Famed investor Michael Burry, known for his portrayal in “The Big Short,” is reaping the benefits of the recent surge in Chinese stocks. His hedge fund, Scion Asset Management, has strategically invested nearly half of its portfolio in Chinese tech giants such as Alibaba.
Burry’s interest in Chinese stocks began in the fourth quarter of 2022, and his patience seems to be paying off now. According to 13F filings, Alibaba is the largest position in his portfolio, accounting for 21% of his holdings. He has also increased his stake in the company by 24% in the second quarter. Additionally, Burry has significant investments in other Chinese tech giants like Baidu and JD.com, with a total of 46% of his portfolio dedicated to these three companies as of June 30.
The recent surge in Chinese stocks can be attributed to the country’s stimulus measures aimed at revitalizing its economy. The People’s Bank of China has implemented interest rate cuts, lowered bank reserve requirements to boost lending, and provided liquidity support for the stock market. Furthermore, Chinese companies have been encouraged to initiate stock buybacks, further boosting investor confidence.
As a result of these measures, the Chinese stock market has experienced significant gains this week. The iShares MSCI China ETF has surged by 18%, while shares of Alibaba, Baidu, and JD.com have seen increases of 19%, 18%, and 32% respectively.
HedgeFollow, a platform that tracks 13F filings, estimates that Burry has seen substantial gains in his Alibaba investment, with shares rising by 34% from his average cost per share of $78.83. This indicates that Burry, along with other hedge fund managers like David Tepper, is capitalizing on the current momentum in Chinese stocks.
Tepper, who also holds Alibaba as the largest position in his fund, believes that there is still room for growth in Chinese stocks due to their undervalued nature. He emphasized the attractive valuations and growth potential of Chinese companies in a recent CNBC interview, highlighting the favorable investment opportunities in the market.
In conclusion, the recent uptick in Chinese stocks has been a boon for investors like Michael Burry and David Tepper, who have strategically positioned themselves to benefit from the positive momentum in the market. With China’s stimulus measures in place and investor optimism on the rise, the outlook for Chinese equities remains promising for the foreseeable future.
