Alibaba, once the most highly valued company in China and once a darling sought after by international hedge funds, has turned into an unpopular investment, being sold off by several big-name international funds.
Bloomberg reported Feb. 24 that regulatory data showed investors including hedge fund giants Point72 Asset Management and Moore Capital Management and a host of Canadian and U.S. pension funds sold 101 million Alibaba American Depositary Receipts in the fourth quarter of 2020, reducing their position by $89 billion. This was the largest sale of ADSs to a U.S. listed company. This was the largest reduction in holdings of a publicly traded U.S. company, and more than three times the size of the second-largest sell-off, Salesforce.com Inc.
The sellers of Alibaba were hedge fund stars: Steve Cohe’s Point72 sold off its entire $413 million stake in the fourth quarter; Louis Bacon’s Moore Capital slashed its position by 99 percent; and Dan Loeb’s Third Point cut its position by 45 percent.
Other prominent investors such as High Tide Capital sold $1.2 billion of its holdings and the Canada Pension Plan Investment Board reduced its stake by 31 percent, worth $2.1 billion.
Ma’s Alibaba, once a symbol of China’s new economy, is now the first target in the Communist government’s campaign to crack down on the tech giant, the report said. Alibaba, which holds a stake in Ant Group, has fallen about 18 percent on the New York Stock Exchange since Beijing called a halt to its $35 billion initial public offering last November. Communist Party regulators have also asked Ant Group to reorganize its business and launched an anti-monopoly investigation into Alibaba.
Rajiv Jain, chairman of GQG Partners LLC in Fort Lauderdale, Florida, which manages $73 billion in assets, said there is no better example than Alibaba to take down a monopoly giant in China.
Rajiv Jain said Alibaba’s long-term growth trajectory is now different from what was previously expected, with regulatory data showing GQG liquidated all 9.6 million Alibaba ADRs worth $2.8 billion in the fourth quarter of last year.
Jain said he has held shares of Alibaba since the company’s debut in 2014.
Investors have questioned whether Alibaba can maintain its rapid growth under the scrutiny of Communist Party regulators. The Communist Party’s State Administration of Market Supervision and Administration said in a statement late last year that it was opening an investigation into Alibaba’s alleged monopolistic practices, including “two-for-one” selection. Alibaba said it would actively cooperate with the regulator’s investigation.
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