For Michael Burry, the hedge fund manager who inspired the movie “The Big Short,” this week’s surge in Chinese stocks was a treat.
Burry began buying Chinese stocks heavily in the fourth quarter of 2022 and is now paying off.
Burry’s Scion Asset Management manages about $200 million, with about half of its portfolio invested in Chinese tech giants, according to 13F filings.
Alibaba is the largest holding in his portfolio, at 21%. He continued to buy Alibaba shares until the second quarter of this year, increasing his holding by 24%.
Burry has 12% of his portfolio in Baidu and another 12% in JD.com. As of June 30, a total of about 46% of Burry's portfolio was invested in these three Chinese stocks.
All three stocks have surged this week after China announced blockbuster stimulus policies.
China’s central bank cut interest rates, lowered banks’ reserve requirements to spur lending and said it planned to provide liquidity support to the stock market. Policymakers also encouraged its companies to start buying back shares.
All of these measures and dovish rhetoric from policymakers have led to a sharp surge in Chinese stocks this week.
The iShares MSCI China ETF is up 18% so far this week. Meanwhile, shares of Alibaba, Baidu and JD.com are up 19%, 18% and 32% so far this week, respectively.
The recent rally in Chinese stocks should mean that Burry’s portfolio, which counts Alibaba as its largest holding, has also seen sizable growth, according to HedgeFollow, which tracks and collates 13F filings.
HedgeFollow estimates that Burry's average cost per share of Alibaba shares is $78.83. Alibaba's stock price reached $105.25 on Thursday afternoon, an estimated increase of 34%.
That's assuming Burry hasn't sold any shares since Scion filed its last 13F for the period ended June 30.
Burry isn’t the only hedge fund manager to cash in on the recent surge in Chinese stocks.
Billionaire investor David Tepper said Thursday that now is the time to buy "everything" Chinese assets.
Like Burry, Tepper counts Alibaba as his hedge fund’s largest position, accounting for about 12% of his $6.2 billion Appaloosa Fund. Tepper believes Chinese stocks have more upside due to low valuations.
“Even with the recent volatility, they feel like lows compared to the past,” Tepper said in an interview Thursday. “The P/E ratio is only one, and the large-cap stocks that trade here are seeing double-digit growth.”
The article is forwarded from: Jinshi Data
