In this article, we discuss the 5 stocks that the China crackdown is crushing. If you want to read our detailed analysis of these stocks, go directly to China Crackdown is Crushing These 10 Stocks.
5. Vipshop Holdings Limited (NYSE:VIPS)
Number of Hedge Fund Holders: 36
Percentage Decline in Share Price Over Past Three Months: 37%
Vipshop Holdings Limited (NYSE:VIPS) is ranked fifth on our list of 10 stocks that the China crackdown is crushing. The firm owns and operates an online discount retailer and is headquartered in Guangzhou.
On September 23, investment advisory JPMorgan downgraded Vipshop Holdings Limited (NYSE:VIPS) stock to Neutral from Overweight and lowered the price target to $11 from $22, predicting the stock would not outperform in the next six months.
At the end of the second quarter of 2021, 36 hedge funds in the database of Insider Monkey held stakes worth $1.30 billion in Vipshop Holdings Limited (NYSE:VIPS), down from 54 in the preceding quarter worth $1.34 billion.
4. Bilibili Inc. (NASDAQ:BILI)
Number of Hedge Fund Holders: 47
Percentage Decline in Share Price Over Past Three Months: 44%
Bilibili Inc. (NASDAQ:BILI) is a Shanghai-based company that markets online entertainment services like video services, mobile games, and other value-added services. It is placed fourth on our list of 10 stocks that the China crackdown is crushing.
On August 20, investment advisory HSBC maintained a Buy rating on Bilibili Inc. (NASDAQ:BILI) stock but lowered the price target to $127 from $140. Charlotte Wei, an analyst at the advisory, issued the ratings update.
At the end of the second quarter of 2021, 47 hedge funds in the database of Insider Monkey held stakes worth $2 billion in Bilibili Inc. (NASDAQ:BILI), down from 53 in the preceding quarter worth $3 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. 360 DigiTech, Inc. (NASDAQ:QFIN)
Number of Hedge Fund Holders: 14
Percentage Decline in Share Price Over Past Three Months: 49%
360 DigiTech, Inc. (NASDAQ:QFIN) is a Shanghai-based company that owns and operates a digital consumer finance platform. It is ranked third on our list of 10 stocks that the China crackdown is crushing.
On August 2, investment advisory CLSA maintained a Buy rating on 360 DigiTech, Inc. (NASDAQ:QFIN) stock but lowered the price target to $27 from $39, predicting a lower take rate and slower loan growth for the firm in the coming months.
Out of the hedge funds being tracked by Insider Monkey, London-based investment firm GLG Partners is a leading shareholder in 360 DigiTech, Inc. (NASDAQ:QFIN) with 516,372 shares worth more than $21 million.
2. KE Holdings Inc. (NYSE:BEKE)
Number of Hedge Fund Holders: 31
Percentage Decline in Share Price Over Past Three Months: 66%
KE Holdings Inc. (NYSE:BEKE) is placed second on our list of 10 stocks that the China crackdown is crushing. The firm owns and runs an integrated online and offline platform for housing transactions and services. It operates from Beijing.
On August 16, investment advisory Goldman Sachs downgraded KE Holdings Inc. (NYSE:BEKE) stock to Neutral from Buy and lowered the price target to $19.30 from $35, noting that there was “unpredictability” around the property market slowdown in China.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm ARK Investment Management is a leading shareholder in KE Holdings Inc. (NYSE:BEKE) with 5.8 million shares worth more than $276 million.
1. New Oriental Education & Technology Group Inc. (NYSE:EDU)
Number of Hedge Fund Holders: 39
Percentage Decline in Share Price Over Past Three Months: 77%
New Oriental Education & Technology Group Inc. (NYSE:EDU) is ranked first on our list of 10 stocks that the China crackdown is crushing. The firm provides private educational services across China. It is headquartered in Beijing.
On July 27, investment advisory Deutsche Bank downgraded New Oriental Education & Technology Group Inc. (NYSE:EDU) stock to Hold from Buy and lowered the price target to $2.50 from $20.10, noting that China was moving towards turning after-school tutoring firms into non-profit entities.
At the end of the second quarter of 2021, 39 hedge funds in the database of Insider Monkey held stakes worth $590 million in New Oriental Education & Technology Group Inc. (NYSE:EDU), down from 45 in the preceding quarter worth $2 billion.
In its Q1 2021 investor letter, Polen Capital, an asset management firm, highlighted a few stocks and New Oriental Education & Technology Group Inc. (NYSE:EDU) was one of them. Here is what the fund said:
“New Oriental Education shares declined in the quarter, seemingly on account of two notable drivers. First, Chinese online education is currently under a regulatory microscope, although the online tutoring area is not central to New Oriental’s business. We continue to believe that, as a large player in a highly fragmented market, New Oriental is well-positioned to manage regulatory change and offers regulators an easier touchpoint to regulate and monitor than individual mom & pop operators.
As regulatory fears hit the after-school tutoring market, we think New Oriental, a leading player in brick-and-mortar after-school tutoring, could gain strength. We think the long-term backdrop for after-school tutoring remains quite favorable. Significant scale advantages and a highly cash generative model with just approximately 5% market share indicate that New Oriental has potential to grow at a high rate, in our opinion. Further, movements by another investor in New Oriental in late March 2021 prompted indiscriminate selling of shares. Those sales left shares trading at a compelling valuation, in our opinion, so we acted by adding to our position. We think New Oriental remains poised to grow earnings at approximately 25% annual rate in the coming years.”
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