5 Chinese Stocks in Cathie Wood’s Portfolio

2. Pinduoduo Inc. (NASDAQ:PDD)

ARK Investment Management’s Stake Value: $59.56 million

Percentage of ARK Investment Management’s 13F Portfolio: 0.14%

Number of Hedge Fund Holders: 49

Pinduoduo Inc. (NASDAQ:PDD) is a Chinese technology company that operates an e-commerce platform through its Pinduoduo mobile app. Cathie Wood owns a $59.56 million stake in the company, which accounts for 0.14% of her overall portfolio.

In December, Macquarie analyst Ellie Jiang resumed coverage of Pinduoduo Inc. (NASDAQ:PDD) with an ‘Outperform’ rating and a $95 price target.

UK-based investment firm Baillie Gifford mentioned Pinduoduo Inc. (NASDAQ:PDD) in its second-quarter 2021 investor letter. Here’s what the fund said:

“As many countries enjoy a relaxation of Covid restrictions, Mr Market is focussed on short-term beneficiaries of ‘the pleasure after the plague’. There are
interesting parallels with the Roaring 20s here, but to our minds, they extend beyond post-pandemic hedonism. Much of the new wealth created in the 1920s was patchily distributed and accompanied by a pervasive sense that the older generation had let down younger people. In 1920, John F. Carter, an irate 23-year-old wrote “the older generation had certainly pretty well ruined this world before passing it on to us. We have been forced to live in an atmosphere of ‘tomorrow we die,’ and so, naturally, we drank and were merry.”

In a similar vein, some of the greatest Growth opportunities are materialising from the companies that are shifting humankind towards more sustainable ways of consuming by driving efficiencies and eliminating surplus. Pinduoduo’s ‘farm to table’ platform is one example – cutting out huge waste in farm produce and short circuiting layers of infrastructure by matching Chinese food supply and demand through a group buying model. In a similar vein, Meituan is well on the way to developing China’s primary ‘Software as a Service’ ecosystem for food distribution which we believe has a strong chance of replacing wasteful wet markets as the primary channel for transacting in produce.

Pinduoduo’s share price pulled back following news that Chinese regulators are investigating possible anti-competitive activities by the country’s large online companies. However, Pinduoduo appears well placed to navigate such regulatory scrutiny in the long-term, helped in part by its community buying business model that benefits consumers, manufacturers and farmers alike. Its business fundamentals are stellar– the company remains the largest Chinese e-commerce platform, with over 820 million annual active users (surpassing Alibaba and JD.com), while revenue growth increased by 239% over the previous year. “