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‘Big Short’ money manager puts money behind China big tech

‘Big Short’ money manager puts money behind China big tech
Mascots for Alibaba Group at a shopping mall in Hangzhou, China. (Photo: Qilai Shen/Bloomberg)

Michael Burry, the money manager made famous in the Big Short, added to wagers on Chinese tech giants Alibaba Group Holding Ltd. and JD.com Inc. in recent months even as a rout in Chinese shares deepened.

Alibaba is now Scion Asset Management’s top holding after Burry’s investment company boosted its stake in the e-commerce giant by 50% in the period ended 31 December, according to the firm’s most recent 13F filing. While the stake was only $5.81-million, it’s a starkly contrarian bet on China’s largest online retailer. Smaller rival JD.com Inc. was Scion’s second biggest holding at $5.79-million after the firm increased its position by 75,000 shares. 

So far the wagers are struggling to pan out. Alibaba is down 5% year-to-date and JD.com has tumbled almost 20% as global money managers unwind positions in Chinese stocks amid an ongoing property crisis and slowing growth. 

Read more: Wall Street Is Going to Great Lengths to Avoid Chinese Equities

It’s not the first time Burry, who rose to fame predicting the 2008 US housing crash, has bet on the companies.

At the end of 2022 he snapped up shares of New York-listed Alibaba and JD.com as China was emerging from the pandemic. He ended up closing out his positions in the second quarter of 2023, only to reopen it months later.

As of Tuesday, some $6.5-trillion of market value had been wiped out of Chinese and Hong Kong stocks from a 2021 peak, underscoring the challenge that Beijing faces as it seeks to arrest a decline in investor confidence. 

Foreign investors have been relentlessly selling China’s onshore equities in the new year. Global funds offloaded 14.5 billion yuan ($2-billion) worth of shares on a net basis in January via trading links with Hong Kong, extending their selling to a record sixth month, according to data compiled by Bloomberg.

US-based money manager GW&K Investment Management LLC, which made a big bet on China, closed its emerging-markets equity fund last month. Top Chinese macro hedge fund Banxia slashed stock positions last month as the rout deepened, taking losses after acknowledging mistakes betting on a rapid economic recovery.

Burry wasn’t the only fund manager buying up Alibaba shares last quarter. The company was the biggest new buy for the Canada Pension Plan Investment Board. On the flip side, Tiger Global Management exited its position in the retailer, selling 1.48 million shares worth $128-million.

Burry’s firm, meanwhile, dropped all its bearish positions in the quarter and instead snapped up shares across industries including health care, financials and of course tech.

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