Shares of hedge fund favorite Alibaba Group Holding fell nearly 3 percent, to close at $86.80, after the U.S. accused the Chinese e-commerce giant of selling counterfeit goods. The stock is now down nearly 20 percent this quarter after peaking in late September. Over the past year, the company has been working hard at re-attracting U.S. investors. Joseph Tsai, the company’s executive vice chairman, spoke at this September’s Delivering Alpha conference.
At the end of the third quarter, at least 133 hedge funds held a position in the stock, making it one of the most popular hedge fund stocks, according to Novus.com. It attracted 62 new investors during the three-month period, while just nine hedge funds fully exited the stock during the quarter. Chase Coleman’s Tiger Global Management bought more than 5.37 million shares, making Alibaba the Tiger Cub’s fifth-largest U.S. long position. Tiger Global was one of a number of hedge funds that made sizable investments in Alibaba when it was a private business, but the firm liquidated its stake within a year or so after the company went public in September 2014. Other major hedge funds that took large new initial stakes in the third quarter included Tiger Cubs Lone Pine Capital and Coatue Management as well as Highbridge Capital Management, Third Point, and Stanley Druckenmiller’s Duquesne Family Office.
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Teva Pharmaceuticals shares — also a favorite of hedge funds — rose 1.5 percent, to close at $36.91, after the Israeli generic drug giant agreed to pay more than $519 million to settle civil and criminal charges that it violated the Foreign Corrupt Practices Act (FCPA) by paying bribes to foreign government officials in Russia, Ukraine, and Mexico. In the third quarter Viking Global Investors was the fifth-largest shareholder even after selling roughly 20 percent of its position. It told investors in its client letter it was anticipating a lower near-term price target due to several “headwinds,” including the invalidation of a key patent for a major Teva drug and the public criticism of competitor Mylan over the pricing of its largest product, EpiPen.
Sure enough, shares of Teva, which was still Viking’s fourth-largest long, are down nearly 20 percent this quarter despite Thursday’s stock price rise. Teva is also the fourth-largest U.S. long disclosed by Paulson & Co., the eighth-largest shareholder, and the second-largest long of PointState Capital.
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Houghton Mifflin Harcourt agreed to appoint Daniel Allen, the president and a partner of Anchorage Capital Group, to the board of directors as part of a compromise deal with the hedge fund firm. Allen’s appointment expands the size of the board to nine members for the publisher of education textbooks and other books.
“With 25 years of financial industry experience, he possesses extensive knowledge of capital markets and will be an invaluable asset to our team moving forward,” said board chairman Larry Fish in a statement. Allen oversees Anchorage’s portfolio management, risk management and investment decisions. Prior to joining Anchorage, he worked at Morgan Stanley and Goldman Sachs.
Anchorage is the largest investor in Houghton Mifflin Harcourt, with 16.62 percent of the shares if you take into account shares to be acquired upon exercise of warrants. Anchorage also agreed to certain customary standstill provisions.
