(Bloomberg) — Billionaire investor David Tepper enriched himself from falling Chinese stocks last quarter while trimming his stakes in high-flying U.S. technology companies, directing hedge fund managers who are slowly getting used to the China amid a record valuation gap between the two. markets.
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Tepper’s Appaloosa Management more than doubled its investment in Alibaba Group Holdings in the first three months of the year, making the Chinese e-commerce giant the largest holding in its $6.7 billion stock portfolio , according to a regulatory filing. The fund also increased its holdings in PDD Holdings and Baidu Inc., while adding JD.com and two Chinese exchange-traded funds as new purchases during the quarter.
As Tepper consolidated his positions in Chinese stocks, he reduced his holdings in the so-called Magnificent Seven stocks, including Amazon.com, Microsoft Corp., Meta Platforms Inc. and Nvidia Corp. Result: Chinese stocks and ETFs represented 24% of the market. of the fund’s stock portfolio at the end of the quarter.
Tepper is among global investors cautiously returning to Chinese stocks after a collapse earlier this year sent their valuations to a record low relative to their U.S. peers. As a group, hedge funds increased their stakes in Alibaba, PDD and Baidu during the quarter, while reducing their stakes in companies such as JD.com and two electronic vehicle makers – Nio Inc. and Li Auto, according to quarterly filing data.
Their purchases were at the right time. The MSCI China index has jumped nearly 30% since its January low, as state-backed funds stepped in to support the market and Beijing’s economic stimulus measures began to gain momentum. magnitude.
Even after the rebound, China’s benchmark index still trades at less than half the valuation of the S&P 500, which hit a new record this week. As of mid-April, hedge fund net allocations to China rose only slightly above their lowest levels in five years, according to Goldman Sachs Group Inc.
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Among China’s bargain hunters, few hedge fund managers have been more aggressive than Tepper. His investment in Alibaba was worth more than $800 million at the end of March, or 12% of its shares, making him one of the company’s largest investors. Appaloosa was also among the largest hedge fund investors in the $5.2 billion iShares China Large-cap ETF (FXI) and the $6.4 billion KraneShares CSI China Internet Fund (KWEB).
Tepper did not immediately respond to an email from Bloomberg News seeking comment.
Chinese tech giants reported mixed results this week. While JD.com reported better-than-expected revenue increases and Tencent Holdings Ltd.’s net profit. surged, Alibaba and Baidu posted mediocre results.
Tepper, who founded Appaloosa Management in 1993, is worth about $20 billion, according to the Bloomberg Billionaires Index.
–With help from Amy Li and Amanda Cantrell.
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