In this article, we discuss the 5 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital. If you want to read our detailed analysis of Guo’s history and hedge fund performance, go directly to the 10 Chinese Stocks to Buy According to Jonathan Guo’s Yiheng Capital.
5. Tal Education Group (NYSE:TAL)
Guo’s Stake Value: $145.7 million
Percentage of Jonathan Guo’s 13F Portfolio: 5.86%
Number of Hedge Fund Holders: 39
Tal Education Group (NYSE:TAL) is a holding company that engages in the provision of after-school tutoring programs for primary and secondary school students. Its services are delivered through premium services, including one-on-one tutoring and online course offerings. Ranked fifth on the list of the 10 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital, Tal Education Group (NYSE:TAL) has a market capitalization of $3.21 billion.
As of the second quarter of 2021, Jonathan Guo’s Yiheng Capital holds over 5.77 million shares of Tal Education Group (NYSE:TAL), amounting to $145.7 million in worth and accounting for 5.86% of the fund’s portfolio. For the second quarter of 2021, the company reported earnings per share at $0.08, missing estimates of $0.11 by $0.03. In addition, the company also reported revenues at $1.10 billion, falling short of the estimated revenues by $21.40 million.
Out of the hedge funds being tracked by Insider Monkey’s database, New York-based investment firm Tiger Global Management LLC is a leading shareholder in Tal Education Group (NYSE:TAL) with 2.28 million shares worth more than $57.59 million.
In the Q2 2021 investor letter of Tao Value, the fund mentioned TAL Education Group (NYSE:TAL). Here is what the fund said:
“On detracting side, our largest loss came from our recent new education positions, TAL. New legislation on both private K9 education & private tutoring materialized in the past quarter, and they turned out to be irrationally harsher & broader than anticipated. When such worst scenario fold out, the prospects of the company undoubtably has changed significantly. Although I believe that market overreacted on this company, it appears that I have made a mistake underestimating the regulatory impact and picking it up too soon. Our position sizes reflected my evaluation of the risk, and I decide to stay put.”
4. Huazhu Group Limited (NASDAQ:HTHT)
Guo’s Stake Value: $162.1 million
Percentage of Jonathan Guo’s 13F Portfolio: 6.52%
Number of Hedge Fund Holders: 27
Huazhu Group Limited (NASDAQ:HTHT) is a hotel management company based in Shanghai, China. The company provides services ranging from hotel leasing, direct hotel operation, and co-development services. Ranked fourth on the list of the 10 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital, Huazhu Group Limited (NASDAQ:HTHT) has a market capitalization of $15.24 billion.
At present, Jonathan Guo’s Yiheng Capital holds over 3.07 million shares of Huazhu Group Limited (NASDAQ:HTHT) worth $162.1 million, representing 6.52% of the fund’s total portfolio. On August 24, the company released its financial report for the second quarter of 2021, with reported revenues at $556 million, an increase of 84% on a year-over-year basis, though it missed the estimated revenue mark by $6.99 million.
Out of the hedge funds being tracked by Insider Monkey’s database, Australia-based investment firm Platinum Asset Management is a leading shareholder in Huazhu Group Limited (NASDAQ:HTHT) with over 1.79 million shares worth more than $94.6 million.
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)
2. Noah Holdings Limited (NYSE:NOAH)
Guo’s Stake Value: $313.7 million
Percentage of Jonathan Guo’s 13F Portfolio: 12.62%
Number of Hedge Fund Holders: 17
Noah Holdings Limited (NYSE:NOAH) is a leading wealth management service provider in China. Catering primarily to high net worth investors, the company offers comprehensive one-stop advisory services on global investment and asset allocation. Ranked second on the list of the 10 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital, Noah Holdings Limited (NYSE:NOAH) has a market capitalization of $2.16 billion.
According to the 13F Filings for the second quarter of 2021, Jonathan Guo’s Yiheng Capital holds 6.64 million shares of Noah Holdings Limited (NYSE:NOAH), worth $313.7 million and representing 12.62% of the fund’s portfolio. For the second quarter of 2021, Noah Holdings Limited (NYSE:NOAH) reported revenues of $139.3 million, a 20.3% increase from the corresponding period in 2020.
Out of the hedge funds being tracked by Insider Monkey’s database, New York-based investment firm, Tiger Pacific Capital is a leading shareholder in Noah Holdings Limited (NYSE:NOAH) with 2.64 million shares worth more than $124.97 million.
1. Bilibili Inc. (NASDAQ:BILI)
Guo’s Stake Value: $591.7 million
Percentage of Jonathan Guo’s 13F Portfolio: 23.81%
Number of Hedge Fund Holders: 47
Bilibili Inc. (NASDAQ:BILI) is an online entertainment platform featuring videos, live broadcasting, and mobile games. The company has a market capitalization of $28.36 billion, and is ranked first on the list of the 10 Chinese stocks to buy according to Jonathan Guo’s Yiheng Capital.
On August 19, Bilibili Inc. (NASDAQ:BILI) released its earnings report for the second quarter of 2021. The company reported earnings per share at -$0.45, beating the expectations by $0.11. In addition, the revenue reported was $692.14 million, an increase of 82.22% on a year-over-year basis, surpassing the forecast estimates by $28.86 million.
Out of the hedge funds being tracked by Insider Monkey’s database, UK-based investment firm, Aubrey Capital Management is a leading shareholder in Bilibili (NASDAQ:BILI) with 219,670 shares worth more than $26.76 billion.
In the Q2 2021 investor letter of Baillie Gifford, the fund mentioned Bilibili Inc. (NASDAQ: BILI). Here is what the fund said:
“One of the most important cognitive elements, is our recognition that consumer patterns and attitudes are evolving increasingly rapidly and with ever greater amplitude. While the human needs for self-actualisation, esteem and belonging are innate and immutable, they are being expressed in new ways. Tastes are being shaped by social groups who are culturally similar but geographically distant. The lines between the physical and digital-self continue to blur.
To those in the throes of middle age, this can be discombobulating. I profess to unease when my daughter recently earned five pounds stacking logs – only to ‘blow’ this pocket money on a pair of virtual Gucci sneakers for her online Roblox character. But we need to be imaginative about the possible size of the market for virtual luxury in the long term and it’s encouraging to observe that Kering is already on the front foot. It is also amply clear that the experienced Long Term Global Growth investors who predate Generations Y & Z, need the help of colleagues in understanding the mood and aspirations of a new cohort of conscious consumers. In this sense, the multigenerational and multicultural dynamic within the LTGG team (and indeed across the broader Baillie Gifford investment floor), has never seemed more important…” (Click here to see the full text)
You can also take a look at 20 Best Places to Invest in Rental Property in 2021 and 10 Best Robinhood Stocks Under $20.
