Even the smartest investors don’t really understand Alibaba by Scott Cendrowski @FortuneMagazine 11:15 AM EDT E-mail Tweet Facebook Google Plus Linkedin Share icons Here’s a little secret: Even the smart hedge funds don’t know a ton about Alibaba, or really about China’s tech scene in general. I got a sense for how little a few weeks ago, when I had dinner in China with a few U.S.-based hedge fund guys who were visiting to attend a Morgan Stanley investment conference. They spent a week shuttling from Beijing to Shanghai to another city to meet dozens of publicly-traded Chinese tech companies—most of which have listed stocks in New York— eager to tell their story. All of their funds will probably own a piece of Alibaba’s IPO. They were in their late-20s to early-30s. Smart and funny. All analysts covering Chinese tech – and all quite honest about not really knowing what is happening inside China. Sure, they knew the financials of the companies in which they hold stock. They could recall PE ratios and where Baidu BIDU recently traded. But they were honest about not having insights into the small tech shifts and preference changes happening within China. How could they? These things don’t show up in investment bank research reports on China. Instead, they seep into stock prices a few months before earnings reports come out. By then, it’s too late. So what do hedge fund investors think about Alibaba BABA and Chinese tech companies like its competitor JD.com JD , travel site Ctrip CTRP , search engine Baidu and others? Here’s what I learned over dinner: We didn’t talk a lot about Alibaba, because the roadshow was still 10 days away. But at least one investor’s fund already had an allotment of IPO shares. It wasn’t a bet on the company, per se, but something to keep a relationship with Alibaba going forward. I don’t think anyone was overwhelmingly excited about Alibaba’s stock probably because the rest of the world is going gaga over it. If you invest in Chinese tech, you pretty much have to own Baidu, China’s version of Google. One of the analysts talked about Baidu as a stock “everyone has to own.” I wondered what happens when the reverse is true. Shares are up 54% this year. Even big hedge funds rarely get one-on-one time with Chinese tech companies. These guys came to China for an investment conference but didn’t get any individual meetings. “It’s terrible,” one said. “You can’t get in their face and say, answer my fucking question!” He was joking. But I told them I sympathized: As a journalist, no good questions get answered in a group. Flying around the globe for meetings probably isn’t worth the jet-lag. They came away feeling better about companies they already knew. But they probably could have learned about the rest from the U.S. One of the hedge fund managers said the real question he wanted to ask at meetings was: “So tell me what I couldn’t learn on Yahoo Finance.” One guy liked Vipshop VIPS , YY.com YY (a mashup of Chatroulette and speed-dating), classifieds site 51job JOBS and of course Baidu and Ctrip.com. These companies all get their inspiration from U.S. leaders, but the scale is just so massive in China—1.3 billion consumers—that even average ideas can make a ton of money. They really liked Tencent, a company almost forgotten amid the Alibaba hype. Tencent shares are up more than 50% the past year. The company’s market value is $150 billion. One analyst said Tencent’s diversity is unbelievable: It runs China’s most popular chatting app, the most popular games, a payments system competing against Alibaba’s and international businesses going global. The real takeaway was that living in China offers perspective on things you can’t fully understand from the U.S.—even things like the huge Alibaba IPO. In Alibaba’s case, it helps to be around its customers all the time. They tell you why they just bought new speakers on Taobao.com instead of on JD.com (a rival site), or how Alipay (an affiliated company) is all they use to pay for cabs and bills. The size of the country, the language barrier and the speed at which things change make China a difficult place to grasp. The same characteristics make Alibaba a puzzling, but potentially lucrative, stock bet.