In this article, we discuss the top Chinese companies on NASDAQ.
Chinese companies have taken the American stock market by storm in recent years as Beijing gradually opens up to investments from the outside world. According to data from the US-China Economic and Security Review Commission, there are close to 250 Chinese companies that are listed in the United States. These firms have a total market capitalization of over $2 trillion. Eight state-owned Chinese entities are also publicly traded in the US. The most active Chinese stocks are in the growth sector, mostly comprising firms listed on the NASDAQ exchange.
For example, Baidu, Inc. (NASDAQ: BIDU), the Beijing-based technology company, is one of the best American Depositary Receipt (ADR) stocks on the market today. Baidu, Inc. (NASDAQ: BIDU) has strong business fundamentals and recently sought approval for a listing on the stock exchange in Hong Kong. The company has also been leveraging capabilities in the artificial intelligence sector to help other businesses develop, signing an agreement with China Huaneng Group in early March to digitize the energy and power industry.
Another Chinese stock with explosive growth potential is JD.com, Inc. (NASDAQ: JD), the Beijing-based ecommerce company that has taken on rival Alibaba Group Holding Limited (NYSE: BABA) for the title of the largest online marketplace in China. JD.com, Inc. (NASDAQ: JD) recently crushed market expectations on earnings per share and revenue for the first quarter of 2021, reporting that annual active customer accounts on the platform had increased 29% year-on-year to almost 500 million. As China gears up for a massive shopping festival, the stock has a lot of room to climb higher along with Alibaba Group Holding Limited (NYSE: BABA).
In the hullabaloo around retail giants like Alibaba Group Holding Limited and JD.com, Inc., Pinduoduo Inc. (NASDAQ: PDD), the Shanghai-based online seller that prioritizes the marketing of agricultural produce, has quietly established itself in the Chinese technology industry over the past few years. Pinduoduo Inc. (NASDAQ: PDD) posted over $3.3 billion in revenue for the first quarter of 2021, up 266% year-on-year and smashing market estimates by $180 million. On May 26, the company reported that active buyers on the platform had crossed 823 million in March 2021.
As internet penetration and mass adoption of digital offerings soar, these stocks will climb higher in the coming weeks and months as the reach Chinese firms expands beyond the Asian country, rivaling the business of American counterparts in this regard. This will likely cause a sea-shift in global power dynamics, adding to the market uncertainty that dominated headlines in recent weeks. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
With this context in mind, here is our list of the top Chinese companies on NASDAQ. These firms are the some of the biggest Chinese firms on the market in terms of market capitalization and have strong business fundamentals, making it likely that the stocks will soar in the coming weeks and months as business activities resume following the worst of the coronavirus crisis.
Top Chinese Companies on NASDAQ
10. Canaan Inc. (NASDAQ: CAN)
Number of Hedge Fund Holders: 9
Canaan Inc. (NASDAQ: CAN) is a firm looking to cash in on the cryptocurrency craze sweeping the world. It makes and sells computer hardware specially designed for mining of crypto coins like Bitcoin. The firm engages in artificial intelligence and data center operations as well. On June 1, Canaan Inc. soared 10% after the firm reported a 538% year-on-year increase in revenue, primarily driven by growth in overseas markets amid a crackdown against Bitcoin-related firms in China.
Canaan Inc. stock has returned more than 413% to investors over the past twelve months, outshining other growth stocks by a long margin. In April, Canaan Inc. signed a $93 million deal with Genesis Digital Assets for delivery of AvalonMiner machines. It is ranked tenth on our list of top Chinese companies on NASDAQ.
At the end of the first quarter of 2021, 9 hedge funds in the database of Insider Monkey held stakes worth $47 million in Canaan Inc., up from 4 the preceding quarter worth $3.8 million.
Just like Baidu, Inc., JD.com, Inc., and Pinduoduo Inc., Canaan Inc. is one of the top Chinese companies on NASDAQ.
9. 360 DigiTech, Inc. (NASDAQ: QFIN)
Number of Hedge Fund Holders: 19
360 DigiTech, Inc. (NASDAQ: QFIN) is a digital finance platform that has grown over the past few years as the financial technology revolution fundamentally alters consumer behavior. Some of the services the company provides include incremental credit assessment, collection, and guarantee for defaulted loans, among others. However, the earnings results of the firm for the first quarter of 2032 have been less than satisfactory, missing market expectations on revenue by over $7 million.
360 DigiTech, Inc. stock has offered investors exceeding 310% over the course of the past twelve months. 360 DigiTech, Inc. has outperformed the wider market in the past year and has a three year revenue growth rate of more than 500%. It is placed ninth on our list of top Chinese companies on NASDAQ.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm GLG Partners is a leading shareholder in 360 DigiTech, Inc. with 964,858 shares worth more than $25 million.
