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Bloomberg
Alibaba, once a cherished fund, abandoned by Point72, Hillhouse
(Bloomberg) – Alibaba Group Holding Ltd, once China’s most valuable company, is moving from being a global hedge fund favorite to something less than desirable. Pension funds abandoned 101 million U.S. certificates of deposit from Alibaba in the fourth quarter, reducing the market value of their holdings by $ 89 billion, according to deposit data. It was the largest reduction in investment among listed companies in the United States, more than three times the second best-selling share, Salesforce.com Inc., once a symbol of China’s new economy, the giant Jack Ma-founded e-commerce now finds itself at the forefront of the government’s campaign to harness the sprawling power of the tech giants. Shares of Alibaba, which are traded on the New York Stock Exchange, have fallen around 18% since November, when regulators in Beijing ended the initial $ 35 billion public offering of the subsidiary of Alibaba, Ant Group, at the last minute. Government watchdogs also ordered Ant to review its activities and launched an antitrust investigation into Alibaba. Meanwhile, Alibaba, which has invested in a wide range of industries, from online grocery shopping to intelligence artificial, will have to cope with future expansion constraints. Chinese antitrust watchdogs paid little attention to investments made by internet companies, but began to strengthen law enforcement as Beijing tried to eliminate monopoly power. In December, the Chinese antitrust watchdog fined Alibaba and two other companies for acquisitions that were several years old. Regulators said the e-commerce heavyweight should have sought government approval before increasing its stake in a department store chain in 2017.If anyone were to give an example of how to remove a monopoly in China, it has nothing better than Alibaba, said Rajiv Jain, who oversees $ 73 billion in assets as chairman of GQG Partners LLC in Fort Lauderdale, Florida. “The long-term growth path is now different from what we thought.” GQG liquidated all of its 9.6 million ADRs in the fourth quarter, valued at $ 2.8 billion, according to filing data. Jain said he has owned shares of Alibaba since the company’s IPO in 2014, while he was chief investment officer at Vontobel Asset Management.A spokesperson for Alibaba declined to comment on investors who sell the stock. Investors are wondering if Alibaba can support its meteoric rise. in the middle of regulatory review. He could now face penalties of up to 10% of his earnings if he is found to have violated antitrust rules. These rules oppose practices such as forced exclusivity agreements with traders, known as “Pick One of Two,” predatory pricing and algorithms favoring new users. Tightened government oversight also threatens to curb Ant’s dominance in online payments and curtail its expansion in consumer lending and wealth management. Alibaba said it was working with regulators to comply. to their demands as antitrust investigations continue. Stock prices have recovered somewhat since Ma resurfaced in late January after disappearing from public view following the government’s crackdown on her companies. Shares fell about 1% to $ 250.34 in New York on Wednesday. Alibaba sellers are the Who’s Who of hedge fund stars. Steve Cohen’s Point72 gave up all of his $ 413 million in securities in the last quarter of the fourth quarter. Moore Capital of Louis Bacon reduced its holdings by 99%, while Third Point of Dan Loeb reduced its stake by 45%. Other top investors who cashed in included Hillhouse Capital Advisors, which sold its $ 1.2 billion. The Canada Pension Plan Investment Board cut its stake by 31% to $ 2.1 billion, and Izzy Englander’s Millennium Management LLC was part of a minority group of investors who picked up Alibaba , counting it as his sixth-largest participation. Representatives for these companies declined to comment Rather than opting out, some investors may have swapped their ADRs for Hong Kong-traded stocks to avoid the risk of getting caught up in political tension between the US and China, said Brendan Ahern, CEO. Head of Investments at Krane Funds Advisors LLC, which manages several China-focused exchange-traded funds in the US Former US President Donald Trump signed a law in December that could kick Chinese companies off US stock exchanges unless they US regulators cannot review their financial audits. The administration had also considered banning US investments in Chinese companies, including Alibaba and Tencent, before speaking out against it. “Alibaba is a very well-run company,” Ahern said. “We strongly believe in the company and in the leadership.” Analysts share Ahern’s optimistic sentiment. All but three of 61 analysts rate the company as a buy. For Jain of GQG, regulatory uncertainties mean that the risk-reward calculation is cumulative compared to Alibaba. For example, it becomes much more difficult for the company to grow its business by acquiring smaller players. “There are more setbacks than good,” said Jain, whose Goldman Sachs GQG Partners International Opportunities Fund has beaten 83% of its peers in the past three years. . “Regulatory risk is generally underestimated until it is too late. In other words, you can’t cripple it. (Updated with Ailbaba share price in the ninth paragraph.) 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