MarketBeat·2024-09-11 11:15Core Insights - Hedge funds are increasingly using relative value strategies, focusing on long positions in undervalued stocks and short positions in overvalued stocks to manage risk and maximize returns regardless of market conditions [1] - Despite negative sentiment surrounding Chinese stocks, many fund managers see potential upside in the technology sector, particularly in companies like Alibaba and Baidu [2][3] Chinese Technology Sector - The forward price-to-earnings (P/E) ratio for Chinese tech stocks is at an all-time low compared to U.S. counterparts, suggesting a favorable risk-reward profile for long-term investors [3][4] - The average forward P/E for top holdings in the KraneShares CSI China Internet ETF is significantly lower at 9.9x compared to the average of 30.5x for leading U.S. tech stocks [4] Alibaba Group - Alibaba recently announced a primary listing in Hong Kong, which could attract billions of buyers if it achieves a higher valuation than its U.S. listing [5][6] - Analysts have set a 12-month price target of $107.61 for Alibaba, indicating a potential upside of 28.38% from its current price [6] - Prominent hedge fund managers, including Michael Burry and George Soros, hold significant positions in Alibaba, reflecting bullish sentiment [5] Baidu Inc. - Baidu's stock is also viewed positively, with a 12-month price forecast of $135.13, suggesting a potential upside of 64.70% [9] - Michael Burry's fund holds a 75,000-share position in Baidu, indicating confidence in the company's future performance [8][9] - Primecap Management Co. has increased its holdings in Baidu by 17.2%, further supporting the bullish outlook [8]