Just like Baidu, Inc., JD.com, Inc., and Pinduoduo Inc., 360 DigiTech, Inc. is one of the top Chinese companies on NASDAQ.
8. Adagene Inc. (NASDAQ: ADAG)
Number of Hedge Fund Holders: 10
Adagene Inc. (NASDAQ: ADAG) is a biopharma company working on monoclonal antibody drugs for cancers. 2020 was a bull year for biotechnology stocks as many piled onto them in the hopes of riding the COVID-19 vaccine wave. However, as the pandemic subsides, it is important for investors to place their bets carefully in the biotech sector. Adagene is a good option in this regard, with the company smashing market predictions on earnings per share in the past fiscal year by $0.20.
Adagene Inc. stock has returned more than 7% to investors in the past month. On May 19, the company announced the results of Phase 1 trial of a drug for solid tumors, outlining that the product has a favorable safety profile and had demonstrated promising clinical efficacy.
At the end of the first quarter of 2021, 10 hedge funds in the database of Insider Monkey held stakes worth $18.8 million in Adagene Inc..
Just like Baidu, Inc., JD.com, Inc., and Pinduoduo Inc., Adagene Inc. is one of the top Chinese companies on NASDAQ.
7. 51job, Inc. (NASDAQ: JOBS)
Number of Hedge Fund Holders: 18
51job, Inc. (NASDAQ: JOBS) provides online human resource services. The stock has a lot of room to run this year as the economy reopens following the coronavirus pandemic and businesses go on hiring sprees to get themselves back in the game. The firm crushed market estimates on revenue and earnings per share for the third quarter of 2020 and has recently received a non-binding proposal to go private at more than $79 per share. The shares of the firm have jumped 15% in the past few weeks.
51job, Inc. stock has returned more than 16% to investors over the past three months. Some of the platforms it owns include 51job.com, yingjiesheng.com, 51jingying.com, lagou.com, and 51mdd.com, among others.
Out of the hedge funds being tracked by Insider Monkey, Naples-based investment firm Pentwater Capital Management is a leading shareholder in the firm with 702,272 shares worth close to $43 million.
Just like Baidu, Inc., JD.com, Inc., and Pinduoduo Inc., 51job, Inc. is one of the top Chinese companies on NASDAQ.
6. GDS Holdings Limited (NASDAQ: GDS)
Number of Hedge Fund Holders: 40
GDS Holdings Limited (NASDAQ: GDS) is a company that builds, maintains, and operates data centers for other businesses, mostly in China. As a result of the coronavirus lockdowns, data centers have become a huge digital commodity, with many firms looking to shift their operations to the internet, an undertaking that is usually built on data centers. GDS stock has surged over the past year on the back of these developments. GDS is different from other data center companies because it offers carrier and cloud-neutral services.
GDS Holdings Limited crushed market expectations on earnings per share for the first quarter of 2021. The company’s shares have offered investors returns exceeding 6% over the course of the past twelve months. The firm is placed sixth on our list of top Chinese companies on NASDAQ.
At the end of the first quarter of 2021, 40 hedge funds in the database of Insider Monkey held stakes worth $2 billion in GDS Holdings Limited, up from 39 in the previous quarter worth $2.8 billion.
Just like Alibaba Group Holding Limited, Baidu, Inc., JD.com, Inc. and Pinduoduo Inc., GDS Holdings Limited is one of the best Chinese stocks to buy now.
In its Q1 2020 investor letter, Baron Asset Fund, an asset management firm, highlighted a few stocks and GDS Holdings Limited (NASDAQ: GDS) was one of them. Here is what the fund said:
“In the most recent quarter, we acquired shares of GDS Holdings Limited, the leading data center developer and operator in China serving the premier Chinese cloud service, e-commerce, social media/gaming, and internet players. Although we have not invested in many foreign-based companies, we believe that GDS represents a compelling opportunity. Its business shares many similarities with Equinix, Inc., a U.S.- based data center operator that has been a profitable long-term investment for the Fund. In addition, our real estate research team has met extensively with GDS management over the course of the last few years and has built increased confidence in the team’s growth aspirations and its ability to successfully execute them.
We believe that the Chinese data center industry remains in the earlier stages of its growth curve, and we believe it will experience one of the fastest multi-year growth rates globally as the Chinese government continues to support the rapid rollout of 5G connectivity. GDS’s current and future data centers support the critical IT infrastructure that empowers cloud adoption and enables numerous consumer and business applications. In addition to experiencing robust organic growth, GDS has accelerated its growth runway through select M&A. These acquisitions have allowed the company to obtain additional capacity in supply constrained markets at attractive prices. In addition, GDS has supplemented its dense urban strategy with a “campus strategy,” whereby it secures additional supplies of land and power on the outskirts of cities with minimal capital committed.
