5 Best ADR Stocks To Buy Now

2. Pinduoduo Inc. (NASDAQ:PDD)

Number of Hedge Fund Shareholders: 53

Country of Origin: China

Pinduoduo Inc. (NASDAQ:PDD) is another e-commerce company that is worth looking into, this one operating in China. You know something is going very right for the company when its shares are up by 60% this year, in stark contrast to the broader sell off of Chinese stocks.

One needs only look at the company’s latest quarterly results, in which sales grew by 65% to $5 billion and net income skyrocketed by 546% to $1.9 billion, to see why investors are excited. Those numbers are even more impressive given the Chinese economic slowdown, which hasn’t spared other top e-commerce platforms in the country like Alibaba Group Holding Limited (NYSE:BABA), whose sales inched up by just 3% during its latest quarter.

Hedge funds were buying back into Pinduoduo Inc. (NASDAQ:PDD) during the second and third quarters, perhaps in anticipation of PDD shares having bottomed out following a 76% slide between the end of 2020 and April 1, 2022. The number of long positions in Pinduoduo among smart money managers ticked up by 18% during Q2 and by another 23% during Q3, with Lei Zhang’s Hillhouse Capital Management and Rajiv Jain’s GQG Partners among the funds adding PDD to their 13F portfolios since April.

Tao Value wasn’t too concerned about Pinduoduo Inc. (NASDAQ:PDD) shares’ rough end to 2021 according to its Q4 2021 investor letter:

“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue grow with such a team with strong culture.”