(Bloomberg) — Shares of Alibaba Group Holding are headed toward their second-best quarter since the e-commerce giant’s record-setting initial public offering two years ago. And hedge funds are missing out.

The Chinese company’s U.S.-traded stock jumped as much as 38% since the end of June to a 21-month high after hedge funds pared their holdings by 2.2 million shares in the previous three months, effectively foregoing around $61 million in profits, according to Bloomberg data.

The ill-timed Alibaba trades add to the hedge fund industry’s woes as some of its biggest and best-known firms lose assets amid souring investor sentiment. Active money managers have trailed the broader stock market for years, prompting clients to push for lower fees and flee to low-cost index products.

“We sold Alibaba last year during the sell off,” said Charlie Wilson, a portfolio manager at Thornburg Investment Management whose $1.2 billion Thornburg Developing World Fund has outperformed 91% of its peers over the past five years. “They really surprised us in their ability to monetize. We had held it previously, and then I think we had made the wrong decision,” he added. “We recently repurchased after we reviewed our estimates.”

The company’s shares rose as much as 1.5% to $109.87 in New York on Wednesday, the highest since December 2014.

Alibaba was once the darling of hedge fund managers, with Dan Loeb’s Third Point and George Soros’s Soros Fund Management disclosing sizable stakes following the company’s $25 billion September 2014 IPO. Hedge funds held positions valued at about $14 billion as of Sept. 30, 2014, Bloomberg data show.

SHRINKING POSITIONS

Since then, they have reduced their aggregate positions every quarter and held $4.4 billion worth as of June 30, the most recent data compiled by Bloomberg show.

That’s according to filings with the SEC which list the publicly-traded U.S. stock holdings of money managers as of June 30. Money managers who oversee more than $100 million in equities in the U.S. must file a Form 13F within 45 days of each quarter’s end to list those stocks as well as options and convertible bonds. The filings don’t show non-U.S. securities, holdings that aren’t publicly traded or cash.

Firms that sold shares over the second quarter include Pine River Capital Management, which got rid of its entire stake, Robert Citrone’s Discovery Capital Management, Millennium Management and John Burbank’s Passport Capital. Burbank has warned of a China-led global economic slowdown. His firm’s main hedge fund fell 7.2% this year through the end of July, according to an investor document obtained by Bloomberg.

MARKET RALLY

Some firms have timed their Alibaba bets better, including Andreas Halvorsen’s Viking Global Investors. It more than doubled its position to 4 million shares for a stake valued at $321 million as of the end of the second quarter, according SEC filings. The value of those shares has increased by more than $100 million since June 30.

Cliff Asness’s AQR Capital Management, Citadel Advisors and Balyasny Asset Management also added to Alibaba positions last quarter.

Spokespeople for the hedge funds either declined to comment or could not be immediately reached.

Alibaba’s gains are part of a larger rally in China’s tech stocks. The American depositary receipts of NetEase, Momo, Weibo, and Sina remain near record highs.

PRICE TARGETS

The gamble is that there’s more room for gains after a rally that has added 25% to Bloomberg’s index of the biggest U.S.-listed Chinese stocks since June 30. Analysts say there are signs that Alibaba is set for further growth following the past quarter’s expectation-beating 59% year-over-year revenue gains. Out of 46 analysts surveyed by Bloomberg, 38 recommend buying Alibaba’s stock.

Eleven analysts increased their price targets on the stock in the past two weeks, citing improving mobile monetization, strategic investments in cloud computing infrastructure, growing buzz surrounding Ant Financial’s IPO, and expectations of a record Singles Day on Nov. 11 as signs investor sentiment may be poised to pick up.

“Investors are positive on the business potential in the near-term for those companies,” said Henry Guo, an analyst at M Science who has covered U.S.-listed Chinese stocks for a decade. “These are the leaders in their industries, and those industry leaders are going to attract the attention of U.S. investors.”

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