Ray Dalio’s Top 5 China Stocks

In this article, we discuss Ray Dalio’s top 5 China stocks. If you want to read our detailed discussion on Dalio’s stance on China over the years, head directly to Ray Dalio’s China Stocks. 

5. Yum China Holdings, Inc. (NYSE:YUMC)

Number of Hedge Fund Holders: 35

Bridgewater Associates’ Stake Value: $34,897,590

Yum China Holdings, Inc. (NYSE:YUMC) owns, manages, and franchises restaurants in China. On May 2, Yum China Holdings, Inc. (NYSE:YUMC) reported Q1 GAAP earnings per share of $0.68 and a revenue of $2.91 billion, topping Wall Street estimates by $0.20 and $140 million, respectively. It is one of Ray Dalio’s top China stocks. 

Securities filings for the first quarter of 2023 reveal that Ray Dalio owned 550,522 shares of Yum China Holdings, Inc. (NYSE:YUMC) worth $34.8 million, representing 0.21% of the total portfolio. However, the billionaire slashed his stake in the company by 55% in the March quarter. 

According to Insider Monkey’s first quarter database, 35 hedge funds were long Yum China Holdings, Inc. (NYSE:YUMC), compared to 34 funds in the prior quarter. GuardCap Asset Management held the leading stake in the company, comprising 8.7 million shares worth $551 million. 

Here is what Cooper Investors specifically said about Yum China Holdings, Inc. (NYSE:YUMC) in its Q2 2022 investor letter:

“Yum China Holdings, Inc. (NYSE:YUMC) – With the world emerging after two years of COVID, the extreme Shanghai lockdowns caught the company and frankly us a little by surprise. While the proposition for domestic KFC roll-out remains intact Yum China has not behaved like a Stalwart this year.”

4. New Oriental Education & Technology Group Inc. (NYSE:EDU)

Number of Hedge Fund Holders: 31

Bridgewater Associates’ Stake Value: $34,950,737

New Oriental Education & Technology Group Inc. (NYSE:EDU) delivers private educational services in China under the New Oriental brand. The company operates across multiple segments, including Educational Services and Test Preparation Courses, Online Education and Other Services, Overseas Study Consulting Services, and Others. In the first quarter of 2023, Ray Dalio held 905,225 shares of New Oriental Education & Technology Group Inc. (NYSE:EDU), worth approximately $35 million and representing 0.21% of the total 13F securities. 

On June 6, New Oriental Education & Technology Group Inc. (NYSE:EDU) announced an extension of its share repurchase program that was initiated in July 2022. The program will now continue for the next twelve months. As of May 31, 2023, the company had already repurchased approximately American depositary shares (ADS) worth $191 million under the program. Additionally, there is still an authorized balance of approximately $209 million available for repurchase, which can be utilized until May 31, 2024.

According to Insider Monkey’s first quarter database, 31 hedge funds were bullish on New Oriental Education & Technology Group Inc. (NYSE:EDU), compared to 36 funds in the preceding quarter. Fang Zheng’s Keywise Capital Management is the leading stakeholder of the company. 

3. KE Holdings Inc. (NYSE:BEKE)

Number of Hedge Fund Holders: 39

Bridgewater Associates’ Stake Value: $39,960,620

KE Holdings Inc. (NYSE:BEKE)  operates an integrated platform for housing transactions and services in China. The company’s operations are divided into four segments – Existing Home Transaction Services, New Home Transaction Services, Home Renovation and Furnishing, and Emerging and Other Services. On May 18, KE Holdings Inc. (NYSE:BEKE) reported a Q1 non-GAAP EPADS of $0.43 and a revenue of $2.95 billion, exceeding Wall Street estimates by $0.18 and $410 million, respectively. 

Securities filings for Q1 2023 reveal that Ray Dalio’s Bridgewater Associates held 2.12 million shares of KE Holdings Inc. (NYSE:BEKE) worth approximately $40 million. However, Dalio cut his stake in the company by 35% in the March quarter. It remains one of his top China stocks. 

