Harding Loevner, an investment management firm, published its “Emerging Markets Equity Fund” first-quarter 2022 investor letter – a copy of which can be downloaded here. Emerging Markets (EMS) declined 6.9% this quarter as measured by the MSCI EM Index, primarily due to the collapse in Russian equities and poor performance in China. As a result of the uncertainty around the war, European stocks with material businesses in, or trade linkages to, Russia or Ukraine sold off, as well as stocks in markets closest to the conflict. Try to spend some time taking a look at the fund’s top 5 holdings to be informed about their best picks for 2022.
In its Q1 2022 investor letter, Harding Loevner Emerging Markets Equity Fund mentioned Baidu, Inc. (NASDAQ:BIDU) and explained its insights for the company. Founded in 2000, Baidu, Inc. (NASDAQ:BIDU) is a Beijing, China-based multinational technology company with a $48.9 billion market capitalization. Baidu, Inc. (NASDAQ:BIDU) delivered a -6.02% return since the beginning of the year, while its 12-month returns are down by -24.96%. The stock closed at $139.83 per share on June 17, 2022.
Here is what Harding Loevner Emerging Markets Equity Fund has to say about Baidu, Inc. (NASDAQ:BIDU) in its Q1 2022 investor letter:
“Our large implicit bet against resources, which includes a long-standing absence of Materials, reflects our focus on high-quality, growing businesses. Companies in these sectors are inordinately reliant upon, and vulnerable to, cyclical moves in commodity prices, which makes it rare for them to meet our investment criteria, especially competitive advantage and financial strength. Their only potential durable advantage tends to be low production cost, but finding this attribute in combination with high-quality reserves, a case for long-term growth in volumes, and satisfactory corporate governance has always been challenging. Western sanctions on Russia have created a supply squeeze in the short term, elevating commodity prices. We are disinclined to make a dash for more commodity exposure, given uncertainty about the duration and effectiveness of sanctions, alternative supply and substitution response, and the cyclical demand outlook, preferring instead to let our deliberative research process bring attractive long-term investments to our attention.
While now having minimal direct exposure to the fossil fuel industry, the portfolio holds several businesses that are firmly part of the global energy transition—a transition that should accelerate if energy prices remain elevated. Examples include the Chinese company, Baidu (NASDAQ:BIDU) (designer of autonomous driving systems).
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Our calculations show that Baidu, Inc. (NASDAQ:BIDU) fell short and didn’t make it on our list of the 30 Most Popular Stocks Among Hedge Funds. Baidu, Inc. (NASDAQ:BIDU) was in 47 hedge fund portfolios at the end of the first quarter of 2022, compared to 38 funds in the previous quarter. Baidu, Inc. (NASDAQ:BIDU) delivered a -6.18% return in the past 3 months.
In December 2021, we also shared another hedge fund’s views on Baidu, Inc. (NASDAQ:BIDU) in another article. You can find other investor letters from hedge funds and prominent investors on our hedge fund investor letters 2022 Q1 page.
Disclosure: None. This article is originally published at Insider Monkey.
