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Appaloosa goes bargain hunting in China

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Appaloosa Management, the distressed debt-focussed hedge fund founded by David Tepper, boosted its holdings in beaten-down Chinese stocks in Q1 while cutting its exposure to US tech stocks, according to a report by Bloomberg.

Theerport cites a regulatory filing as revealing that Appaloosa more than doubled its investment in Alibaba Group Holdings in the first three months of the year, making the Chinese e-commerce giant the biggest position in its $6.7bn equity portfolio at $800m (12%).

The fund also raised its stakes in PDD Holdings and Baidu while adding JD.com and two Chinese exchange-traded funds as new buys during the quarter.

While going on a shopping spree in China, the firm also cut its holdings in the so-called Magnificent Seven tech stocks, including Amazon, Microsoft, Meta and Nvidia. At the end of Q1, Chinese shares and ETFs accounted for 24% of the fund’s equity portfolio.

Appaloosa’s purchases in the world’s second-largest economy seem to be well-timed, with the MSCI China Index having surged by almost 30% since its January low. However, the China benchmark is still trading at less than half of the valuation of the S&P 500 Index, which notched a fresh record this week.

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