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Alibaba is favourite of US hedge fund managers

Regulatory filings show Third Point, Soros Fund Management, Viking Global Investors owned big stakes
Monday, November 17, 2014 - 05:50
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Alibaba, the Chinese e-commerce website, was the hot initial public offering of the year.

New York

ALIBABA, the Chinese e-commerce website, was the hot initial public offering of the year. And not surprisingly, shares of Alibaba wound up in the portfolios of many well-known money managers in the third quarter.

Third Point, Viking Global Investors, Paulson & Co and Soros Fund Management were some of the hedge funds that disclosed sizeable ownership stakes in Alibaba when they submitted filings to the Securities and Exchange Commission (SEC) on Friday.

The regulatory filings, known as 13-Fs, are quarterly updates from large money managers about their holdings in stocks traded in the United States.

Viking Global Investors, the fund led by O Andreas Halvorsen, reported having about 11 million shares of Alibaba, while Daniel Loeb's Third Point reported a stake of 7.2 million shares. Soros Fund Management, which manages the wealth of George Soros, had 4.4 million Alibaba shares. John A Paulson's fund said that it had 1.9 million shares.

Also reporting a large stake in the Chinese company was Tiger Management, led by Julian Robertson. It said it had about 1.2 million shares. Moore Capital, the fund led by Louis Bacon, reported having 1.5 million shares.

Leon Cooperman's Omega Advisors and Barry Rosenstein's Jana Partners disclosed holding smaller stakes in Alibaba. BlueMountain Capital Management disclosed it owned 303,031 shares, while Appaloosa Management said it had 725,000 shares. Even the family office of Stanley Druckenmiller, the billionaire investor, said it had 10,000 shares.

Alibaba raised about US$22 billion in one of the largest IPOs ever.

Investor interest in Alibaba had built up well before its stockmarket debut in September. But a number of prominent hedge fund managers - Mr Loeb of Third Point, David Tepper of Appaloosa Management and Mr Bacon among them - pressed for one-on-one meetings with the company in the run-up to the IPO.

The 13-F filings offer the first glimpse of which hedge fund managers and mutual funds were able to pick up Alibaba shares. More broadly, they offer a window into the thinking of money managers. But 13-F filings also do not provide a full picture. They disclose only what money managers, including hedge funds, were invested in as of more than 40 days ago - something investors should keep in mind when reviewing any 13-F quarterly report.

Moreover, October was a particularly volatile month, meaning stock positions could have changed substantially. The filings also do not require investors to disclose short positions, or bets that a stock will fall in price. And sometimes the SEC will permit investors to keep stock positions confidential for a while.

But the filings can reveal some interesting developments.

For instance, Jana disclosed that it also owned 842,268 shares of McDonald's, a move that contributed to a one per cent gain in McDonald's shares.

But while some hedge funds clustered around a few stocks, disagreement was common. The Fortress Investment Group, for example, disclosed owning five million shares in Ally Financial, the one-time financing arm of General Motors. Paulson sold two million Ally shares, disposing of its position.

Mr Loeb sold his position in Hertz. Hertz said on Friday it would revise its recent financial statements after discovering errors. NYT