Dow Jones
Beijing


Alibaba Group Holding was the darling of the hedge fund industry in the third quarter. It’s still a hedge fund favourite – but a lot less so, according to data released on Friday.
Hedge funds held about 2.7% of shares outstanding in the Chinese e-commerce company at the end of the year, according to analytics firm Novus Partners, down from 4% of the shares three months earlier. That amounts to about 30mn shares offloaded, which would have been worth about $3bn on December 31.
Another metric by which to measure Alibaba’s popularity: It went from being the 7th most popular hedge fund holding at the end of the third quarter to the 20th, according to AlphaClone, which measures popularity by the number of hedge funds with Alibaba among their top 20 holdings.
Hedge funds that exited the stock include Appaloosa Management, Eton Park Capital Management, Highfields Capital Management and Omega Advisors. Viking Global Investors, which had bought into Alibaba before its public debut, and Maverick Capital reduced their holdings, Novus said.  An analytics firm for institutional investors, Novus studied more than 1,000 funds’ regulatory filings and counts as hedge funds those firms focused on running hedge fund assets rather than broadly diversified money managers. Hedge funds can trade in and out of positions so the quarterly filings provide only a snapshot of their holdings.
Hedge funds connected with Julian Robertson’s Tiger Management – including funds founded by proteges of Robertson, funds seeded by Tiger and funds founded by mentees of Robertson’s proteges – reduced their Alibaba holdings by about a half billion dollars, based on the closing price of Alibaba shares at the end of the year, Novus found.
So-called “Tiger Cubs,” “Tiger Seeds” and “Tiger Grandcubs” have a reputation for trading in a similar fashion, having been schooled in a like-minded investment style.
But some big-name investors are championing Alibaba. Tiger Global Management, also connected to Robertson and known for its pre-IPO investments in technology companies including Facebook and Zynga, reported a new stake of 5.8mn shares. Third Point, run by investor Daniel Loeb, increased its stake to 10mn shares, up from 7.2mn shares at the end of September.