September 22, 2023

Third Point: Moore Led Hedge Funds bought Alibaba last quarter

(Bloomberg) — While famed money manager Michael Burry made headlines for driving bullish bets on stocks including Alibaba Group Holding Ltd. in the first quarter of this year, other top hedge funds also piled up.

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Moore Capital Management and Third Point LLC were among the top buyers of US-traded shares of the Chinese e-commerce giant in the first quarter, according to a hedge fund analysis compiled by Bloomberg based on 13F filings. A handful of Asian-based peers were among the top sellers, the data showed.

The only company headquartered in Asia in the top 10 buyers was Hermes Li’s Aspex Management (HK) Ltd., which managed $7.2 billion at the end of last year, according to data collected by Bloomberg from quarterly filings.

Six Asian-based firms, including Simon Sadler’s Segantii Capital Management Ltd. and Alpine Investment Management Ltd., accounted for nearly half of Alibaba’s ADRs drained by the quarter’s top 10 largest hedge fund sellers. Tairen Capital Ltd., Prime Capital Management Co. Ltd. and CoreView Capital Management Ltd. completely stepped out of their positions. According to the records, Segantii and Ariose Capital Management Ltd. sold most of the Alibaba ADRs they owned by the end of December by March.

Alibaba’s ADRs have lost about a third of their value since this year’s peak in January amid news of SoftBank Group Corp.’s plan. to lower its importance and rising geopolitical tensions.

Read more: Michael Burry Doubles Alibaba’s Stake in Big Bet on China Tech

Among the first-quarter sellers, Segantii runs a hedge fund with about $6 billion that has had one year of losses since its inception in late 2007. Founded the same year, Tairen reported $5.9 billion in gross assets in its hedge fund in a March regulatory filing and is one of the most respected Asia-based managers.

Deposit Restrictions

The 13F filings have been closely watched by observers seeking a glimpse into the opaque world of hedge fund trading. Sure, they have limitations. While they provide an end-of-quarter snapshot of funds’ mostly bullish bets, they do not disclose trading during the quarter and do not account for most of the bearish bets.

Alpine and Segantii declined to comment. The other companies did not immediately respond to messages asking for comment.

Asia-based hedge funds typically invest most of their capital outside of U.S. exchanges, meaning their 13F filings only cover a small percentage of their investments. Higher disclosure thresholds in jurisdictions such as Hong Kong, where a number of US-traded Chinese companies now have dual listings, mean information is more difficult to obtain. It is unclear whether the ADR transactions were funds moving from ADRs to Hong Kong equities, vice versa, or parts of hedged transactions involving Hong Kong equities.

The most popular holdings these six Asian sellers added during the quarter was Group Ltd. Ariose, CoreView, Segantii and Tairen more than tripled their combined ADR holdings. US shares of the Chinese online travel agency rose nearly 10% in the first quarter, extending the 26% rise in the last three months of 2022 when Beijing signaled it would ease Covid-era travel restrictions. It has since fallen about 20% as investors worried about China’s longer-term economic outlook.

CoreView and Segantii also built new positions in Baidu Inc. during the quarter, when it revealed China’s response to ChatGPT and a planned $5 billion share buyback. It relinquished some of its previous gains amid news that China would require security reviews of generative artificial intelligence services.

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