Burry increased his stake in the mid-cap retailer Sprouts. Should you follow his lead?

Michael Burry, the iconic short seller and investor who served as the inspiration for the protagonist in *The Big Short*, has increased his stake in the organic grocery retailer Sprouts Farmers’ Markets. He has been buying up shares in the company for several months. Burry’s current theory is that rising interest rates are pushing the market toward another sell-off of consumer sector stocks.

“I bought more Sprouts shares,” investor Michael Burry wrote on Substack. He did not specify how many shares he purchased, but he did mention the transaction price—$63. This is roughly in line with their market value. On Monday, September 28, the stock rose 1.5% to $63.45 per share, allowing it to break above the low it had reached on September 25—its lowest level since May 2024.

Investors began selling off shares in consumer sector companies due to the interest rate hike, Burry explains. In mid-September, the Federal Reserve raised the rate by a quarter of a percentage point—for the first time in three years.

The investor believes that, as a result, “new lows may persist,” but in the long term, they should perform well. “I like Sprouts’ positioning. The company has a loyal customer base in the premium segment,” Burry wrote. He also noted that the retailer consistently carries out share buyback programs. Sprouts announced its most recent such program, worth up to $1 billion, in August 2025. At the same time, the short seller writes, the company maintains a return on investment and return on equity above the market average.

Burry has been buying up Sprouts shares for several months now—ever since they plummeted from their peak of $182, reached in June 2025. “I’ve finally increased my position in Sprouts Farmers’ Markets [...]. It’s a small but reasonable position now—about 3%,” he wrote in April. At the time, the investor noted that the stock had previously “outperformed expectations too much” and that he was “glad it has come back down” to lower levels.

Currently, the stock is trading at just 12 times this year’s projected earnings, writes Billy Duberstein, a contributing analyst at The Motley Fool. He explains that same-store sales growth (sales at the same locations) plays a major role in the valuation of retail companies.

At Sprouts, this metric declined by 1% year-over-year in the second quarter. This is a notable change compared to the same period in 2025, at the end of which the company reported a 10.2% year-over-year increase in comparable sales, Duberstein notes. The retailer’s management attributed this trend to the high base from early 2025, when supply chain disruptions caused some shoppers to switch to Sprouts from other stores, and also linked the current trends to the conflict in the Middle East, which has driven up inflation and caused consumers to be more cautious about spending, according to the Motley Fool article.

Wall Street is generally bullish on Sprouts' prospects: 11 analysts recommend buying the stock, seven recommend holding it, and two recommend selling it. The average price target is $95.4, which is 50% higher than the stock's most recent closing price.