Alibaba Group Holding Ltd (NYSE:BABA) has fallen as low as $76.55 per share so far today, or 4.59% below its $80.23 per share closing price yesterday, as stocks in China continued to fall Tuesday and optimism that the Chinese government will be able to stem the downward trend wanes. The Shanghai Composite index fell 1.3% while the CSI 300 Index comprised of the largest companies listed in the Shanghai and Shenzhen markets fell 1.8%. The fall of stocks in the country on Tuesday after a brief respite on Monday comes after China implemented its strongest move yet over the weekend to try to stop the slide of stocks. The government suspended initial public offerings and lent cash to investors to buy shares. Brokers told the government they will be buying shares until the Shanghai Composite breaches 4,500 but said index is down by more than 17% from that level. The ongoing problem in the Chinese markets has also affected the Hong Kong market, as the Hang Seng Index fell 1% on Tuesday.
While many hedge funds had bullish outlooks on Chinese stocks heading into the last quarter, interest in Alibaba Group Holding Ltd (NYSE:BABA) declined sharply following its underwhelming first quarter results. Heading into the second quarter, a total of 86 of the hedge funds tracked by Insider Monkey were long in Alibaba, dropping 4% from the end of the fourth quarter. The total value of the holdings of those long in the stock also decreased 18.38% to $5.8 billion by the end of the first quarter, down from $7.11 billion in the previous quarter. It should be noted, however, that from January 2 to March 31, the stock fell 19.92%, so there was a slight collective increase in share ownership.
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Insider Monkey also tracks insider transactions. Whether executives running companies are buying or selling their firms’ shares can be used to deduce whether these executives feel confident about their own companies. However, there have been no recorded insider purchases or sales of shares this year for Alibaba.
With all of this in mind, we’re going to review the recent hedge fund action encompassing Alibaba Group Holding Ltd .
What does the smart money think about Alibaba Group Holding Ltd (NYSE:BABA)?
Discovery Capital Management, led by Rob Citrone, holds the most valuable position in Alibaba Group Holding Ltd (NYSE:BABA). Discovery Capital Management has a $730.4 million position of 8.77 million shares, comprising 8.3% of its 13F portfolio. Coming in second is Andreas Halvorsen of Viking Global, with a $578.1 million position of 6.94 million shares; 2.2% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism include Chase Coleman’s Tiger Global Management, Alec Litowitz and Ross Laser’s Magnetar Capital, and George Soros’ Soros Fund Management.
Because Alibaba Group Holding Ltd (NYSE:BABA) saw declining sentiment from hedge fund managers, there exists a select few funds that elected to cut their positions entirely heading into the second quarter. Interestingly, Dan Loeb‘s Third Point cut the biggest position of the “upper crust” of funds followed by Insider Monkey, comprising about $1.04 billion held in 10.0 million shares. James Dinan’s fund, York Capital Management, also dropped its holding of 2.81 million shares or about $292.5 million worth of shares.
Because of the troubles in the Chinese markets which may affect how much optimism and therefore business there is in the country where Alibaba primarily operates, as well as the decline in interest among hedge funds, we don’t see Alibaba Group Holding Ltd (NYSE:BABA) as a good stock to buy at the moment.
Disclosure: None
