Michael Burry, the renowned money manager known for his role in The Big Short, has taken a significant bullish stance on China. Despite a decline in interest from other hedge funds in China's reopening trades, Burry has increased his optimistic investments in e-commerce giants JD.com and Alibaba Group Holding. These two stocks now constitute the largest positions in his Scion Asset Management, making up 20% of his overall stock portfolio.
Burry made contrarian bets by increasing his holdings in Alibaba and JD.com during China's shift away from the Covid Zero policy. He tripled his stake in JD.com to 250,000 shares worth $11 million (11% of his portfolio) and doubled his holdings in Alibaba to $10 million. Hedge funds collectively sold 4 million shares of JD.com, leading to a $451 million reduction in value, one of the largest declines among US-listed companies.
Why it matters
JD and Alibaba's performance has been weak since their reopening rally failed in January. JD's US-listed shares dropped by 32% this year, while Alibaba remained largely unchanged. JD reported the lowest revenue growth rate ever last week. Alibaba's shares in Hong Kong rose by 1.6%, and JD.com jumped 4.7% on Tuesday, following a rally in the Nasdaq Golden Dragon China Index on Monday.