(Bloomberg) — Billionaire investor David Tepper added to struggling Chinese stocks last quarter while cutting stakes in fast-growing U.S. tech companies. Big hedge fund managers are gradually warming to China amid a record difference in valuations between the two countries. market.
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Tepper’s Appaloosa Management more than doubled its investment in Alibaba Group Holdings Inc. in the first three months of this year, according to regulatory filings, as the Chinese e-commerce giant increased its $6.7 billion stock portfolio. occupied the highest position. The fund also increased its stakes in PDD Holdings and Baidu Inc., while adding JD.com and two Chinese exchange-traded funds to its new purchases in the quarter.
As Mr. Tepper built up his position in Chinese stocks, he reduced his holdings in the so-called Magnificent Seven, including Amazon.com, Microsoft Corp., Meta Platforms Inc. and Nvidia Inc. As a result, Chinese stocks and ETFs accounted for 24% of the stocks. The fund’s stock portfolio at the end of the quarter.
Mr. Tepper is among a growing number of global investors who are cautiously returning to Chinese stocks after the meltdown earlier this year left them at record low valuations relative to their U.S. peers. According to quarterly filing data, hedge funds as a group increased their holdings in Alibaba, PDD and Baidu during the quarter, while companies including JD.com and two electric vehicle makers (Nio Inc. and Li Auto) reduced investment in
Their purchase was well timed. The MSCI China Index has risen about 30% from its January lows as government-backed funds stepped in to support the market and the Chinese government’s economic stimulus package began to gain momentum.
Even after the rebound, the Chinese benchmark still trades at less than half the valuation of the S&P 500 index, which set a new record this week. As of mid-April, hedge fund net allocations in China remained just above the lowest level in five years, according to Goldman Sachs Group.
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Among China’s bargain hunters, few hedge fund managers were as aggressive as Tepper. His investment in Alibaba was more than $800 million as of the end of March, representing 12% of his holdings, making him one of the company’s largest investors. Appaloosa also became one of the hedge funds’ largest investors in the $5.2 billion iShares China Large Cap ETF (FXI) and the $6.4 billion KraneShares CSI China Internet Fund (KWEB).
Mr. Tepper did not immediately respond to an email from Bloomberg News seeking comment.
Chinese tech giants reported mixed financial results this week. JD.com posted better-than-expected revenue growth and Tencent Holdings’ net profit soared, but Alibaba and Baidu reported lackluster results.
Tepper, who founded Appaloosa Management in 1993, is worth about $20 billion, according to the Bloomberg Billionaires Index.
–With assistance from Amy Lee and Amanda Cantrell.
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