Billionaire Brad Gerstner’s Altimeter Capital Dumps Largest China Holding and Invests in These 2 Two Top 15 Stocks

Brad Gerstner’s hedge fund, Altimeter Capital Management, made 27 moves in the fourth quarter, none more important than closing out its seventh-largest position, KraneShares CSI China Internet ETF (NYSEARCA:KWEB).

That’s a lot of moves for a portfolio with just 23 holdings at the end of September spread across $6.75 billion in assets. It finished 2024 with 24 positions and assets of $5.55 billion, which suggests only one thing: more of the hedge fund’s portfolio went to cash in the final quarter of 2024. 

As said, Altimeter made 27 moves in the fourth quarter: five new purchases, added to five existing stocks, closed out four stocks, including KWEB, and reduced its positions in 13 more.

Considering that the hedge fund holds a focused portfolio of less than 30 stocks, you would think that it would be relatively easy to figure out Gerstner’s rationale for each of the moves. Sometimes, however, no answers can be gleaned from the quarterly 13F holdings reports. 

However, the closeout of KWEB provided most of the funds necessary to buy two new stocks, both in the top 15. 

Here’s why Altimeter might have made these three moves. 

Key Points About This Article:

• Billionaire Brad Gerstner’s hedge fund dumped its biggest China position in the fourth quarter and moved the funds into two promising growth stocks. 
• Altimeter Capital Management is already winning from its bet on Flutter Entertainment (NYSE:FLUT). 
• Its Maplebear (NASDAQ:CART) bet on Instacart could require more patience if the hedge fund wants to profit from the food and grocery delivery business. 
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “2 Legendary High-Yield Dividend Stocks” now.

Goodbye to KWEB and Altimeter’s Largest China Holding

The hedge fund sold all 5.67 million of its shares in KWEB during the fourth quarter generating approximate proceeds of nearly $200 million based on the average of the share price quarterly high ($39.17) and low ($29.00).

As mentioned earlier, it was the hedge fund’s 7th-largest position at the end of September, accounting for 2.86% of the portfolio. It was also the hedge fund’s largest position in a China-related stock or ETF. 

Gerstner’s firm only acquired the KWEB position in the third quarter, suggesting that this was a broad bet that Chinese internet companies would outperform the markets in the year’s final quarter. 

The bet doesn’t appear to have paid off, as KWEB traded down 14% in the quarter. If Altimeter was quick to react, the ETF’s share price hit its Q4 high of $39.17 on Oct. 7, just days into the year’s final quarter. 

However, according to WhaleWisdom.com, Gerstner’s firm is estimated to have paid an average price of $27.28 per share in the third quarter, so it’s possible that it made a reasonable return on its one-month bet. 

It turned around and bought stock in Maplebear (NASDAQ:CART), the parent of Instacart, and Flutter Entertainment (NYSE:FLUT), the casino operator that owns sports-betting powerhouse FanDuel. 

Altimeter Places a Big Bet on Sports

Altimeter paid an average of $246.09 a share for Flutter shares, purchasing 380,315 for approximately $93.6 million. This is now the hedge fund’s 14th-largest position, accounting for 1.77% of the portfolio. 

Two months into 2025, Gerstner is making money from the bet. Flutter shares are up 5.1% year-to-date and 10% from what he paid for them. 

One thing that likely attracted Altimeter to Flutter was its November announcement that it would repurchase $350 million of its stock by March 31. This was the first of several future buybacks to complete the share repurchase program announced by the board in September, which authorized the company to buy back up to $5 billion and a maximum of 17.74 million shares. 

At the same time as it announced the $5 billion buyback plan, Flutter also announced that it would acquire Playtech’s Italian gaming business for $2.6 billion and invest $350 million in a Brazilian gaming company. 

Of course, it doesn’t hurt that Flutter is projecting 2027 revenues in the U.S. of $9.7 billion and adjusted net earnings of $2.4 billion, accounting for 48% of its 2027 projected profits.   

Given Americans bet $147.9 billion on sports in 2024, it’s not surprising that Altimeter placed a big bet on Flutter. 

Instacart Fails to Deliver

Altimeter paid an average of $42.02 a share for Instacart shares. It purchased 2.54 million shares for approximately $106.7 million, slightly more than Flutter. Altimeter is now the hedge fund’s 12th-largest position, accounting for 1.90% of the portfolio. 

Two months into 2025, Gerstner looks to be losing money from the bet. Flutter shares are up 6.0% year-to-date but down from what he’s estimated to have paid in the fourth quarter. 

Analysts are lukewarm about the stock. Of the 31 covering it, only 18 have a Buy rating (58%). However, the median 12-month target price is $55, 25% higher than its current share price. 

As for why Altimeter might have bought it, that’s tough to know.

On Feb. 26, Instacart reported Q4 2024 results that were weaker than expected in revenue and profits. The company’s shares fell on the news. 

On the top line, its sales from deliveries were $616 million, $7.4 million shy of Wall Street’s estimate, while total revenues ($883 million) were also less than the consensus. On the bottom line, its adjusted earnings per share were $0.53, 18 cents lower than analyst expectations. 

Investors’ biggest concerns are whether Instacart can maintain its pace of growth for GTV (gross transaction value), which was up 10% in Q4 to $8.65 billion, and the company’s soft guidance for Q1 2025.

We’ll have to wait until Altimeter reports its Q1 2025 holdings in mid-April to see if it took this correction to buy more.

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