In this article, we will take a look at the 5 most undervalued Hong Kong stocks to buy according to hedge funds. To see more such companies, go directly to 10 Most Undervalued Hong Kong Stocks To Buy According To Hedge Funds.
5. HSBC Holdings plc (NYSE:HSBC)
Number of Hedge Fund Holders: 13
One of the biggest banking companies in the world, HSBC Holdings plc (NYSE:HSBC) was founded in Hong Kong and has significant presence in the region. HSBC Holdings plc (NYSE:HSBC) has a PE ratio of 6.6 as of May 30.
As of the end of the first quarter of 2023, 13 hedge funds had stakes in HSBC Holdings plc (NYSE:HSBC). The biggest hedge fund stakeholder of HSBC Holdings plc (NYSE:HSBC) was Ken Griffin’s Citadel Investment Group which owns about a $14 million stake in HSBC Holdings plc (NYSE:HSBC).
4. Futu Holdings Limited (NASDAQ:FUTU)
Number of Hedge Fund Holders: 16
Hong Kong-based Futu Holdings Limited (NASDAQ:FUTU) provides digitalized securities brokerage and wealth management services. Futu Holdings Limited (NASDAQ:FUTU) is known for its Futubull and Moomoo digital platforms.
Recently, Futu Holdings Limited (NASDAQ:FUTU) posted its first quarter results. GAAP EPADS in the period came in at $1.08, beating estimates by $0.22. Revenue in the quarter jumped about 52.3% year over year to $318.5 million, beating estimates by $50.73 million.
A total of 16 hedge funds tracked by Insider Monkey had stakes in Futu Holdings Limited (NASDAQ:FUTU) as of the end of the first quarter of 2023. The total worth of these stakes was $242 million. The biggest stakeholder of Futu Holdings Limited (NASDAQ:FUTU) was D1 Capital Partners which had a $94 million stake in the company.
3. Silicon Motion Technology Corp. (NASDAQ:SIMO)
Number of Hedge Fund Holders: 34
Silicon Motion Technology Corp. (NASDAQ:SIMO) develops NAND flash controllers for SSDs and other solid state storage devices. Silicon Motion Technology Corp. (NASDAQ:SIMO) has a significant presence in China and Hong Kong.
Out of the 943 hedge funds tracked by Insider Monkey, 34 hedge funds had stakes in Silicon Motion Technology Corp. (NASDAQ:SIMO). The total worth of these stakes was $468 million. The most significant shareholder of Silicon Motion Technology Corp. (NASDAQ:SIMO) was Michel Massoud’s Melqart Asset Management which owned a $64 million stake in the company.
California-based MaxLinear recently announced it will acquire Silicon Motion Technology Corp. (NASDAQ:SIMO) for about $3.8 billion. However, the deal is under review in China as of May 30.
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)
1. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 128
We include Alibaba Group Holding Limited (NYSE:BABA) in our list of Hong Kong stocks loved by hedge funds since the Chinese ecommerce retailer is listed on the Hong Kong stock exchange as well as it received its listing in the country last year. In fact, Alibaba Group Holding Limited (NYSE:BABA) had plans to have its primary listing in Hong Kong. However, Bloomberg in November 2022 reported that Alibaba Group Holding Limited (NYSE:BABA)’s plans to convert its listing in Hong Kong to primary listing were delayed.
Alibaba Group Holding Limited (NYSE:BABA) has a PE ratio of 20.82 as of May 30 morning. Alibaba Group Holding Limited (NYSE:BABA) is one of the most popular stocks among elite hedge funds. Out of the 943 hedge funds in Insider Monkey’s database, 128 hedge funds held stakes in Alibaba Group Holding Limited (NYSE:BABA), significantly up from 113 hedge funds in the previous quarter.
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