To provide some perspective on GDS’s growth rate, it signs more “bookings” in a single quarter than many global data center companies sign over the course of a year. Lastly, after two well received capital raises in 2019, GDS remains well funded with ample cash on its balance sheet to support multiple years of accelerated growth. GDS also has several deep-pocketed backers, including the Singaporean government’s investment fund, that have remained supportive of GDS’s growth plans and have participated in several of GDS’s capital raises. We believe there are many similarities to our other data center investments–GDS is earlier on its growth curve but growing at a much faster clip. We see a path for GDS to nearly triple its cash flow over the next few years, and we see a path to double our investment over that timeframe.”
5. NetEase, Inc. (NASDAQ: NTES)
Number of Hedge Fund Holders: 32
NetEase, Inc. (NASDAQ: NTES) is a technology company that offers interactive entertainment services. The online gaming business of the firm is likely to help the stock gain value in the coming weeks and months as it is one of the fastest growing markets in the world. On May 18, NetEase, Inc. reported that the online game services revenue for the first three months of 2021 had increased 11% to $2.3 billion.
NetEase, Inc. stock has offered investors returns exceeding 36% over the course of the past twelve months. In addition to gaming and interactive entertainment, the firm also dabbles in the communications and ecommerce businesses. It is ranked fifth on our list of top Chinese companies on NASDAQ.
Out of the hedge funds being tracked by Insider Monkey, Bermuda-based investment firm Orbis Investment Management is a leading shareholder in NetEase, Inc. with 18.2 million shares worth more than $1.8 billion.
4. Bilibili Inc. (NASDAQ: BILI)
Number of Hedge Fund Holders: 53
Bilibili Inc. (NASDAQ: BILI) is a video sharing website that primarily caters to the young generation of Chinese people who want a YouTube-esque experience in the country. The firm also offers gaming and other services on its platform. The firm has seen its user base grow in recent months, reporting on May 13 that monthly active users had reached 223 million by the end of March, an increase of 30% compared to a year ago. The total time spent by the users on the platform also increased with the daily average crossing 82 minutes per user.
Bilibili Inc. stock has returned more than 170% to investors over the past year. On April 8, investment advisory Credit Suisse upgraded Bilibili Inc. to Outperform from Neutral with a price target of $140.
At the end of the first quarter of 2021, 53 hedge funds in the database of Insider Monkey held stakes worth $3.01 billion in Bilibili Inc., up from 46 in the preceding quarter worth $3.08 billion.
In its Q4 2020 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Bilibili Inc. (NASDAQ: BILI) was one of them. Here is what the fund said:
“Bilibili (ticker: BILI) similarly reported a blast Q3 2020. Bilibili reached average MAU of 197m with high 7.6% pay ratio, showing strong user growth and high engagement. Additionally, the high margin advertisement segment showed exceptionally strong trend, growing 126% yoy. Though surprising to many, I think it is a natural outcome of building an ever-more valuable user generated contents platform. If it is not by ads, I believe these values created by Bilibili will accrue to it in other ways. One interesting data point is that management mentioned the average age of new cohorts are still around 20, indicating it is still in its early stage of a long growth runway. I am happy to see this position played out like how I envisioned in original thesis and will be excited to continue to follow its progress.”
3. Pinduoduo Inc. (NASDAQ: PDD)
Number of Hedge Fund Holders: 56
Pinduoduo Inc. is a retailer that focuses on agriculture-related products. Amid the dramatic rise of ecommerce platforms, the firm has established a name for itself among the rural user base in China, something that other retail giants have struggled with in recent years. The company has doubled down on this brand recognition, pledging to sell $145 billion worth of farm produce on its platform by 2025. In 2019, estimates suggested that almost 12 million farmers in the country supplied their produce to merchants who used Pinduoduo to sell products.
Pinduoduo Inc. recently beat market estimates on revenue and earnings per share for the first quarter of 2021. Average monthly users on the platform increased 49% year-on-year during the period. The company’s shares have offered investors returns exceeding 47% over the past year.
At the end of the first quarter of 2021, 56 hedge funds in the database of Insider Monkey held stakes worth $6.2 billion in Pinduoduo Inc., up from 54 in the preceding quarter worth $10.5 billion.
In its Q1 2021 investor letter, Tao Value, an asset management firm, highlighted a few stocks and Pinduoduo Inc. (NASDAQ: PDD) was one of them. Here is what the fund said:
“Pinduoduo reported a strong quarter, reporting MAU of 720 million, now surpassing Taobao. However, it was overshadowed by a bigger news on Colin Huang resigning from Board and completely disassociating himself from PDD’s management & operation. Huang explained in his letter to shareholders that he would start fundamental research initiatives in food science. Although not entirely shocked (as he already stepped down from CEO July 2020), I am surprised by the fast pace of such transition. I remain confident in the organization and the culture Huang built but will monitor it closely.”
