2. GDS Holdings Limited (NASDAQ:GDS)
Number of Hedge Fund Holders: 25
Bridgewater Associates’ Stake Value: $13,513,000
GDS Holdings Limited (NASDAQ:GDS) is a Shanghai-based company that develops and operates data centers in the People’s Republic of China. The company provides colocation services including critical facilities space, customer-available power, and managed hosting services. Ray Dalio owns 765,183 shares of GDS Holdings Limited (NASDAQ:GDS) as of Q3 2022, worth $13.5 million. The billionaire strengthened his hold on the stock by 8% during the September quarter.
On August 26, RBC Capital analyst Jonathan Atkin downgraded GDS Holdings Limited (NASDAQ:GDS) to Sector Perform from Outperform with a price target of $33, down from $41.
According to Insider Monkey’s data, 25 hedge funds were long GDS Holdings Limited (NASDAQ:GDS) at the end of the second quarter of 2022, compared to 26 funds in the last quarter. Joel Ramin’s 12 West Capital Management is the largest stakeholder of the company, with 7.3 million shares worth $245 million.
Here is what Baron Real Estate Fund has to say about GDS Holdings Limited (NASDAQ:GDS) in its Q1 2022 investor letter:
“Following a 66% correction in its share price from a peak of $117 per share in February 2021, we recently reacquired shares in GDS Holdings Limited (GDS) at an average cost of $39 per share. GDS is the leading developer and operator of data centers in China. Following several years of strong share price performance, the shares of GDS corrected sharply in 2021 due to investor concerns about China’s increased regulatory scrutiny of the technology industry and a slowdown in its economy, increased competition, evidence of further tensions with U.S. regulatory agencies, and a substantial correction in technology shares broadly. At our average purchase price of $39, we believe these concerns are sufficiently discounted in the shares and remain optimistic about the company’s long-term potential to generate strong growth and increase the intrinsic value of the business.
In February 2021, three highly respected institutional investors-Sequoia China, ST Telemedia Global Data Centers, and an Asian sovereign wealth fund-invested $620 million dollars in GDS at a slight premium to the Fund’s purchase price. This was a major vote of confidence in the management team and the growth opportunity ahead (we suspect there is meaningful additional capital available to support GDS’s expansion plan should volatility in the public equity markets persist). We continue to believe that GDS is well positioned to benefit from the Chinese digital economy, which is in its early growth phase, with relatively low national internet access penetration and expectations for ongoing strong growth in public cloud spending.
GDS’ shares are valued at a discounted cash flow multiple to its global data center peers despite the fact that the company is projected to grow its cash flow 3 to 4 times faster over the next few years.”
