Michael Burry, best known for calling out the subprime mortgage crisis, made many changes to his portfolio last quarter, including what appeared to be a hedge on a big bet on Chinese internet stocks. Burry, who now manages hedge fund Scion Asset Management, raised stakes in several ADRs of Chinese internet companies, according to regulatory filings. The trader increased his Alibaba stake by 29% to a stock valued at more than $21 million, making it his largest position at the end of September. The widely followed investor also doubled its stake in JD.com, pushing it to become Scion’s second-largest shareholder, valued at $20 million. Burry also increased its stake in Chinese search engine Baidu by 67% to a bet worth $13.2 million at the end of the third quarter. When filling out the ADR, Burry took many options for the name, perhaps as a hedge. Investors profit when securities fall in price. But when paired with long holdings, it can be used to offset any expected short-term losses in the stock. At the end of September, Burry acquired millions of dollars in contracts with Alibaba, JD.com and Baidu, with an unknown value, strike price or expiration, according to the filing. Chinese equities got a boost in September after the government signaled a flood of stimulus measures in an effort to revive growth and avoid continued stagnation in the world’s second-largest economy. However, many stocks gave up some of these gains as officials have yet to announce concrete fiscal support. Burry rose to fame by betting against mortgage-backed securities before the global financial crisis of 2008. Burry was featured in Michael Lewis’ book “The Big Short” and the Oscar-winning film of the same name. Outside of these Chinese companies, Burry has increased its bets on payment processing company Shift4 Payments, American Coastal Insurance Corporation and healthcare firm Molina Healthcare. Money managers with more than $100 million in assets must disclose long positions with the U.S. Securities and Exchange Commission 45 days after the quarter ends. Active traders such as Burry may have changed positions by the time the filing came out.
Michael Burry reshuffles portfolio, increases hedges in China holdings
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