3. Baidu, Inc. (NASDAQ:BIDU)
Ariel Investments’ Stake Value: $349,165,000
Percentage of Ariel Investments’ 13F Portfolio: 3.09%
Number of Hedge Fund Holders: 47
Baidu, Inc. (NASDAQ:BIDU) is a Chinese tech company specializing in internet-related services and products. Susquehanna analyst Shyam Patil maintained a Positive rating on Baidu, Inc. (NASDAQ:BIDU) and a price objective of $200 on May 31. While the analyst is concerned by the epidemic and China’s macroeconomic circumstances, his long-term outlook on the firm has not changed.
On May 5, Baidu, Inc. (NASDAQ:BIDU) posted earnings for the first quarter of 2022. The earnings per average diluted share (EPADS) came in at $1.77, beating market predictions by $0.94. In addition, the revenue for the first three months of 2022 was $4.48 billion, above the market estimates by $320 million.
According to Insider Monkey’s first-quarter database, 47 hedge funds were bullish on Baidu, Inc. (NASDAQ:BIDU), compared to 38 funds in the preceding quarter. John W. Rogers’ Ariel Investments held the most significant position in Baidu, Inc. (NASDAQ:BIDU), with 2.64 million shares worth about $349.17 million.
Ariel Investments, in its third-quarter 2021 investor letter, mentioned Baidu, Inc. (NASDAQ:BIDU). Here is what the fund said:
“When we have such a high level of conviction for a company it is not uncommon for us to own it in size across our portfolios. Such is the case with technology giant Baidu, whose leading search engine has been dubbed the “Google of China.” This quarter shares sold off in sympathy with the Chinese internet sector as investors were rattled by the government’s sweeping regulatory crackdown intended to promote “common prosperity” by easing wealth inequality. While we recognize the greater political risk of investing in emerging markets such as China and incorporate an appropriately higher risk premium in the discount rate in our valuation models, we believe Baidu’s business strategy is aligned with national policies and prioritize and is therefore not adversely impacted unlike some other players in the internet sector who are in the eye of the storm.
Indeed, the Chinese government recognizes Baidu’s large, upfront investments in many next-generation artificial intelligence (AI) technologies and hails it as a national champion. For example, the company’s Advanced Driving Support System (ADAS), Apollo, has twice as much data on miles driven than any other initiative in the world, giving Baidu (and China) a large lead in the global AI arms race. In addition, Baidu’s cloud offering touts highly differentiated Platform as a Service (PaaS) features and capabilities for a demanding enterprise customer base. While these initiatives are a temporary drag on margins and require long-term execution, their success will bolster China’s “dual circulation” strategy aimed at spurring domestic demand, innovation and self-reliance.” (Click here to see the full text)