According to Insider Monkey’s first quarter, 39 hedge funds were bullish on KE Holdings Inc. (NYSE:BEKE), with combined stakes worth $1.7 billion. Lei Zhang’s Hillhouse Capital Management is the largest stakeholder of the company. 

Artisan Developing World Fund made the following comment about KE Holdings Inc. (NYSE:BEKE) in its second quarter 2023 investor letter:

“Bottom contributors to performance for the quarter included real estate platform KE Holdings Inc. (NYSE:BEKE). Beike fell due to weaker industry property sales in China in April following the release of strong pent-up demand in Q1, despite accelerating revenue and very modest cost growth.”

2. Trip.com Group Limited (NASDAQ:TCOM)

Number of Hedge Fund Holders: 41

Bridgewater Associates’ Stake Value: $41,090,323

Trip.com Group Limited (NASDAQ:TCOM) is a Chinese travel service provider that operates globally, offering services including accommodation reservation, transportation ticketing, packaged tours, in-destination activities, corporate travel management, and other travel-related solutions. Ray Dalio owned 1 million shares of Trip.com Group Limited (NASDAQ:TCOM) worth $41 million, making it one of his top China stock picks. The billionaire trimmed his position in the company by 42% in Q1 2023. 

On June 8, Trip.com Group Limited (NASDAQ:TCOM) reported a Q1 non-GAAP EPADS of $0.45 and a revenue of $1.3 billion, outperforming Wall Street estimates by $0.19 and $140 million, respectively. 

According to Insider Monkey’s first quarter database, 41 hedge funds were bullish on Trip.com Group Limited (NASDAQ:TCOM), compared to 36 funds in the prior quarter. Richard S. Pzena’s Pzena Investment Management is the largest stakeholder of the company, with 7.8 million shares worth $297 million. 

Artisan International Value Fund made the following comment about Trip.com Group Limited (NASDAQ:TCOM) in its Q4 2022 investor letter:

“Trip.com Group Limited (NASDAQ:TCOM), a Chinese online travel agency, was the second-largest contributor to return in 2022. Trip.com is the dominant supplier of online travel reservations and is expected to benefit from China’s loosening COVID-19 restrictions on both domestic and international travel. Management of Trip.com has wisely spent the COVID-19 lockdown period reinforcing and improving the company’s market position and reducing unnecessary costs. We expect earnings to boom over the next year as travel picks up. Other investors appeared to agree, pushing the share price up 42% in 2022.”

1. PDD Holdings Inc. (NASDAQ:PDD)

Number of Hedge Fund Holders: 62

Bridgewater Associates’ Stake Value: $162,607,932

PDD Holdings Inc. (NASDAQ:PDD) primarily operates Pinduoduo, an e-commerce platform that provides a wide range of products across multiple categories. PDD Holdings Inc. (NASDAQ:PDD) is the largest China stock in Ray Dalio’s 13F portfolio. In the first quarter of 2023, Dalio owned 2.14 million shares of PDD Holdings Inc. (NASDAQ:PDD) worth $162.60 million, representing 0.99% of the total 13F securities. 

On May 26, PDD Holdings Inc. (NASDAQ:PDD) reported a Q1 non-GAAP EPADS of $1.01 and a revenue of $5.48 billion, outperforming Wall Street estimates by $0.38 and $920 million, respectively. 

According to Insider Monkey’s first quarter database, 62 hedge funds were bullish on PDD Holdings Inc. (NASDAQ:PDD), compared to 57 funds in the earlier quarter. Lei Zhang’s Hillhouse Capital Management is the largest stakeholder of the company, with 10.6 million shares worth $807.8 million. 

Here is what Tao Value has to say about PDD Holdings Inc. (NASDAQ:PDD) in its Q4 2021 investor letter:

“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 to grow with such a team with a strong culture.”

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