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Famed ‘Big Short’ investor Michael Burry is taking advantage of the recent rise in Chinese stocks.
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Burry’s Scion Asset Management has invested almost half of its portfolio in Chinese technology giants such as Alibaba.
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China’s recent stimulus measures, including interest rate cuts, have led to a surge in stock prices.
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 seems to be finally paying off.
Burry’s Scion Asset Management, which manages about $200 million, has invested about half its portfolio in Chinese tech giants, according to 13F filings.
Burry counts Alibaba as his largest position at 21% of the portfolio, and he bought the 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 in JD.com. In total, Burry had approximately 46% of his portfolio invested in the three Chinese stocks as of June 30.
All three stocks have soared this week after China started announcing stimulus plans in earnest to revive its struggling economy.
The People’s Bank of China announced major interest rate cuts, reduced banks’ reserve requirements to boost lending and said it plans liquidity support for the stock market.
The country also encouraged its companies to buy back shares.
All these measures and mild statements from policymakers have led to a huge rise in the Chinese 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% respectively so far this week.
According to data from HedgeFollow, which tracks and aggregates data from 13F filings, recent gains in the Chinese stock market should mean Burry is also seeing significant 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 were trading at $105.25 in Thursday afternoon trading, for an estimated gain of 34%.
This assumes Burry has not sold any shares since Scion’s last 13F filing, which provides data as of June 30.
Burry isn’t the only hedge fund manager making money from the recent rise in the Chinese stock market.
Billionaire investor David Tepper said Thursday it’s an “anything” buying opportunity for Chinese stocks.
Like Burry, Tepper considers Alibaba his hedge fund’s largest holding, accounting for about 12% of his $6.2 billion Appaloosa fund. Tepper believes there is more upside potential in Chinese stocks due to their low valuations.
“Even with the recent moves, they are at a flat low compared to where they have been in the past. And then you have single, multiple PEs, with double-digit growth rates for the major stocks traded around the world. here,” Tepper said in an interview with CNBC on Thursday.
Read the original article on Business Insider
