Here’s why Michael Burry’s biggest stock bet is about to pay off

The famous ‘Big Short’ investor Michael Burry might soon have a lot to celebrate as his biggest holding, Alibaba (NYSE: BABA) is either already in the green in its entirety, or at break-even levels.

To be precise, Burry has, for a time, been in the green on the bulk of his 155,000 BABA shares but the initial batch of 50,000 has been somewhat controversial. Indeed, as the original Alibaba stock was acquired during the third quarter of 2023, it could have been bought for as little as $83 or for more than $100.

Such price action in the third trimester of 2023 means that up until the market’s opening on September 24 – which saw the Chinese stock at $95.90 -‘The Big Short’ investor was more likely than not to have remained in the red on the 50,000 BABA shares.

Finally, given Alibaba has been on a decisive uptrend and rose 13.40% in the last five sessions – with the single biggest jump taking place in the extended trading between September 23 and September 24 – Burry is almost certainly fully in the green on his investment.

Alibaba stock likely to continue the rally

There is also a strong possibility that the investment will soon change to beeing fully profitable even if ‘The Big Short’ trader purchased the stock at the absolute highs of Q3, 2023 as the current uptrend has already enabled BABA stock to rise from September lows near $81 to its press time price of $95.90.

The ongoing rally is highly likely to persist in the foreseeable future due to a recent string of positive news pertaining to Alibaba.

Alibaba spurred upward by a deluge of positive news

On Setember 4, for example, it became known that Beijing’s long-standing probe of Alibaba over alleged monopolistic practices and certain other issues had been concluded. Jack Ma’s company is not only out of the hot water, but the Chinese regulators are reportedly very pleased with its restructuring.

A string of insider stock purchases executed by Joseph Tsai, Alibaba’s Chairman and co-founder, throughout the summer, can also be interpreted as a strong show of confidence in the wake of recent regulatory developments. However, some have also linked it with the firm’s recent primary listing in Hong Kong.

There has also been no shortage of positive news for the e-commerce and technology giant in the second half of September.

For example, Alibaba has recently entered into a partnership with Nvidia to advance autonomous driving technology and offer other computing services, according to a September 23 South China Morning Post report.

Finally, in a move likely to benefit the country’s entire ailing stock market, China elected to lower its interest rate to 1.5% from the previous 1.7% just weeks after the U.S. FED opted for a 50 basis points reduction.