Hedge Funds Love Chinese Tech Stocks

#3 Alibaba Group Holding Ltd (NYSE:BABA)

 – Number of Hedge Fund Holders (as of March 31): 67
– Total Value of Hedge Fund Holdings (as of March 31): $5.14 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 2.60%

Although early investor SoftBank may have sold $10 billion worth of Alibaba Group Holding Ltd (NYSE:BABA) shares at around $74 per share, Alibaba still has long-term potential. As the dominant e-commerce company in China, Alibaba offers substantial upside if the Chinese economy turns around and its middle class continues to grow. Alibaba also has a fast growing cloud division that could one day drive earnings growth like Amazon Web Services has been doing for Amazon.com, Inc. (NASDAQ:AMZN). 67 funds in our database owned shares of Alibaba as of the most recent 13F filing period, down by ten from the end of the previous quarter.

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

 – Number of Hedge Fund Holders (as of March 31): 72
– Total Value of Hedge Fund Holdings (as of March 31): $4.82 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 9.30%

Baidu Inc (ADR) (NASDAQ:BIDU) holds the lion’s share of the lucrative Chinese search market and is some ways ahead of the curve in terms of the ride sharing trend. Although it doesn’t own a major part of Didi Chuxing like Alibaba and Tencent, Baidu does own a stake in the fast growing app, Uber. Baidu’s Uber stake could pay off big time if and when the fast growing start-up launches its IPO. 72 funds in our system owned shares of Baidu at the end of March, up by 17 from the end of 2015.

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

 – Number of Hedge Fund Holders (as of March 31): 73
– Total Value of Hedge Fund Holdings (as of March 31): $9.11 billion
– Hedge Fund Holdings as Percent of Float (as of March 31): 39.40%

Although JD.Com Inc (ADR) (NASDAQ:JD) might be smaller than its e-commerce competitor Alibaba, the stock counts more top funds as shareholders of it. According to our database, 73 funds owned almost 40% of JD.com’s shares, while 67 funds owned just 2.6% of Alibaba’s shares. The smart money’s fascination with JD.com is no surprise; JD.com is eyeing the long-term horizon much like Amazon.com, Inc. (NASDAQ:AMZN) did, and putting market share and growth above profits. If the company’s management executes well and Alibaba slips up, the stock could mimic Amazon’s torrid multi-year run that has seen its shares gain 13-fold over the past seven-and-a-half years.

Disclosure: None