In a surprising turn of events, renowned investor Michael Burry, famous for his accurate prediction of the US housing market crash, has been steadily accumulating shares of Chinese tech giants Alibaba (BABA:NSD) and JD.com (JD:NSD). This move comes in contrast to other hedge funds that have been selling off their positions in these companies. Burry’s Scion Asset Management now holds significant stakes in both Alibaba and JD.com, which have become the top two stock holdings in his portfolio. Let’s delve into the details of this unexpected investment strategy.
Rising Holdings and Portfolio Allocation:
According to Scion’s Form 13F regulatory filing, Alibaba and JD.com collectively accounted for 20% of Scion Asset Management’s $107 million allocation as of March 31. The filing revealed that Scion held 100,000 Alibaba shares valued at $10.2 million and 250,000 JD.com shares valued at nearly $11 million. Interestingly, these holdings have increased substantially since December 31, signifying Burry’s growing confidence in the Chinese tech companies.
Burry’s Contrarian Stance:
Michael Burry’s contrarian approach to investing is well-known, and his current bet on Alibaba and JD.com further exemplifies this characteristic. While other hedge funds were selling off JD.com shares in the first quarter of 2023, Burry remained steadfast in his belief in the long-term potential of these companies. Despite his market warnings in the past, including his famous “Sell” tweet, which he later retracted, Burry’s investment decisions have always garnered attention.
Small Banks Amid the Banking Crisis:
Aside from Alibaba and JD.com, Burry’s Scion Asset Management has also invested in smaller banks like First Republic and Pacific Western amidst the ongoing banking crisis. This diversification of holdings showcases Burry’s strategy of identifying undervalued opportunities even in turbulent times.
The Big Short Legacy:
Michael Burry’s reputation was solidified by his accurate prediction and subsequent profit from the US housing market crash in 2008, which was immortalized in the book and movie “The Big Short.” His ability to navigate complex financial landscapes and identify investment opportunities has made him a prominent figure in the investment world.
Market Response and Scion’s Silence:
Following Burry’s increased holdings, Alibaba shares closed 3.5% higher at $88.34, and JD.com gained almost 7% to reach $37.67. While the after-hours trade remained relatively flat for both stocks, the market clearly responded positively to Burry’s endorsement. Scion Asset Management, however, has not provided an immediate comment on these recent developments.
Conclusion:
Michael Burry’s decision to accumulate shares of Alibaba and JD.com serves as a captivating development in the investment sphere. As a contrarian investor, Burry’s actions challenge the prevailing sentiment and suggest a different perspective on the potential of Chinese tech companies. It will be intriguing to observe the future performance of these holdings and how they contribute to the overall success of Scion Asset Management.
