Maplelane’s Top 5 Stock Holdings

4. JD.com (NASDAQ: JD)

JD remains one of Maplelane Capital’s top 10 stock holdings even though the hedge fund sold 42% of its stake in the company during the September quarter to take advantage of the stunning share price rally. JD accounts for about 3.19% of the hedge fund’s overall portfolio. Shares of Chinese e-commerce platform rallied almost 126% in the last twelve months.

Argosy Investors, which generated 29.8% in select accounts for 2020, has commented on few stocks including JD.com in an investor letter. Here is what Argosy Investors stated:

“JD.com has been making conscious decisions to break its business up into its component parts, which in our opinion helps surface the value of each business. JD’s enterprise value is about USD $120 billion today. JD spun off its JD Health business worth USD $28 billion (like Teladoc in the US), may spin off its JD Cloud business (similar to AWS in the US), has sold shares in its JD Logistics business and is shooting for a valuation of USD$40 billion in 2021 via an IPO, and JD Digits which provides supply chain and consumer loans was expected to be valued at nearly USD $30 billion before Ant Financial was prevented by the Chinese government from completing its IPO. The combined values of these business segments within JD is about $98 billion, leaving $22 billion for JD’s core retail business (and its cloud business) which is on track for over USD $100 billion in sales this year and growing over 20% per year. Assuming a 5% long-term margin for JD Retail, that segment is generating USD $5 billion of operating profit (EBIT). Given their strong market position, investors could value JD’s retail business alone at 20x EBIT, valuing JD retail at $100 billion. By comparison, Amazon was valued at over $175 billion during the year in which it earned USD $100 billion in revenue, so we continue to believe JD is being undervalued, despite a more competitive environment with Alibaba in China than Amazon faces in the US.”