Several of Asia’s largest hedge funds have increased their stakes in Chinese e-commerce giant Pinduoduo in the third quarter while, at the same time, hacking back their holdings in its rival JD.com.
The switch, revealed by in latest regulatory filings, seemed to be driven by the view that Pinduoduo’s global ambition and inexpensive products would give it an edge over the purely domestic JD.com business.
HHLR Advisers, an investment management arm under billionaire Zhang Lei’s private equity firm Hillhouse Capital Group, reported a 43% jump in the number of shares it holds in Pinduoduo in the past quarter, while it sold 25% of its JD.com US listed American depositary receipts (ADRs).
Similarly, Hong Kong-based Greenwoods Asset Management, which manages nearly $20 billion, bought as much as 1.2 million shares in Pinduoduo, making Pinduoduo its second-largest U.S. listed holding by the quarter end, worth over $200 million. The firm also shed 1.1 million shares in JD.com.
Singapore-based FengHe Fund Management and Zhang Lei-backed Aspex Management, did something similar in the July to September period, while Hong Kong-based WT Asset Management, which manages around $4 billion, more than tripled its positions in Pinduoduo by purchasing over 800,000 shares, the quarterly 13F filings to the US Securities and Exchange Commission show.
The 13F filings reveal what investors owned in US listed stocks by September 30, offering the market a glimpse of the latest investment trends.
Pinduoduo, the e-commerce platform known for selling inexpensive goods, in September launched its first overseas site in the United States.
Investors cheered Pinduoduo’s global ambition, as its shares gained 1.5% in the third quarter despite the heavy selling pressure faced by wider Chinese tech stocks amid US-China tensions and an audit dispute.
“Pinduoduo has been a favourite long for a while, even on the downturn in the third quarter. It’s cheap but it offers some defensive play to the growth targets onshore as it has designs of global expansion and diversity of earnings,” said Andy Maynard, global head of equities at China Renaissance Securities.
As for JD.com, it is a purely domestic player with a higher correlation to overall trends in Chinese markets, analysts point out. They also say investors could be moving their holdings in JD.com ADRs to Hong Kong-listed ones to hedge US delisting risks.
- Reuters with additional editing by Sean O’Meara