JB Global Capital: Lessons from Lululemon’s (LULU) Investment Case

JB Global Capital: Lessons from Lululemon’s (LULU) Investment Case

Tue, August 11, 2026 at 5:27 PM GMT+3 3 min read

• LULU -1.87%

JB Global Capital, an investment firm, released its second-quarter 2026 investor letter. A copy of the letter can be downloaded here. The fund declined 12.1% in Q2, largely driven by Alibaba, its largest holding. However, since inception on January 3, 2023, the fund has returned 109.7%, compared with 94.4% for the S&P 500. Additionally, please check the fund's top five holdings to know its best picks in 2026.

In its Q2 2026 investor letter, JB Global Capital highlighted Lululemon Athletica Inc. (NASDAQ:LULU). Lululemon Athletica Inc. (NASDAQ:LULU) designs, distributes, and retails athletic apparel, footwear, and accessories. On August 10, 2026, Lululemon Athletica Inc. (NASDAQ:LULU) closed at $127.80 per share. The one-month return of Lululemon Athletica Inc. (NASDAQ:LULU) was 8.93%, and its shares lost 33.76% over the past 52 weeks. Lululemon Athletica Inc. (NASDAQ:LULU) has a market capitalization of $14.51 billion.

JB Global Capital stated the following regarding Lululemon Athletica Inc. (NASDAQ:LULU) in its Q2 2026 investor letter:

"In September 2025, I published Investment Case: Lululemon Athletica Inc. (NASDAQ:LULU), calling the stock compelling value at $162 per share. The thesis rested on a business trading well below what its fundamentals justified: a debt-free balance sheet, 58% gross margins against a 33% industry average, and a brand strong enough to sustain 37% operating margins in both North America and mainland China. Triangulating across a DCF, relative comps to Nike and Adidas, and net asset value, I arrived at a fair value range of $194-280 per share. Today, the stock trades at roughly $123 per share, 24% below my initial entry.

So what went wrong? Two things: one about my own process, and one about how little of the future can be known in advance. The first is the limits of backward-looking analysis. My thesis leaned heavily on trailing financials that were real, but historical. Since then, gross margin has compressed, operating margin has contracted, and ROE is down nearly 10% from a year ago. None of this means the business is broken. The balance sheet is still debt-free with $1.5 billion in cash, margins remain well above most apparel peers, and I still hold the position at roughly 9% of the portfolio. But it's a reminder that heavily underwriting the past for an exceptional business is an easy way to end up underwater on a position.…" (Click here to read the full text)

Lululemon athletica inc. (NASDAQ:LULU) is not on our list of 40 Most Popular Stocks Among Hedge Funds Heading Into 2026. According to our database, 61 hedge fund portfolios held Lululemon athletica inc. (NASDAQ:LULU) at the end of the first quarter, compared to 78 in the previous quarter. While we acknowledge the potential of Lululemon athletica inc. (NASDAQ:LULU) as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on thebest short-term AI stock.

In another article, we covered Lululemon athletica inc. (NASDAQ:LULU) and shared a bullish thesis on the company. In addition, please check out our hedge fund investor letters Q2 2026 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.