Are Hedge Funds Losing Interest in China?

#3. JD.Com Inc(ADR) (NASDAQ:JD)

– Number of Hedge Fund Shareholders (as of June 30): 51

– Total Value of Hedge Funds’ Holdings (as of June 30): $6.66 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 34.6%

Over the second quarter of 2016, the number of hedge funds in our database long JD.Com Inc(ADR) (NASDAQ:JD) tumbled by more than 30%, as the stock lost more than 22% of its value. However, the hedge funds that we track remained overweight the stock, owning more than one-third of its float. Some funds that remained bullish on the company were Andreas Halvorsen’s Viking Global, which disclosed ownership of 22.49 million shares as of June 30, and Philippe Laffont’s Coatue Management, with 19.69 million shares.

Since the second quarter ended, shares of JD.Com Inc(ADR) (NASDAQ:JD) have jumped by almost 30%, largely driven by strong second quarter results. Revenue rose by 42% year-over-year, to approximately $9.8 billion, with revenue from services and other businesses up by 67% to $832.25 million. Gross profit also rose by 66% to $1.4 billion, while annual active customer accounts spiked by 65% to 188.1 million.

#2. Baidu Inc (ADR) (NASDAQ:BIDU)

– Number of Hedge Fund Shareholders (as of June 30): 56

– Total Value of Hedge Funds’ Holdings (as of June 30): $3.43 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 7.6%

Much like its peers above, Baidu Inc (ADR) (NASDAQ:BIDU) the number of hedge fund supporters of Baidu declined during the second quarter, by 22%. Still, as 56 shareholders in our system held the stock, it was one of the most popular Chinese stocks among hedge funds and one of the 100-most widely held stocks overall. Among those bearish was Dmitry Balyasny’s Balyasny Asset Management, which sold all of its 272,090 Baidu shares as well as its 400,000 call options underlying Baidu shares during the second quarter. Among those bullish was Harris Associates, which held 5.26 million shares worth $869.7 million as of June 30.

Baidu Inc (ADR) (NASDAQ:BIDU) has been pretty volatile this year, but gained 12% in the third quarter. Most recently, shares spiked after the company’s CEO appeared on CNBC to talk about the Chinese economy, the internet, and innovation, among other things. Discussing the dominance of U.S. internet companies in Europe, Robin Li said, “I think European countries are frustrated that they don’t have enough number of choices. That actually creates opportunities for companies like us.”

#1. Alibaba Group Holding Ltd (NYSE:BABA)

– Number of Hedge Fund Shareholders (as of June 30): 69

– Total Value of Hedge Funds’ Holdings (as of June 30): $5.51 billion

– Hedge Funds’ Holdings as Percent of Float (as of June 30): 2.8%

Lastly is Alibaba Group Holding Ltd (NYSE:BABA), one of the few major Chinese stocks to rise in popularity among the hedge funds that we track during the second quarter, with the number of funds holding its shares rising by two to 69. Bulls included Silver Lake Partners, with 16.36 million shares on June 30, and Ken Fisher’s Fisher Asset Management, with 3.22 million shares.

Alibaba Group Holding Ltd (NYSE:BABA)’s stock recently broke the $100 threshold after more than 550 days trading below that mark. Last week, shares spiked after Jim Cramer mentioned the company among those “in the sweet spot of good growth, low expectations.” In his show, the expert prepared investors for “the impending gloom of a rate hike and slowing economy, by highlighting plays that could work in a changing world.”

Disclosure: Javier Hasse holds no interest in any of the securities or entities mentioned in this article.