In this article, we discuss 4 tech stocks that Chinese billionaire Lei Zhang is selling in 2022. If you want to read our detailed analysis of Zhang’s history, investment philosophy, and hedge fund performance, go directly to Chinese Billionaire Lei Zhang is Selling These 8 Tech Stocks in 2022.
4. Airbnb, Inc. (NASDAQ:ABNB)
Number of Hedge Fund Holders as of December 31: 63
Airbnb, Inc. (NASDAQ:ABNB) is a San Francisco, California-based online marketplace for lodging, vacation homes, and tourism activities.
Hillhouse Capital Management closed its entire position in Airbnb, Inc. (NASDAQ:ABNB) during Q1 2022. One of the reasons for offloading the complete stake could have been Airbnb, Inc.’s (NASDAQ:ABNB) decision to shut down its domestic operations in China. Although the firm launched its operations in 2016, it did not have any significant impact on Airbnb, Inc.’s (NASDAQ:ABNB) overall profitability as it contributed nearly 1% to the total revenue. Operating in China was already complicated due to competition from local players. All the company’s listings in mainland China will be removed in the coming months.
Here’s what Tollymore Investment Partners said about Airbnb, Inc. (NASDAQ:ABNB) in its Q3 2021 investor letter.
“Today disruptors are not typically seeking to replace incumbents entirely. Rather, they break the links in the customer journey, in doing so better aligning monetisation with value creation and minimising externalities. For example, Airbnb broke the link between staying in residential property and owning it. Airbnb is a specific example of a business model innovation which separated asset use from ownership. This is hardly a novel idea; it’s called renting. Rental models lend themselves to assets which are expensive and durable, and where usage is infrequent.”
Of the 924 elite funds in Insider Monkey’s database, 63 funds held a stake in Airbnb, Inc. (NASDAQ:ABNB) as of Q4 2021.
3. NIO Inc. (NYSE:NIO)
Number of Hedge Fund Holders as of December 31: 30
NIO Inc. (NYSE:NIO) is a Chinese EV company. Hillhouse Capital Management initiated a position in NIO Inc. (NYSE:NIO) in Q3 2020, with over 2 million shares bought at an average quarterly share price of $15.40. Over the next few quarters, the stake was decreased until the entire holding was sold off in Q1 2022.
The stock price of NIO Inc. (NYSE:NIO) has declined by over 50% YTD. NIO Inc. (NYSE:NIO) posted an EPS GAAP Actual of -$0.21 for Q1 2022, missing the analysts’ estimates by $0.05. However, the company is expected to perform better following ease in Covid-19 related restrictions in China.
On May 23, Vijay Rakesh at Mizuho reiterated a Buy rating on NIO Inc. (NYSE:NIO) stock with a price target of $60. Rakesh added that NIO Inc. (NYSE:NIO) plans on launching Nio Pilot+ self-driving in the following months and has priced it at a 40% to 50% discount from Tesla.
2. Pinduoduo Inc. (NASDAQ:PDD)
Number of Hedge Fund Holders as of December 31: 34
Pinduoduo Inc. (NASDAQ:PDD) is a Chinese e-commerce platform that provides a wide variety of discretionary products. Hillhouse completely liquidated its position in Pinduoduo Inc. (NASDAQ:PDD) during Q1 2022. This is only the second quarter since Q2 2018, when the shares of Pinduoduo have not been part of Hillhouse Capital’s portfolio.
The analysts’ view on Pinduoduo Inc. (NASDAQ:PDD) stock contrasts with Zhang’s stance. In a note issued to investors on May 16, Andre Chang at JPMorgan double upgraded Pinduoduo Inc. (NASDAQ:PDD) stock from an Underweight to an Overweight rating with a target price of $55. The target price reflects a healthy upside potential of over 34.4% from the last closing price. The analyst highlighted that following the recent regulatory announcement by the Chinese government, the “significant uncertainties” related to the Chinese internet sector are out of the way.
In its Q4 2021 investor letter, Tao Value discussed its stance on Pinduoduo Inc. (NASDAQ:PDD). Here’s what it said:
“On the detracting side, one of our largest detractors includes Pinduoduo (ticker: PDD). Pinduoduo (PDD) reported the second consecutive GAAP profit quarter yet missed on the revenue due to nation-wide consumption weakness & scaled back Sales & Marketing efforts. Market disliked it and the stock price plunged on the earnings. In my opinion, the accounting profits proved the original thesis of using S&M to acquire users and using great shopping experience to keep them. After realizing the first growth curve, Pinduoduo now shifted its focus & investment to agriculture. It is still very early, but the reduced size due to price drop warrants a position to watch and continue grow with such a team with strong culture.”
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders as of December 31: 279
Amazon.com, Inc. (NASDAQ:AMZN) is a Seattle, Washington-based e-commerce giant. Hillhouse Capital liquidated a stake of 15,000 shares in the trillion-dollar company in the first quarter. The hedge fund opened a position in Amazon.com, Inc. (NASDAQ:AMZN) in Q1 2017, with 11,562 shares purchased at an average quarterly share price of $833.5. Amazon.com, Inc. (NASDAQ:AMZN) stock has come under pressure after major retailers in the US provided a very bleak outlook regarding consumer spending for the rest of the year due to the increase in inflation.
Miller Value Partners shared its insights on Amazon.com, Inc. (NASDAQ:AMZN) in its Q1 2022 investor letter.
“For frame of reference, Amazon (NASDAQ:AMZN) bottomed at the same valuation in the financial crisis (side note: Amazon bottomed at 4x EV/GP after the tech bubble burst)! So there’s historical precedent for the lows being in. We will see whether that holds true this time. Regardless, we think there’s significant upside over a 5-year time horizon. The one other topic I want to briefly address is our volatility. We hope to write something about the topic in more depth in the future, but we want our clients and prospective investors to understand our views on it. We think that volatility is significantly misunderstood. We believe it creates opportunities from which we can profit.”
Amazon.com, Inc. (NASDAQ:AMZN) is the most owned stock amongst the 924 hedge funds tracked by Insider Monkey at the end of Q4 2021.
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