Abbotsford, British Columbia – Renowned investor Michael Burry has recently increased his holdings in Chinese tech giant Alibaba, as per the latest 13F filings by his firm Scion Asset Management. Burry, known for his successful bets against the subprime mortgage bubble in 2007, raised his stake in Alibaba by 24%, making it his largest holding at 21% of his portfolio. Along with other major Chinese stocks like Baidu and JD.com, Chinese stocks now make up about 45% of Burry’s holdings.

The move to increase his position in Alibaba is seen as a bullish sign for large-cap Chinese stocks, especially amidst the ongoing debate surrounding the investability of Chinese companies due to concerns about the influence of the Chinese Communist Party. The current geopolitical climate, combined with factors like deglobalization and the leadership style of Xi Jinping, has led to contrasting opinions on the potential risks and rewards of investing in Chinese stocks.

Despite the uncertainty, Alibaba stands out with its strong profitability metrics and attractive valuations, backed by a solid cash position and recent initiatives like share buybacks and dividends. The company’s strategic focus on returning value to shareholders through buybacks and dividends signals confidence in its growth prospects and financial stability.

While there are concerns about potential risks such as the CCP’s actions, economic challenges in China, and impact on consumer demand, the overall sentiment towards Alibaba remains optimistic, with many investors seeing an opportunity in the current market conditions. With a focus on managing risks and leveraging potential opportunities, investors like Burry are eyeing long-term growth potential in Chinese tech companies like Alibaba.

Looking ahead, the trade landscape for stocks like Alibaba could see a shift as investors navigate through uncertainties and seek to capitalize on undervalued opportunities. Options like OTM calls provide a strategic approach to limit downside risks while maximizing returns in a market environment marked by volatility and sentiment swings. By analyzing market trends, financial performance, and geopolitical developments, investors can make informed decisions to optimize their investment strategies for the future.