The man who predicted the 2008 housing crash is making another contrarian call, and this time his sights are set on China.
Hedge fund manager Michael Burry, who became famous after the film “The Big Short” chronicled his bet against subprime mortgages, revealed on Thursday, June 25, that he added to his JD.com position at $24.79 per share.
According to a StockTwits report, Burry also bought Microsoft December 2028 LEAP calls and added to stakes in Adobe and Fiserv.
But it’s the China trade that is raising eyebrows.
Burry laid out his thinking in a Substack post, arguing that the recent sell-off in Chinese and Hong Kong stocks has very little to do with business fundamentals.
Burry says China’s sell-off is a technical problem
Burry’s core argument is that capital is simply rotating out of Hong Kong and China for reasons unrelated to how these businesses are performing.
“Hong Kong stocks are falling hard as the chip narrative pulls capital from Hong Kong and pushes it into South Korea and Japan,” he wrote in his Substack post.
Momentum traders and large Asian-focused funds are reallocating quickly, he explained, making the move more self-reinforcing than it is fundamentally driven.
Fund manager buys and sells:
- Warren Buffett’s Berkshire triples stake in newspaper giant
- Cathie Wood sells $16M of surging semiconductor stock
- Bill Ackman discloses new $2.09 billion stake in megacap tech stock
China’s leading companies have been “pushed down near their lows again,” as Burry put it. His conclusion was blunt: this is “largely technical pressure, not fundamental.”
Burry also sold Alibaba primarily for tax-loss purposes and reallocated the proceeds to JD.com.
He noted that he may eventually buy back Alibaba and is also watching Meituan and Tencent.
JD.com just posted a record quarterly profit
Burry’s timing is interesting because JD.com just wrapped up a strong first quarter.
Total revenues grew 4.9% year over year (YoY) to roughly 316 billion yuan ($46.5 billion) in Q1 2026.
More importantly, JD Retail’s operating profit surged 16.5% YoY to 15 billion yuan ($2.21 billion), a record quarterly high, management said. The retail segment’s operating margin expanded to 5.6%, up 0.7 percentage points YoY.
Related: Michael Burry delivers contrary Lululemon stock verdict
Gross margin at the retail level came in at 18.6%, up 1.8 percentage points YoY. That marks 16 consecutive quarters of year-over-year gross margin improvement, CEO Sandy Xu said on the call.
“This margin uplift was further amplified by a favorable revenue mix shift, particularly the increased contribution from high-margin streams such as advertising and commissions,” Xu explained.
“We believe JD Retail’s margin profile is a clear reflection of our evolving structural efficiencies, which we expect to provide further headroom for optimization going forward.”
User growth was another bright spot.
Both quarterly and annual active customers grew by more than 20% YoY. Customer shopping frequency rose 37% YoY in Q1, suggesting that existing users are buying more.
Is JD.com stock fundamentally strong?
On the asset side:
- JD held $29.3 billion in total cash and short-term investments as of March 2026.
- Total assets stood at $99.4 billion.
- Long-term investments added another $15.1 billion.
That’s a substantial liquidity cushion.
Inventories were $13.9 billion, relatively stable compared to recent quarters. Accounts receivable were just $3.7 billion, down from $5.6 billion in September 2025, suggesting the company is collecting cash faster.
On the liability side, accounts payable were $27.4 billion, which is typical for a large retailer that negotiates extended payment terms with suppliers.
Total current liabilities were $44.8 billion, while total current assets were $52.9 billion, indicating that current assets comfortably cover short-term obligations.
Long-term debt was $9.1 billion, manageable relative to the company’s cash position, and the total shareholders’ equity stood at $40.7 billion.
One area worth watching: Free cash flow over the last 12 months fell to 22 billion yuan from 38 billion yuan a year earlier, which CFO Ian Shan attributed partly to cash outflows tied to a trading program and fluctuations in operating income.
Overall, though, the balance sheet looks solid. JD carries ample cash, growing margins, and a manageable debt load.
What it means for investors watching Burry’s moves
Valued at a market cap of $38 billion, JD stock is down 72% from its all-time high.
Analysts tracking the China-based tech stock forecast free cash flow to grow from $0.91 billion in 2025 to $8.21 billion in 2029.
If JD stock trades at 9x forward FCF, which is in line with the three-year average, it could double within the next three years.
Out of the 11 analysts covering JD stock, nine recommend “buy,” and two recommend “hold.” The average JD stock price target is $38, indicating an upside potential of over 50% from current levels.
Burry’s thesis is that the market is mispricing JD.com due to capital-flow dynamics, not business deterioration.
JD Retail is hitting record profits, user engagement is accelerating, and the balance sheet is healthy. Moreover, the company is investing aggressively in artificial intelligence and logistics automation, which management says is already showing up in efficiency gains.
Whether the technical selling pressure lifts soon is anyone’s guess. But if Burry is right that this is a market mechanics problem rather than a business problem, investors may be looking at a window that doesn’t stay open for long.
Related: Michael Burry sees a $3 trillion problem with SpaceX
