Kevin O'Leary, chairman of O'Shares ETFs, took some heat for buying Chinese stocks earlier this week when seemingly everyone disagreed with his reasoning, but it was an obvious move for the savvy investor.
"When everybody in the market hates them and you start getting analysts calling them 'uninvestable,' you have to tiptoe into the tulips," O'Leary said Wednesday on CNBC.
At the beginning of the week, O'Leary bought shares of Alibaba Group Holding Ltd (NYSE:BABA), Tencent Holdings Ltd (OTC:TCEHY) and Meituan (OTC:MPNGF).
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The fundamental reason for owning Chinese stocks is getting exposure to the Chinese consumer and China's economy, which is growing at an incredibly high rate, he said.
O'Leary, who will be the keynote speaker at the inaugural Benzinga Psychedelics Capital Conference on April 19 in Miami Beach, acknowledged the concerns over government policy and ADR delisting potential, but said the stocks were already down big on the uncertainty.
"You have to hold your nose on the volatility, but the fundamentals are why you invest and you pick your opportunities when you get people slashing them," O'Leary said.
Although he is sitting on roughly 30% gains in just two days, O'Leary said he doesn't plan to sell. Yet O'Leary said he's forced to trim anything that becomes larger than a 5% weighting in his portfolio.
He wants to maintain full positions in the Chinese stocks he bought because he can't find the same growth opportunities anywhere else, he said.
"I'll stop owning these when they stop growing and I don't see that happening for a long time."
BABA, TCEHY, MPNGF Price Action: At publication time, Alibaba was up 28.3%, Tencent was up 25.7% and Meituan was up 32.2%.
Photo: courtesy of Alibaba.
