SPX3,998.84-72.86 -1.79%
DIA340.03-4.71 -1.37%
IXIC11,239.94-221.56 -1.93%

Asian hedge funds amassed China's Pinduoduo, ditched JD.com in Q3

Reuters · 11/16/2022 05:31
Asian hedge funds amassed China's Pinduoduo, ditched JD.com in Q3

By Summer Zhen

- Some of Asia’s largest hedge funds scooped up large stakes in Chinese e-commerce giant Pinduoduo in the third quarter while cutting holdings in its rival JD.com, according to their latest regulatory filings.

The switch seemed to be driven by the view that Pinduoduo's global ambition and inexpensive products would give it an edge over the purely domestic JD.com business.

HHLR Advisers, an investment management arm under billionaire Zhang Lei’s private equity firm Hillhouse Capital Group, reported a 43% jump in the of shares it holds in Pinduoduo PDD.O in the past quarter, while it sold 25% of its JD.com JD.O U.S. listed American depositary receipts (ADRs).

Similarly, Hong Kong-based Greenwoods Asset Management, which manages $20 billion, bought as much as 1.2 million shares in Pinduoduo, making Pinduoduo its second-largest U.S. listed holding by the quarter end, worth over $200 million. The firm also shed 1.1 million shares in JD.com.

Singapore-based FengHe Fund Management and Zhang Lei-backed Aspex Management, did something similar in the July to September period, while Hong Kong-based WT Asset Management, which manages around $4 billion, more than tripled its positions in Pinduoduo by purchasing over 800,000 shares, the quarterly 13F filings to the U.S. Securities and Exchange Commission show.

The 13F filings reveal what investors owned in U.S. listed stocks by September 30, offering the market a glimpse of the latest investment trends.

Pinduoduo, the e-commerce platform known for selling inexpensive goods, in September launched its first overseas site in the United States.

Investors cheered Pinduoduo’s global ambition, as its shares gained 1.5% in the third quarter despite the heavy selling pressure faced by wider Chinese tech stocks amid U.S.-China tensions and an audit dispute. The U.S. listed KraneShares China internet ETF KWEB.K dropped 26% in the same period.

JD.com ADRs JD.O and Hong Kong shares 9618.HK fell more than 20% each in the third quarter.

“Pinduoduo has been a favourite long for a while, even on the downturn in the third quarter. It’s cheap but it offers some defensive play to the growth targets onshore as it has designs of global expansion and diversity of earnings,” said Andy Maynard, global head of equities at China Renaissance Securities.

As for JD.com, it is a pure domestic play with a higher correlation to overall trends in Chinese markets, analysts say. They also say investors could be moving their holdings in JD.com ADRs to Hong Kong-listed ones to hedge U.S. delisting risks.

Global players also joined the crowded trade. Bridgewater Associates and Ballie Gifford disclosed they raised stakes in Pinduoduo in the third quarter.

Besides the e-commerce sector, Chinese online real estate brokerage KE Holdings BEKE.K continued to be a popular in the third quarter, with HHLR upping its position in the stock by 20%, after significantly increasing by 78% its positions in KE Holdings in the second quarter.

Springs Capital,which manages more than $10 billion, said it tripled its positions in the real estate broker in the third quarter.

(Reporting by Summer Zhen
Editing by Vidya Ranganathan & Simon Cameron-Moore)

((summer.zhen@thomsonreuters.com; 852-3462-7739;))