Market Extra: Michael Burry of The Big Short fame doubled down on China bets. Here’s what other investors are saying

by | May 18, 2023 | Stock Market

Corrects value in paragraph 12 to “a couple of hundred billion dollars”. Quarterly U.S. regulatory filings this week revealed that Scion Asset Management, the hedge fund founded by Michael Burry, doubled down on China stock bets. The question is, should investors?

Burry’s investment moves are widely followed as he correctly called the collapse of the U.S. housing market that triggered the 2008 financial crisis. He shot to fame after appearing in Michael Lewis’s book “The Big Short,” that was later a movie. The filing with the Securities and Exchange Commission, known as a 13F, revealed Scion had 10% of his U.S.-listed portfolio in China retailing giant
and 9.6% in e-commerce giant Alibaba
at the end of the first quarter. Scion was also a buyer of those names in the fourth quarter of 2022, but as the holdings information is backward looking, it’s unclear if the fund remains invested. Burry hasn’t responded to a request for comment from MarketWatch. Scion wasn’t alone in that China enthusiasm, though. Hedge fund Third Point also took a new position in Alibaba, and hedge fund Hillhouse Capital Advisors, filing under HHLR Advisors, added to its position in Alibaba, PDD Holdings and other China names. Investors have been riding out a not-so-easy year for China stocks. U.S.-listed shares of are down 32% year to date, while Alibaba, which will report its latest results on Thursday, has eked out a 0.28% gain, after dropping more than 20% in 2022. Online retailer PDD
is off 18%, with EV maker NIO
down 15%, while online internet tech group NetEase
is up 23%. Reporting Tuesday, Chinese search engine operator Baidu 
got a boost after beating forecasts and swinging to a first-quarter profit. Some of the wobbles for China stocks are down to uncertainty over how long the country will take to emerge fully from its zero-COVID policy. Data out Tuesday showed disappointing growth in China retail sales and industrial production, and a youth unemployment rate at a record 20.4%. Among those not ready to give up on China is Thomas Hayes, chairman of …

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