Michael Burry, the investor known for his prescient housing market short ahead of the 2008 financial crisis, has exited his Alibaba Group Holding Ltd. position and established a large stake in JD.com Inc., citing valuation concerns tied to the company's share issuances and aggressive AI investments.
The move follows Alibaba's announcement of a HK$80 billion ($10.2 billion) share sale to fund AI initiatives, the largest follow-on offering in Hong Kong this year. The offering was priced at HK$112.70 per share, compared with Alibaba's Hong Kong closing price of HK$123 the prior Friday. The company's U.S.-listed American depositary receipts fell 8.6% that day, contributing to a 18.6% year-to-date decline.
Alibaba reported a 75% drop in profit for the quarter ended June, driven by increased spending on AI and other growth initiatives, despite a 9% rise in revenue. Burry stated that Alibaba shares would need to decline by roughly half before he would reconsider an investment, criticizing the company's capital allocation strategy in a Substack post. "I cannot bless share issuances," he wrote, referring to the HK$80 billion offering.
Burry had previously disclosed a new position in Alibaba in April but has now shifted capital to JD.com, describing his stake in the online retailer as "large." The repositioning reflects broader concerns about valuation and corporate strategy in China's e-commerce sector, where competition and regulatory pressures continue to weigh on investor sentiment.
