would fall in early November, as that pressure builds.

He sold before the crowd and plans to return while it is still selling. Ordinary investors can run the same play, as long as the stand-in is genuinely a different security.

Michael Burry sold Lululemon for a tax loss and parked the cash in Deckers Outdoor, planning to buy Lululemon back after the 30-day wash-sale window.

Robert Way / Getty Images

Deckers is a shaky stand-in for Lululemon

Burry expects the two brands to move in tandem during the window, according to Stocktwits. This year argues otherwise: Lululemon is down about 55% in 2026, and Deckers is down 23%, the same report noted.

The business mix explains the gap. HOKA generated $703.5 million of Deckers’ $1.02 billion in quarterly sales, according to its latest earnings release. That makes Deckers mostly a running-shoe company, while Lululemon lives and dies by lifestyle apparel.

That divide showed up last week. Nike (NKE) warned that its sales slump will worsen this fiscal year, Bloomberg reported. Its performance products grew while lifestyle Sportswear fell, a call transcript showed.

Deckers also brings its own catalyst. It reported its September quarter on October 23 last year, according to an SEC filing, so its next report could land inside Burry’s window. To me, that makes the proxy less of a hedge and more of a second bet.

Wall Street rates the stand-in above the OG

Lululemon sells premium yoga pants and athleisure. Its stock closed at a record $511.29 on December 29, 2023, and at an all-time low of $2.24 in March 2009, according to CompaniesMarketCap. It now trades more than 80% below that peak.

Comparable sales fell 9% last quarter, and the company cut its outlook again, according to CNBC. Shares also fell when former Nike executive Heidi O’Neill was named CEO, Reuters reported.

The 35 analysts tracked by Stock Analysis rate Lululemon a Hold, with an average target of $104.91, implying about 11% upside. They expect revenue to shrink 5.8% this fiscal year, so the stock trades as a turnaround, not a bargain.

Deckers closed at a record $223.11 on January 30, 2025, and at a split-adjusted low of about 8 cents in December 1998, according to CompaniesMarketCap. Its 27 analysts rate it a Buy with an average target of $120.41, implying roughly 52% upside, according to Stock Analysis.

Here is the twist. Both stocks trade near 10 times forward earnings, though Deckers is expected to grow revenue 7.4% this fiscal year. Deckers also repurchased $338 million of stock last quarter at an average of $103.79 a share, well above today’s price, its earnings release showed.

That may be why Burry left the door open to keeping Deckers. If the proxy fails, it could fail upward.

More Michael Burry:

  • Michael Burry pulls an old playbook into the Nvidia fight
  • Michael Burry sends fresh warning on Nvidia stock
  • Michael Burry keeps pointing at unloved stocks for a reason

Burry’s tax trade is now a market event

Tax-loss selling is usually quiet year-end bookkeeping. Burry narrates his to paying subscribers, turning private housekeeping into a public signal.

Lululemon already ranks among the S&P 500’s biggest decliners of 2026. Many holders sit on losses, and one of its best-known bulls just showed them how to harvest theirs without leaving the sector.

That could deepen the October selling Burry hopes to buy into. The real test comes in early November, when the window closes.

If he rebuys Lululemon and keeps Deckers, his conviction will be hard to question. If the window passes quietly, the calendar will have said more than anything he wrote.

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