5 Best Chinese Stocks to Buy Now

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Shareholders: 128

Topping the list of best Chinese stocks to buy now in a landslide is Alibaba Group Holding Limited (NYSE:BABA), which has more than twice as many smart money investors as the runner-up. Alibaba did experience a big decline in hedge fund ownership in the second-half of 2021 and remains well off its all-time highs, but money managers have been buying back into the company in recent quarters.

Alibaba Group Holding Limited (NYSE:BABA) is undergoing an organizational restructuring which the company believes will allow it to be more efficient and could lead to some of the new business units being spun off as separate public companies. That provides some intriguing potential catalysts for Alibaba investors in the future, which likely explains why hedge funds have been adding it back to their portfolios.

L1 Long Short Fund believes Alibaba Group Holding Limited (NYSE:BABA)’s organizational restructuring will help unlock some of its sum-of-the-parts valuation discount, as it revealed in its Q1 2023 investor letter:

“Alibaba Group Holding Limited (NYSE:BABA) (Long +16%) shares performed strongly based on favourable sentiment surrounding China’s re-opening and indications from Chinese authorities that the prolonged restructuring process of Alibaba/Ant Financial was finally drawing to a close. The company remains a high-quality business with leading positions in both eCommerce and Public Cloud. We exited our position in January at around US$116 per share with the shares having rallied more than 90% since their early November lows and our China re-opening catalyst having played out. We subsequently re-entered the position in March with the shares having pulled back and with the company announcing a new organisational and governance structure. Alibaba has announced plans to split into six major business groups – Cloud Intelligence, Taobao Tmall, Local Services, Global Digital, Cainiao Smart Logistics and Digital Media and Entertainment Group. Each of these groups will be managed independently (separate CEO and board) and have the flexibility to raise external capital and potentially pursue separate IPOs. We believe this announcement is a strong catalyst to unlock the inherent sum-of-the-parts valuation discount in the company.”

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