Michael Burry, renowned for his role in predicting the US housing crash in the film “The Big Short,” has expanded his investments in Chinese tech giants Alibaba Group Holding Ltd. and JD.com Inc. over recent months, despite a continued decline in Chinese stock prices. According to Scion Asset Management’s most recent 13F filing, Alibaba now stands as the top holding for Burry’s investment company, with Scion increasing its stake in the e-commerce giant by 50% in the period ending Dec. 31. Although the stake amounts to $5.81 million, it represents a bold contrarian bet on China’s largest online retailer. Meanwhile, Scion’s investment in JD.com Inc., a smaller rival, grew to become the firm’s second-largest holding at $5.79 million after it increased its position by 75,000 shares.
However, Burry’s wagers have faced challenges. Year-to-date, Alibaba has experienced a 5% decline, while JD.com has plummeted by almost 20%. This downward trend coincides with global money managers reducing their exposure to Chinese stocks amidst ongoing concerns over a property crisis and slowing economic growth.
This isn’t the first time Burry has shown interest in these companies. In 2022, he acquired shares of Alibaba and JD.com as China was recovering from the pandemic. Although he closed out these positions in the second quarter of 2023, he later reopened them.
As of Tuesday, Chinese and Hong Kong stocks have collectively lost $6.5 trillion in market value from their peak in 2021, highlighting Beijing’s challenge in restoring investor confidence amidst the ongoing market downturn.
Foreign investors have been consistently selling off Chinese equities since the beginning of the year. In January alone, global funds offloaded 14.5 billion yuan ($2 billion) worth of shares via trading links with Hong Kong, marking the sixth consecutive month of net selling.
US-based investment manager GW&K Investment Management LLC recently closed its emerging-markets equity fund, while top Chinese macro hedge fund Banxia reduced its stock positions last month, acknowledging losses resulting from misjudgments on the pace of economic recovery.
Burry’s firm has notably shifted its focus away from bearish positions, opting instead to invest across various industries, including healthcare, financials, and technology.
In the same quarter, other fund managers also demonstrated interest in Alibaba, with the Canada Pension Plan Investment Board making it their biggest new buy. Conversely, Tiger Global Management exited its position in the retailer, selling 1.48 million shares valued at $128 million.
