After the famous ‘Big Short’ investor Michael Burry abandoned his 2023 bet against the semiconductor industry – though, interestingly, the short position may not have been wrong, only poorly timed – he again stirred controversy with his persistent bullishness about Chinese stocks.
The latest 13-f filing, made available on November 14, 2024, revealed that his confidence in East Asian stocks not only remained unshaken, but possibly even grew.
Specifically, the document revealed that Scion Asset Management increased its stake in Alibaba (NYSE: BABA), JD.Com (NASDAQ: JD), and Baidu (NASDAQ: BIDU), while it generally reduced its investments in most other holdings.
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Still, despite Burry buying 45,000 additional BABA shares, 250,000 JD shares, and 50,000 BIDU shares, the famous investor appears to have implemented a hedge against further losses on these investments.
Michael Burry doubles down on his Chinese stocks bet
Indeed, the 13-f also revealed that the entirety of the JD.Com stock position, as well as much of the Alibaba and Baidu stakes, were covered by put options at the end of the third quarter (Q3) of 2024.
Put options are an investment vehicle that enables traders to sell a set number of shares at a pre-determined price. They can either lead to significant profits if a stock falls or mitigate losses if they are ‘covered’ by a long position.
Though two theories behind these put options emerge as the most likely – Burry either grew weary of the Chinese stocks’ lackluster performance at some point during Q3 and opted to hedge his now-massive bets or decided to ‘lock in’ the profits generated in late September – the filing did not reveal any precise details.
Towards the end of the previous trimester, the Chinese market experienced a buying frenzy as the People’s Republic announced a string of measures intended to stimulate ailing stocks.
Though the initial reaction sent the shares of East Asian companies flying ever higher, the rally proved short-lived amid revelations that the injection was not what investors had hoped for.
In the last 6 months, Alibaba stock is up 2.61%, JD.Com stock is down 2.75%, and Baidu stock is 22.79%. Furthermore, with their press time price of $90.31, BABA shares are 23.15% below their early October highs at about $117.52.
JD shares are, likewise, 28.2% below their October 6 highs near $47.08 at their price today of $33.80. Finally, though they reached $115.13 at the start of the previous month, BIDU shares also collapsed 26.3% to their November 15 pre-market price of $84.84.
Beyond Michael Burry’s Chinese stock investments
Beyond the Chinese stocks, Michael Burry increased his positions in Shift4 Payments Inc (NYSE: FOUR) from 100,000 shares to 150,000. ‘The Big Short’ investor also purchased 5,470 Molina Healthcare (NYSE: MOH), raising his stake by about 25%, and also bumped up his position Olaplex Holdings Inc (NASDAQ: OLPX) to 1,000,000 with a 1% increase.
The 13-f also revealed that Scion Asset Management cut its stake in RealReal (NASDAQ: REAL) – previously noted for its exceptionally strong performance in 2024 – by half, and also reduced its hold over American Coastal Insurance Corp (NASDAQ: ACIC) from 250,000 shares owned to 100,000.
Finally, Michael Burry also completely cleared his investments in BioAtla Inc (NASDAQ: BCAB) and Hudson Pacific Properties (NYSE: HPP) during Q3.
Disclaimer: The featured image in this article is for illustrative purposes only and may not accurately reflect the true likeness of the individuals depicted.
