Cathie Wood buys Alibaba after four years in China comeback

The stakes are worth about US$16.3 million in total, according to the funds’ holdings reports

Cathie Wood’s funds reopened positions in Alibaba Group Holding for the first time in four years, just as the stock rallied to a multiyear high on optimism over the Chinese firm’s push in artificial intelligence (AI).

A daily trading report from Wood’s Ark Investment Management showed that two of the firm’s exchange-traded funds (ETFs) snapped up American Depositary Receipts (ADRs) of Alibaba on Monday (Sep 22). The stakes are worth about US$16.3 million in total, according to the funds’ holdings reports.

Alibaba ADRs on Tuesday touched the highest levels since November 2021, having almost doubled year to date. Investors are ramping up bets that the Internet giant’s AI push could reinvigorate growth, after its core e-commerce business gets pinched by increased competition from rivals, including PDD Holdings.

Ark’s first investments in Alibaba can be traced back to 2014, shortly after the company’s initial public offering that year, according to a Securities and Exchange Commission (SEC) search tool. But no investment or proxy voting record could be found after September 2021, when the firm was in the centre of a sweeping regulatory crackdown.

The latest investment could mark a return for Ark after limiting its holdings in Chinese Internet stocks since the sector’s meltdown in 2021 and 2022. Earlier this year, it started building a position in Baidu, SEC’s records showed. It snapped up more shares in the search engine operator on Monday, bringing the overall position to about US$47 million.

Ark’s ETFs also invest in electric vehicles maker BYD, autonomous driving technology firm Pony AI and JD Logistics, though these stakes are relatively small.

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Wood has been widely known for her aggressive bets on disruptive technologies, and achieved outsized gains from her flagship Ark Innovation fund (ARKK) in 2020. While the fund’s 49 per cent return this year is far ahead of the S&P 500 and the Nasdaq 100, it’s down on a five-year basis, and has suffered an outflow of US$438 million this year, according to data compiled by Bloomberg. BLOOMBERG