5 Most Undervalued Hong Kong Stocks To Buy According To Hedge Funds

2. Baidu, Inc. (NASDAQ:BIDU)

Number of Hedge Fund Holders: 43

Baidu, Inc. (NASDAQ:BIDU) is in the spotlight after the company’s management announced that the large language model powering the company’s Ernie bot will soon be unveiled. In March, Baidu fell after the company revealed its Ernie bot in a pre-recorded video rather than live demonstration.

Baidu, Inc. (NASDAQ:BIDU) is also listed on the Stock Exchange of Hong Kong Limited (SEHK) since March 2021. Baidu, Inc. (NASDAQ:BIDU) has a PE ratio of 23 as of May 30. Baidu, Inc. (NASDAQ:BIDU) is up 5.8% year to date.

As of the end of the first quarter of 2023, 43 hedge funds tracked by Insider Monkey were long Baidu, Inc. (NASDAQ:BIDU). The biggest hedge fund stakeholder of Baidu, Inc. (NASDAQ:BIDU) was John W. Rogers’ Ariel Investments which owns a $428 million stake in the company.

Horos Asset Management made the following comment about Baidu, Inc. (NASDAQ:BIDU) in its Q4 2022 investor letter:

“As I mentioned at the beginning of this quarterly letter, we took advantage of the meltdown in technology platforms to initiate new positions in companies in which we had already been shareholders in the past and whose valuation did not, until now, provide a sufficiently high margin of safety. Such is the case of PayPal and Baidu, Inc. (NASDAQ:BIDU).

In the case of Baidu, as many will know, it is known as the “Chinese Google”. The company has been the leading Internet search engine in the Asian country for years, which has given it a historically privileged position to monetize, through online advertising, a huge user base. However, the rise of two types of applications has called into question the sustainability of its business model. On the one hand, mobile social apps, such as ByteDance’s well-known TikTok, have emerged as a new model of online consumption, generating a new platform through which to monetize Internet users. On the other hand, even more disruptive in the long term, is the emergence of the so-called super apps: a sort of virtual Swiss Army knives that allow users to access many products and services without having to leave their interface at any time, making Baidu’s traditional search engine less attractive. In this field, Tencent (with its super app Weixin/WeChat), Alibaba (Alipay) and Meituan certainly stand out. These two factors have caused Baidu’s online advertising market share to drop from 17% in 2017 to less than 7% estimated for 2022.34 To this deterioration, we should add the collapse in market value of its stake in iQiyi (video platform controlled by Baidu) and its equity holdings such as Trip.com (hotel and flight platform) …” (Click here to read the full text)