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Famed “Big Short” investor Michael Burry is benefiting from the recent rise in Chinese stocks.
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Burry’s Scion Asset Management has nearly half of its portfolio invested in Chinese tech giants like Alibaba.
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China’s recent stimulus measures, including interest rate cuts, have led to a surge in stock gains.
The rise in Chinese stocks this week should be music to the ears of hedge fund manager Michael Burry of “The Big Short” fame.
Burry started aggressively buying Chinese stocks in the fourth quarter of 2022 and it looks like it’s finally paying off.
According to 13F filings, Burry’s Scion Asset Management, which manages about $200 million, has about half of its portfolio invested in Chinese tech giants.
Burry counts Alibaba in his largest position with 21% of the portfolio, and was still buying shares in the second quarter, increasing his stake by 24%.
Burry also has 12% of his portfolio invested in Baidu and another 12% of his portfolio invested in JD.com. In total, Burry had about 46% of his portfolio invested in the three Chinese stocks as of June 30.
All three stocks rose this week after China got serious about announcing stimulus plans to revitalize its struggling economy.
The People’s Bank of China announced major interest rate cuts, reduced bank reserve requirements to stimulate lending and said it plans to support liquidity for the stock market.
The country also encouraged its companies to start buying back shares.
All these measures and the dovish speeches from policymakers caused a massive rise in China’s stock market 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.
According to data from HedgeFollow, which tracks and compiles data from 13F filings, recent gains in China’s stock market should mean Burry is also seeing some sizable gains in its portfolio, with Alibaba leading the way.
HedgeFollow estimates that Burry has an average cost per share of $78.83 for his stake in Alibaba. Alibaba shares hit $105.25 in Thursday afternoon trading, representing an estimated gain of 34%.
This assumes Burry has not sold shares since Scion’s last 13F filing, which provides data as of June 30.
Burry is not the only hedge fund manager making money from the recent rise in China’s stock market.
Billionaire investor David Tepper said Thursday it’s a time to buy “everything” for Chinese stocks.
Like Burry, Tepper views Alibaba as his hedge fund’s largest position, representing about 12% of his $6.2 billion Appaloosa fund. Tepper believes Chinese stocks can gain further upside due to their depressed valuations.
“Even with the recent moves, they are at a low level compared to the past. And you’re there with multiple and single PEs, with double-digit growth rates for the big stocks trading at over $100 million.” here,” Tepper said in an interview with CNBC on Thursday.
Read the original article on Business Insider