David Tepper Takes Over Alibaba as Hedge Funds Hunt for Bargains in China - Latest Global News

David Tepper Takes Over Alibaba as Hedge Funds Hunt for Bargains in China

(Bloomberg) — Billionaire investor David Tepper invested in beaten-down Chinese stocks last quarter while trimming stakes in high-profile U.S. technology firms, leading hedge fund managers slowly getting excited about China amid the record-high valuation gap between the two markets.

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Tepper’s Appaloosa Management more than doubled its investment in Alibaba Group Holdings in the first three months of the year, giving the Chinese e-commerce giant the largest position in its $6.7 billion stock portfolio, according to a regulatory filing . The fund also increased its holdings in PDD Holdings and Baidu Inc. and added JD.com and two Chinese exchange-traded funds as new purchases during the quarter.

As Tepper built positions in Chinese stocks, he reduced his holdings in so-called “Magnificent Seven” stocks, including Amazon.com, Microsoft Corp., Meta Platforms Inc. and Nvidia Corp. The result: Chinese stocks and ETFs accounted for 24% of the fund’s equity portfolio at the end of the quarter.

Tepper is among global investors cautiously returning to Chinese stocks after a collapse earlier this year sent their valuations to a record discount compared to their U.S. counterparts. As a group, hedge funds increased their holdings in Alibaba, PDD and Baidu during the quarter, while reducing companies like JD.com and two electric vehicle makers – Nio Inc. and Li Auto – according to quarterly filings.

Your purchases came at the right time. The MSCI China index has risen nearly 30% from its January lows as government-backed funds stepped in to support the market and Beijing’s economic stimulus gained momentum.

Even after the recovery, the Chinese benchmark is still trading at less than half the valuation of the S&P 500 index, which hit a new record this week. Hedge funds’ net allocations to China rose only slightly above their lowest level in five years through mid-April, according to Goldman Sachs Group Inc.

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Among bargain hunters in China, few hedge fund managers have been more aggressive than Tepper. His investment in Alibaba totaled more than $800 million, or 12% of his stock holdings, at the end of March, making him one of the company’s largest investors. Appaloosa was also among the largest hedge fund investors in the $5.2 billion iShares China Large-cap ETF (FXI) and the $6.4 billion KraneShares CSI China Internet Fund (KWEB).

Tepper did not immediately respond to an email from Bloomberg News seeking comment.

Chinese tech giants reported mixed earnings this week. While JD.com posted better-than-expected sales increases and Tencent Holdings Ltd.’s net profit. skyrocketed, Alibaba and Baidu reported weak results.

Tepper, who founded Appaloosa Management in 1993, is worth about $20 billion, according to the Bloomberg Billionaires Index.

– With assistance from Amy Li and Amanda Cantrell.

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