May 15, 2015 / 5:24 PM / 2 years ago

Top U.S. hedge funds boost Alibaba stakes in first quarter

Daniel S. Loeb, founder of Third Point LLC, participates in a panel discussion during the Skybridge Alternatives (SALT) Conference in Las Vegas, Nevada May 9, 2012.Steve Marcus

NEW YORK (Reuters) - Top U.S. hedge fund managers increased their stakes in Alibaba Group Holding Ltd (BABA.N) at the end of the first quarter, positioning themselves to take advantage of any upswing after the Chinese e-commerce company's stock took a beating after a surprise revenue miss in January.

Soros Fund Management LLC, Tiger Global Management LLC, Viking Global Investors LP and Moore Capital Management LP were among those that added to their position in Alibaba. Farallon Capital Management LLC took a fresh stake in the company, buying 221,000 shares valued at $18.4 million.

The moves come after a disappointing earnings report in January that sent the stock plunging 20 percent during the first quarter.

The company's shares have recovered, up 6.3 percent since the end of March and up nearly 8.8 percent in May alone. The company reported stronger quarterly results in May and appointed a new chief executive.

"It was a smart move," said Gil Luria, an analyst with Wedbush Securities. "These hedge funds used the negative sentiment as an opportunity to buy the stock at a depressed level."

Among those who boosted their stake, Soros Fund Management added 44,604 shares to its 4.4 million stake. Tiger Global Management increased its stake by 15 percent to 6.7 million shares at the end of March, while Viking Global almost doubled its shares to 6.9 million. Tiger Management, led by Julian Robertson, raised its stake 11 percent to 636,878 shares. And Louis Bacon's Moore Capital Management boosted its stake some 15-fold to 2.1 million shares from just 138,345 shares at the end of last year.

"This is a classic example of the more public sentiment being less than positive and the so-called 'smart money' seizing on related opportunities," said S&P Capital IQ analyst Scott Kessler.

Daniel Loeb's Third Point LLC and John Paulson's Paulson & Co took an opposite stance, with Third Point dissolving its 10 million-share Alibaba stake and Paulson vacating its 1.93 million share position at the end of the first quarter. The moves came after they had steadily built up their positions in previous quarters.

The firms are among big hedge funds reporting their positions as of the end of March. U.S. regulators require large investors to disclose stock holdings every quarter, providing a window into the strategies of some of the biggest managers. The disclosures, known as 13F filings, are due Friday.

Reporting by Ashley Lau in New York. Editing by Jennifer Ablan, Andre Grenon and Christian Plumb

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