2. JD.com, Inc. (NASDAQ: JD)
Number of Hedge Fund Holders: 75
JD.com, Inc. is one of the largest ecommerce platforms in China. It has grown during the pandemic as the coronavirus lockdowns encouraged people to shop online. In the coming weeks, the stock is expected to soar further as a major shopping festival begins in China. In late May, the share price of the firm jumped more than 2.5% as the firm reported strong earnings results for the first fiscal quarter, beating market expectations on revenue and reporting a 49% year-on-year increase in monthly active users.
JD.com, Inc. had announced in late March that it would be selling its artificial intelligence and cloud businesses worth over $2.4 billion. The businesses would be sold to JD Digits, the fintech arm of JD.com, Inc..
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Tiger Global Management LLC is a leading shareholder in the firm with 51.6 million shares worth more than $4.3 billion.
In its Q1 2021 investor letter, Arisaig Partners, an asset management firm, highlighted a few stocks and JD.com, Inc. (NASDAQ: JD) was one of them. Here is what the fund said:
“Our largest holding as a firm, JD.com, we expect to grow earnings at an annualised rate of 30% over the next five years, implying it will trade on an EV / EBITDA of 7.5x at the end of this period. Is this a growth stock or a value stock? Does anyone care? Do these labels really matter?
For the Asia Fund, with a higher pre-existing allocation to our core FMCG holdings coming into the year, we took advantage of capital market volatility to further concentrate on our highest conviction names. JD.com has been the main destination for our limited reallocations as evidence continues to emerge supporting our thesis that the company has a strong right-to-win in the large and highly fragmented USD1.8th Chinese grocery market. We have also been encouraged by the fact that after years of persistence, the company is beginning to engage with us on ESG issues (we have specifically discussed data protection, climate change and the circular economy). ESG is now being considered at the board level, and specific sustainability reporting should follow in the coming months. Having long displayed a healthy obsession with customer service, we interpret these latest conversations as a sign that JD is beginning to develop a more sophisticated understanding of its impact on all stakeholders.”
1. Baidu, Inc. (NASDAQ: BIDU)
Number of Hedge Fund Holders: 89
Baidu, Inc. is one of the largest technology corporations in the world and is known as the ‘Google of China’ as it operates the most popular internet-based search engine in the Asian country. Like other mega tech firms, Baidu, Inc. has diversified business beyond the core internet service to artificial intelligence, cloud computing, and internet streaming services. The company is placed first on our list of top Chinese companies on NASDAQ.
Baidu, Inc. stock was upgraded to Buy from Hold by investment advisory Loop Capital Markets in late March on the back of the company’s entry into the autonomous vehicles market. The company’s shares have returned more than 52% to investors over the past year.
At the end of the first quarter of 2021, 89 hedge funds in the database of Insider Monkey held stakes worth $6.5 billion in Baidu, Inc., up from 51 in the preceding quarter worth $4.6 billion.
In its Q1 2021 investor letter, Horos Asset Management, an asset management firm, highlighted a few stocks and Baidu, Inc. (NASDAQ: BIDU) was one of them. Here is what the fund said:
“We have also fully exited our stake in Baidu, following their outstanding performance during the period and their lower relative upside potential compared to other investment alternatives, which we will discuss below.
The Chinese technology platform company Baidu has also been held in the portfolios managed by Alejandro, Miguel and myself for several years. During this period, we have seen very high volatility in its share price, which we have taken advantage of to make significant rebalancing moves in our position (in fact, we even sold our entire position once, when we thought the stock’s upside potential was exhausted). After several years of instability, market sentiment turned very positive, putting an end to the historical advertising problems in the healthcare sector, the divestments in O2O (Online-to-Offline) businesses that continued to weigh on the company’s margins, the IPO of part of the iQiyi streaming business (which hid Baidu’s underlying cash generation capacity) and the tough competition from other industry giants such as Tencent and Alibaba, as well as the entry of new players with disruptive business models (ByteDance). At the same time, the company’s recent commitment to electric vehicles contributed even more to this change of narrative. Baidu’s share price rose almost fourfold from the March 2020 lows to all-time highs and reached a valuation where the margin of safety, in our view, was too narrow.”
You can also take a peek at Billionaire Stan Druckenmiller’s Top 10 Stock Picks and Billionaire Julian Robertson On Interest Rates and His Top Stock Picks For 2021.
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This article is originally published at Insider Monkey.
