3. JD.com, Inc. (NASDAQ:JD)
Guo’s Stake Value: $178.49 million
Percentage of Jonathan Guo’s 13F Portfolio: 7.18%
Number of Hedge Fund Holders: 76
JD.com, Inc. (NASDAQ:JD) is a company that provides retail infrastructure and operates an online e-commerce marketplace headquartered in Beijing, China. Ranked third on the list of the 10 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital, JD.com, Inc. (NASDAQ:JD) has a market capitalization of $121.83 billion.
Jonathan Guo’s Yiheng Capital currently holds 2.23 million shares of JD.com, Inc. (NASDAQ:JD), amounting to $178.49 million in worth and accounting for 7.18% of the fund’s portfolio. The company issued its quarterly earnings report for the second quarter of 2021 on August 23, with reported earnings per share at $0.45, surpassing estimates by $0.10. Additionally, the reported revenue came at $39.15 billion, beating forecast estimates by $962.80 million.
On August 24, investment advisory Mizuho maintained a Buy rating on JD.com, Inc. (NASDAQ: JD) stock but lowered the price target to $85 from $95, underlining that regulation pressures in China would have a little impact on the company.
Out of the hedge funds being tracked by Insider Monkey’s database, New York-based investment firm D1 Capital Partners is a major shareholder in JD.com, Inc. (NASDAQ:JD) with over 15.5 million shares worth more than $1.2 billion.
In the Q2 2021 investor letter of Arisaig Partners, the fund mentioned JD.com, Inc. (NASDAQ:JD). Here is what the fund had to say:
“JD.com, for example, continues to display impressive operating momentum, with sales on track to grow around 30% this year by our estimates. Looking longer term, this company is making a credible claim to be the dominant player in Chinese grocery ecommerce, an enormous chunk of overall consumption in China, and the last one yet to move online in a big way. We think that JD has a clear advantage over rivals here thanks to its integrated and fully self-managed logistics capabilities. Whereas an offline big box retailer might have 10-20,000 SKUs, JD offers 8 million. 90% of orders fulfilled by JD Logistics can be delivered on the same day or the next day to 500 million customers. The fact that JD has just 30 days of inventory tells us that this is a highly-optimised fulfilment chain. It is very hard to be both fast and efficient, and in order to achieve this it is necessary to know what inventory to hold in which warehouse, and when to hold it (“right place, right time, right person”), a highly information-intensive challenge. The only other retailer that comes close to being able to manage that level of complexity is Amazon, and indeed these are capabilities that are very hard to replicate, taking decades of painstaking investment, trial and error testing, and data accumulation.
Moreover, far from being some sort of ‘victim’, this company is most likely a beneficiary of tighter regulation in this sector. A recurrent message running through JD’s recent investor day was that of “deep purpose”, the objective being to create shared value for a broader ecosystem of customers, merchants and employees. As we describe in the next section on “Navigating China”, this form of alignment with the strategic objectives of the government is a very China-specific way of conceptualising ESG, and essential for all businesses that operate in this country to get right…” (Click here to see the full text)
