Michael Burry, of ‘The Big Short’ fame, who predicted the 2008 crash, went all in on Chinese equities following a misjudged bet against the semiconductor industry.
Per the latest 13-F filing available, Alibaba stock (NYSE: BABA) is the savvy investor’s largest holding. Chinese stocks account for 43% of Burry’s portfolio — and BABA shares, on their own, make up 16% of it.
Before the onset of the trade war, the renowned investor’s portfolio was up quite significantly. However, as his largest holding happens to be a Chinese e-commerce giant, the tariffs placed upon the People’s Republic by the U.S. administration, which have now risen to a staggering 125%, have had an outsized effect on BABA stock.
To be more precise, Alibaba shares closed at a price of $129.33 on April 2. By press time on April 11, they were trading at $106.84.
Therefore, BABA shares have lost 17.38% in value since the start of the trading war. At present, they’re at risk of even further capital depreciation.
Michael Burry is losing almost $50k per day on his biggest holding
Michael Burry owns 150,000 Alibaba shares. On April 2, they were worth roughly $1,939,950. By press time, their worth has receded to $1,602,600. To put that in another perspective, that’s a loss of $337,350, or roughly $48,000 per trading day.
With no clear path to resolving trade disputes in sight, Alibaba stock remains at risk of further moves to the downside, since its prospects are closely tied to Chinese manufacturing — which tended to operate on razor-thin margins even before the new import duties.
Moreover, as the tariff exchange threatens to increase inflation and might cause a recession, discretionary spending could see a pullback — and investors could divest from equities in search for more stable assets.
Featured image via Shutterstock
