Tiger Pacific Raises Exposure to These Chinese Stocks; Buys Alibaba, Sells JD

Tiger Pacific Capital is an Asia-focused hedge fund, which was seeded by billionaire Julian Robertson. The fund was founded by Run Ye, Junji Takegami and Hoyon Hwang, all three of whom had been previously employed at Tiger Asia Management, which had $1.2 billion in assets under management before it was shut down in August 2012 due to a regulatory probe in Hong Kong.

According to its last 13F filing, Tiger Pacific had an equity portfolio worth $110.18 million at the end of June, 67% of which was invested in tech stocks and the remaining 33% was allocated to the Financial sector. However, it’s important to mention that the fund had just five holdings at the end of the last quarter. Tiger Pacific increased its exposure to the majority of its holdings, as well as initiated a stake in Alibaba Group Holding Ltd (NYSE:BABA) and closed its stake in JD.Com Inc (ADR) (NASDAQ:JD). 

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During the second quarter, Tiger Pacific sold its entire stake in JD.Com Inc (ADR) (NASDAQ:JD), which had contained 276,305 shares at the end of March. The move comes amid a 22% loss registered by JD.com’s stock in the second quarter, which was affected by lower-than-expected sales and a slowdown in GMV growth reported for the first three months of the year, among other things. In other news, earlier this month, JD.Com Inc (ADR) (NASDAQ:JD) announced that it has entered into a strategic partnership with Bacardi and will become its strategic e-commerce partner for the full line of its products in China. Of the 749 funds in our database at the end of the June quarter, 51 were long JD.Com, holding $6.66 billion worth of stock, which represented 34.60% of the float. The company saw a significant decline in popularity as a quarter earlier 73 funds had amassed $9.11 billion worth of shares.

On the other hand, Tiger Pacific initiated a position in Alibaba Group Holding Ltd (NYSE:BABA) and held 166,546 shares valued at $13.24 million at the end of the quarter; the position was its fourth-largest in terms of value. Last week, Alibaba said that it is not considering to buy back its 15% stake held by Yahoo! Inc. (NASDAQ:YHOO) as it could face a  hefty U.S. tax bill. Alibaba’s shares have returned nearly 30% so far this year. At the end of the June quarter, 69 funds from our database held $5.51 billion worth of Alibaba shares, which represented 2.80% of the float, compared to 67 funds with stakes worth $5.13 billion at the end of March.

On the next page, we are going to discuss three stocks that represented Tiger Pacific’s largest holdings as the fund was heading into the third quarter.

Vipshop Holdings Ltd – ADR (NYSE:VIPS) was Tiger Pacific’s second-biggest holding in the technology sector and the third-biggest holding in the portfolio at the end of June. According to the 13F filing, the fund held 1.91 million shares, up by 2% on the quarter, worth $21.36 million at the end of the quarter.  Vipshop Holdings reported better-than-expected earnings and revenues for the last quarter. The company’s earnings of $0.17 per share, beat the consensus forecast of $0.15 per share,while revenue advanced by 39.3% year-over-year to $2.02 billion, beating the estimates by $120 million. A total of 25 investors we track amassed $604.27 million worth of Vipshop Holdings shares at the end of June, which equals to 9.20% of the float. This compares with 42 funds that held $879 million worth of stock a quarter earlier.

Autohome Inc (ADR) (NYSE:ATHM) was Tiger Pacific’s second-biggest holding at the end of the second quarter, accounting for 24.11% of the total portfolio. During the quarter, Tiger Pacific added 78,718 shares of Autohome and held 1.32 million shares worth $26.57 million. Autohome reported its second-quarter financial results last month, posting revenue of $207.4 million, up by 60.1% on the year and beating the consensus forecast by $850,000. The company’s earnings for the quarter came in at $0.51 per share, topping the estimates of $0.40 per share. The number of funds from our database long Autohome stood at 14 at the end of June, while the value of their holdings was $96.90 million, up from 11 funds holding $69.94 million worth of shares at the end of the previous quarter.

Noah Holdings Limited (ADR) (NYSE:NOAH) was Tiger Pacific’s largest holding at the end of the June quarter, as the fund held 1.52 million shares worth $36.55 million; the stake was increased by 15% during the second quarter. Noah Holdings is a $1.5 billion company that is engaged in providing wealth management and asset allocation services to wealthy individuals and companies in China. Last week, the company announced plans to start an insurance business in Singapore next year as it expects the demand for overseas assets among wealthy individuals in China to grow by 20% in 2017. Six funds tracked by us held $49.75 million worth of Noah Holdings Limited (ADR) (NYSE:NOAH) at the end of the June quarter, compared to five funds holding $45.18 million worth of shares a quarter earlier.

Disclosure: none