Hedge funds are publishing their 13F reports for the quarter ending December 2021. The reports, which need to be filed with the SEC no later than 45 days after the end of each fiscal quarter, provide investors with an exciting snapshot into the world of hedge funds.
For those who aren't familiar with 13Fs, these reports detail the U.S.-listed common stock equity positions of hedge funds at the end of each quarter. They provide a window into the hedge fund world, which is usually pretty secretive. However, they do have their limitations. These reports only highlight equity holdings, for one; they do not detail debt, credit or cash positions, and they do not include non-U.S.-listed stocks. What's more, the reports only tell us the holdings as they were at the end of the quarter. They do not tell us if the hedge fund has sold or bought more of the position since that date. Further, they do not tell us anything about when the position was bought, the price paid or the reasons behind the trade.
Still, despite the drawbacks, these reports can be a great starting point for further research. They can also be helpful in identifying investment trends. In particular, they can highlight the sectors and industries where managers are currently finding the most interesting opportunities.
While digging through these reports, I noticed that there is a certain section of investors currently very interested in Chinese e-commerce and technology group Alibaba (BABA, Financial).
Value investors are buying
Over the past couple of quarters, I have reported on Charlie Munger (Trades, Portfolio)'s growing position in the stock. Munger has been buying the investment through the Daily Journal Corporation (DJCO, Financial), where he is the Chairman.
The company bought 160,000 shares in Alibaba during the first quarter of 2021. It substantially increased its position throughout the rest of the year. At the end of 2021, the Daily Journal owned just over 600,000 shares in Alibaba. As the stock price has slumped around 50%, Munger has increased his position by more than 260%.
There are plenty of other value investors following the billionaire's lead. Prem Watsa (Trades, Portfolio)'s Fairfax Financial Holdings acquired a small position of around 36,000 shares in the company during the third quarter of 2021. It increased its position by more than 300% to just under 144,000 shares during the fourth quarter.
First Eagle Investment (Trades, Portfolio) has increased its holding from just under 1 million shares to more than 4 million shares in the space of a year. The Tweedy Browne (Trades, Portfolio) Value Fund has increased an initial position of 26,000 shares in the fourth quarter of 2020 to 550,000 shares as of the end of 2021. Miller Value Partners (Trades, Portfolio) also increased its position marginally during the fourth quarter.
Perhaps the most notable trade is that of Conifer Management. This hedge fund is managed by Gregg Alexander, who used to work at the Sequoia Fund. Warren Buffett (Trades, Portfolio) once picked out Alexander as one of the three investors that he would be happy to have manage his own money (the others were Seth Klarman (Trades, Portfolio) and Li Lu (Trades, Portfolio)).
Conifer first acquired its position in Alibaba in the fourth quarter of 2020. It acquired 600,000 shares. Since then, the firm has been steadily increasing its position. At the end of the fourth quarter, it owned around 220,000 shares. According to the hedge fund's 13F report, following these deals, the holding is now the fourth-largest position in the $1.5 billion hedge fund portfolio. The automaker Stellantis N.V. (STLA, Financial) is the second-largest holding accounting for around 20% of equity assets.
The fact that Alexander and Munger both own a position in Alibaba is notable. These two investors are some of the most successful value investors of all time and have both been commended by Buffett himself.
