After salivating at the Alibaba IPO, hedge fund managers lucky enough to buy in early are indeed getting a nice return kick from the Chinese e-commerce company.
Investment firms that have made money on Alibaba since it went public on Sept. 19 include Viking Global Investors, Third Point, Paulson & Co., Lone Pine Capital, Tiger Global Management and Glade Brook Capital Partners, according to people with knowledge of the portfolios.
Take hedge fund manager John Paulson, for example. Paulson & Co. bought private stock at $56 a share before the IPO, according to a discussion of the position on a call with investors Oct. 17. Paulson was then one of the lucky funds to get an additional allocation at the IPO price of $68 (bankers running the deal reportedly received far more order for stock than they could fill). The stock immediately popped when it hit the public market and now trades at more than $94.
The size of Paulson's position, spread between the firm's Advantage funds and others, is unclear. A spokesman declined to comment. While Alibaba was a winner, Paulson's Advantage fund has declined nearly 22 percent this year through Oct. 14, according to Lyxor data and as first reported by The Wall Street Journal.
Another Alibaba winner is Andreas Halvorsen's Viking. Nearly half of the Viking Global Equities fund's 4.1 percent return in the third quarter came from Alibaba. The gain was first reported by hedge fund-focused publication Alpha. The fund is up 10.8 percent overall through September. A spokesman for Viking declined to comment.
Dan Loeb also got a nice boost from Alibaba. His Third Point told clients this week that it had a "significant" investment in the stock and Alibaba was among the fund's top five winners for the third quarter, according to a person familiar with the returns. Third Point's Offshore fund is up 6 percent this year through September. A spokesman for Third Point declined to comment.
"Third Point has met with management several times and is confident that Alibaba can generate long‐term value in its core markets and compete in new ones, making it a compelling potential multi‐year investment," Loeb wrote in a letter Tuesday to investors.
"The company has a substantial network effect that creates several large moats around its business, generating significant free cash flow for re‐investment and expansion as well as an unrivaled amount of data on Chinese consumers. We see continued end market growth in Chinese consumer spending and e-commerce (as well as global e‐commerce) and continue to believe that Alibaba has considerable additional monetization potential."
Other investors to make money on Alibaba were Tiger Global Management and Glade Brook Capital Partners, both of which got in early with private shares. Both firms declined to comment.
Stephen Mandel's Lone Pine Capital also has a stake in Alibaba and has made money on the position, according to a person familiar with the situation. Additional details weren't available and a spokesman for Lone Pine declined to comment.