David Tepper is holding off on China bet as he cuts Nvidia Holdings

(Bloomberg) — Billionaire investor David Tepper has held almost steady in the Chinese companies he scooped up earlier this year, even as he pared his stakes in Alibaba Group Holding Ltd. and U.S. tech giants.

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While Tepper’s Appaloosa Management cut its stake in Alibaba by about 7% in the second quarter, the Chinese e-commerce giant remains the fund’s largest position, accounting for 12% of its $6.2 billion stock portfolio , according to a 13F regulatory filing on Wednesday.

Tepper also adjusted his investment in other Chinese companies, adding stakes in JD.com Inc., KE Holdings Inc. and two Chinese exchange-traded funds, while reducing positions in PDD Holdings and Baidu Inc. In total, Chinese stocks and ETFs made up 26% of the fund’s equity portfolio.

Tepper — who founded Appaloosa in 1993 — continued to reduce his exposure to U.S. technology companies, including Amazon.com, Microsoft Corp. and Meta Platforms Inc. Its holdings in Nvidia Corp. fell 84% during the quarter to $85 million, or 1.4% of the portfolio.

Tepper, along with Michael Burry of Scion Asset Management, has become one of the few prominent China bulls among hedge fund investors. In the first quarter, he piled up Chinese stocks — more than doubling his stake in Alibaba — as a rout in stocks prompted state-backed funds to step up buying to prop up the market.

Read: Michael Burry increases Alibaba stake and halves stock portfolio

Since then, Chinese stocks have struggled to gain momentum as years of housing slumps have undermined consumer confidence. The MSIC China index has gained just 0.4 percent this year, one of the biggest laggards in the global market, trailing the S&P 500’s 14 percent return.

Like Tepper, Burry — who became famous for his bet against the U.S. housing market in 2008 — stuck to his bullish bets on China even as he cut his total stock portfolio in half in the second quarter. Burry has increased its stake in Alibaba and Baidu in the past quarter, while pulling back on JD.com. The three Chinese companies accounted for 46 percent of his $52 million stock portfolio.

Alibaba and JD.com will report their latest quarterly earnings on Thursday. Alibaba has returned 4.8 percent this year, including dividends, while JD.com has lost 7.7 percent.

–With the help of Yiqin Shen.

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