5 Best Chinese Stocks To Invest In: This Tiger Hedge Fund Just Bought Them

Tiger Pacific Capital is a hedge fund focused on Asia, founded by Run Ye, Junji Takegami and Hoyon Hwang, who previously worked for Tiger Asia Management. The fund has recently filed its latest 13F filing, in which it reported an equity portfolio worth $116 million as of the end of December. The filing also revealed that the fund held a total of nine positions heading into 2017, including five holdings it acquired between October and December.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively the most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500-tracking ETFs.

All of Tiger Pacific Capital’s positions are in China-based companies and in this article, we are going to take a closer look at the five new stocks it added to its 13F portfolio during the fourth quarter.

Tiger Pacific Capital bought around 54,300 shares of Baidu Inc (ADR) (NASDAQ:BIDU) worth $8.9 million during the fourth quarter. The Chinese language Internet search provider, which is also one of the world’s most visited websites, controls almost 80% of the internet search market in China. For the third quarter, Baidu Inc (ADR) (NASDAQ:BIDU) posted adjusted earnings of $1.49 per share, topping analysts’ estimates of $1.11 and even though its revenue of $2.74 billion inched down by 0.7% year-over-year, it beat the consensus estimate of $2.71 billion. The stock has returned more than 8% year till date when NASDAQ was up 5.4%. According to our data, the number of hedge funds long this stock increased by one to 57 during the third quarter, having amassed 7.6% of the company’s float at the end of September.

Tiger Pacific Capital also initiated a new position in Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) by purchasing 519,700 shares for a value of $8.26 million during the fourth quarter. The casino gaming and entertainment company is developing a fifth hotel tower in Cotai, Macau. Melco Crown Entertainment Ltd (ADR) (NASDAQ:MPEL) reported third quarter 2016 earnings of $0.126 per share, exceeding the $0.07 consensus estimate, while evenue of $1.15 billion also surpassed analyst estimates of $1.1 billion. The stock has returned more than 25% over the last year. At the end of the third quarter, 16 funds from our database held shares of the company worth $370 million, versus 16 funds holding $171 million worth of stock a quarter earlier.

During the year end quarter, Tiger Pacific Capital also bought a new stake in SINA Corp (NASDAQ:SINA) and held 135,441 shares worth $8.23 million at the end of 2016. Sina Corporation (NASDAQ:SINA) is an online media company in China and has a large user base for its e-commerce solution. The company announced that it will distribute Weibo Corp (ADR) (NASDAQ:WB) ordinary stock (majority-owned subsidiary of SINA) on a pro-rata basis to increase value for its shareholders. SINA Corp’s (NASDAQ:SINA) advertising revenues continue to grow primarily due to Weibo which is a leading its social media platform in China. The stock is up by a whopping 77% over the last year outperforming the market. At the end of September, the number of funds tracked by us long SINA Corp (NASDAQ:SINA) increased by 12 on the quarter to 33 and the value of their holdings stood at $796 million.

In New Oriental Education & Tech Grp (ADR) (NYSE:EDU), Tiger pacific Capital acquired 65,000 shares worth $2.7 million during the fourth quarter. The provider of private educational services in China had more than 1.3 million enrollments (up by 56% on the year) in the second quarter of fiscal 2017 ended November 30, and has a competitive advantage in the form of a strong brand name, extensive geographical presence and a number of educational programs. This quarter, the management expects revenue in between $409 million and $422 million. New Oriental Education & Tech Grp (ADR) (NYSE:EDU) has an average ‘Buy’ recommendation from 18 analysts covering the stock. New Oriental’s  stock has gained 59% over the last year. At the end of the third quarter, 20 funds from our database held shares worth $288 million in aggregate, representing 2.9% of the total outstanding stock.

Tiger Pacific Capital bought 97,030 shares of Baozun Inc (ADR) (NASDAQ:BZUN) worth $1.17 million during the last quarter. Baozun Inc (ADR) (NASDAQ:BZUN) is a leading, digital and e-commerce service partner in China backed by the Alibaba Group Holding Ltd (NYSE:BABA). The company has a market capitalization of $802 million and its stock has returned an astounding 141% over the last year. Nine funds tracked by us were bullish on Baozun Inc (ADR) (NASDAQ:BZUN) heading into the fourth quarter of 2016, up by three over the quarter.

Disclosure: None