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Fund Manager for Scion Asset Management and notorious subject of The Big Short, Michael Burry recently released his 13F filing for the first quarter. Surprisingly, Chinese stocks made up more than 20% of his total holdings after some notable investments.
Indeed, Burry’s hedge fund — which manages slightly less than $200 million in assets — made a number of interesting moves in Q1. Notably, Burry increased his positions in select Chinese companies for which he has a clear preference.
These names include:
- JD.com (NASDAQ:JD)
- Alibaba (NYSE:BABA)
- Baidu (NASDAQ:BIDU)
Burry purchased 160,000 shares of JD stock, the most shares of the three Chinese companies, followed by 50,000 new shares of BABA and 40,000 added shares of BIDU stock.
This represents a substantial addition to his previous holdings of these stocks. Indeed, BIDU is the only of three companies Burry had no prior stake in. Now, the stock represents 4.07% of his total portfolio. Meanwhile, Burry’s holdings in JD stock increased from 6.11% to 9.53% of his portfolio — his single-largest Chinese holding — and his position in BABA jumped from 6.15% to 8.74%.
On whole, Burry’s position in these Chinese stocks jumped to 22.34% of his total portfolio. Previously, the stocks only made up 12.26% of his holdings.
Why Is Michael Burry Betting Big on Chinese Stocks?
Burry clearly prefers the big-name Chinese companies, perhaps for good reason. As a result of economic uncertainty and regulatory barriers in the country, the Morningstar China Index has lost almost 17% over the past three years, leaving many of these companies at a notable discount.
Of the three, Alibaba is perhaps the best-known Chinese company. It’s also one of the largest Chinese companies by market capitalization. At the time of this writing, BABA stock trades for about $83 per share, well below its $309 peak seen back in 2020. Alibaba is considered the “Amazon of China” and an e-commerce giant in its own right.
The stories are similar for both Baidu, an internet-services tech company, and JD.com, another e-commerce company.
Burry is best-known as one of the first investors to short the housing market prior to the 2008 housing crisis. Burry earned roughly $800 million for himself and his fund when home prices tumbled.
Because of this, investors have kept a close eye on Burry and his fund for insight into potential investing opportunities.
On the date of publication, Shrey Dua did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
