Summary:
Renowned investor Michael Burry, known for his successful bet against the US housing market in 2008, has made significant changes to his portfolio by cutting stakes in Chinese tech giants Alibaba and JD.com. Despite the stake reductions, Burry opened a new position in PDD Holdings and maintained his stake in Baidu Inc. These moves come amidst a rally in the Chinese stock market triggered by the rollout of the DeepSeek AI model and uncertainties surrounding US-China trade relations.
A Closer Look at Michael Burry’s Investment Strategy
Michael Burry, the founder of Scion Asset Management, has once again made headlines with his investment decisions. Famously portrayed in the award-winning film “Big Short” for his profitable bet against the US housing market, Burry’s latest move involves trimming his holdings in Chinese tech companies. According to the latest Form 13F filed with the US Securities and Exchange Commission in February, Scion Asset Management has reduced its stakes in JD.com and Alibaba Group Holdings.
Burry’s Stake Reductions in Alibaba and JD.com
In the fourth quarter of 2024, Scion Asset Management decreased its stake in JD.com by 40% to 300,000 shares valued at £8.26 million. Similarly, the hedge fund’s position in Alibaba saw a 25% reduction to 150,000 shares worth £10.1 million. Despite these cuts, both JD.com and Alibaba remain significant holdings in Burry’s portfolio, reflecting his continued interest in the Chinese tech sector.
The Changing Landscape of Chinese Stocks
The decision to trim stakes in JD.com and Alibaba coincided with a period of volatility for Chinese stocks. Following China’s monetary stimulus measures in September 2024, the market experienced fluctuations as investors grappled with economic uncertainties and a property crisis. During this time, Alibaba’s US-listed shares dropped by 20% and JD.com’s stock price declined by 13%, reflecting the challenges faced by Chinese companies in the global market.
New Investments and Market Trends
While reducing exposure to JD.com and Alibaba, Burry also took a new position in PDD Holdings by acquiring 75,000 shares valued at £5.77 million. Additionally, his stake in Baidu Inc. remained unchanged, indicating his confidence in the company’s long-term prospects. These strategic moves come amidst a market rally in China triggered by the cost-effective DeepSeek AI model, which has outperformed US equities and raised questions about the future of AI development.
Investor Sentiment and Global Factors
The recent developments in the Chinese stock market have prompted investors to reassess their positions and consider the impact of external factors such as US President Donald Trump’s tariffs on China. With some of China’s equity benchmarks outperforming their US and European counterparts, there is a growing interest in Chinese stocks despite their historical volatility. Burry’s decisions reflect a nuanced approach to navigating these complex market dynamics and seizing opportunities for growth.
In conclusion, Michael Burry’s decision to cut stakes in Chinese tech giants while exploring new investment opportunities underscores the dynamic nature of the global market. As investors continue to adapt to changing trends and geopolitical factors, strategic moves like Burry’s highlight the importance of staying informed and agile in a rapidly evolving financial landscape.
