Weekly update

David Tepper Scoops Up Alibaba as Hedge Funds Hunt for Bargains in China

Billionaire investor David Tepper increased his investments in underperforming Chinese stocks last quarter while reducing his stakes in high-performing US tech firms. This move reflects a growing interest among hedge fund managers in Chinese markets, driven by a significant valuation gap between the two regions. Tepper’s Appaloosa Management more than doubled its investment in Alibaba Group Holdings in the first quarter, making it the largest position in its $6.7 billion equity portfolio/The fund also increased its holdings in PDD Holdings and Baidu Inc., and added new positions in JD.com and two Chinese exchange-traded funds according to new reports.

While boosting his positions in Chinese stocks, Tepper reduced his investments in the "Magnificent Seven" US tech stocks, including Amazon, Microsoft, Meta Platforms, and Nvidia. As a result, Chinese shares and ETFs comprised 24% of the fund’s equity portfolio by the end of the quarter.

Tepper is among the global investors cautiously returning to Chinese stocks after their valuations hit record lows earlier this year compared to US peers. Hedge funds, as a group, increased their holdings in Alibaba, PDD, and Baidu, while reducing stakes in JD.com and electric vehicle makers Nio Inc. and Li Auto, according to quarterly filings. This strategy was well timed, as the MSCI China Index has surged nearly 30% since its January low, aided by state backed market interventions and Beijing’s economic stimulus efforts.

Despite the rebound, the China benchmark remains valued at less than half of the S&P 500 Index, which reached a new high recently. As of mid April, hedge funds' net allocations in China increased slightly above their lowest levels in five years, according to Goldman Sachs Group Inc.

Bridgewater taps Schonfeld’s Head of Macro Research

Jerome Saragoussi, Head of Macro Research and Strategy at Schonfeld Strategic Advisors, is set to leave the firm in June to join Bridgewater Associates, the world’s largest hedge fund, according to a report by hedgeweek.

The report, confirmed Saragoussi's appointment. Saragoussi joined Schonfeld in September after serving as a Portfolio Manager at Eisler Capital, where he worked alongside Light Sky Capital founder Ben Melkman. Previously, Saragoussi was Head of Research and Strategy at Light Sky, before the macro fund closed in 2022. Melkman joined Schonfeld in early 2023 but departed in November the same year when Schonfeld reduced its head count by 15% due to disappointing returns and investor pressure.

Jain Global appoints Head of Leveraged Finance Research

Jain Global, the hedge fund founded by former Millennium Co-Chief Investment Officer Bobby Jain, is set to make its much anticipated debut next month and has appointed David Salpeter as Head of Leveraged Finance in New York. Salpeter brings nearly two years of hedge fund experience, having spent a year and eight months as an analyst at multi strategy firm Citadel.

Before joining Citadel, Salpeter was Vice President and Distressed Debt Analyst at Goldman Sachs, starting in April 2019. Prior to that, he spent almost 14 years at Citigroup, where he worked as a Director in both credit opportunities and distressed debt.

A legendary hedge fund exited its GameStop bet before the meme stock's 550% spike

A legendary hedge fund exited its GameStop position before the meme stock surged by as much as 550%. SEC filings reveal that Tudor Investment Corporation, founded and led by billionaire trader Paul Tudor Jones, held bullish call options on 44,300 GameStop shares at the end of December, with a notional value of about $777,000. The firm also had bearish put options on 27,800 GameStop shares, valued at approximately $487,000. However, neither position appeared in the hedge fund's first quarter portfolio update on Wednesday, indicating they exited these positions by the end of March.

GameStop shares, which had dropped to around $10 by late April, skyrocketed to an intraday high of $65 on Tuesday. The surge was largely attributed to the return of Keith "Roaring Kitty" Gill — a key figure in the 2021 GameStop saga — to social media. Despite this, the stock fell nearly 20% on Wednesday and another 15% in premarket trading on Thursday.

This week's surge echoed the events of January 2021, when GameStop's stock price jumped from under $5 to over $80 on a split-adjusted basis, driven by retail investors on social media aiming to squeeze short sellers and capitalize on the volatility.