500.com Ltd (WBAI): Greenwoods Asset Management Ltd. Cuts Passive Stake

In a new filing with the U.S. Securities and Exchange Commission, Greenwoods Asset Management Ltd. has disclosed reducing its stake in 500.com Ltd (NYSE:WBAI). According to the filing, the fund currently holds 343,000 American depositary shares, which represent 3.43 million Class A ordinary shares. The passive stake is equal to about 1.73% of the class, and represents a decrease from 410,000 American depositary shares, which represent 4.10 million Class A ordinary shares.

500 ltd

500.com Ltd (NYSE:WBAI) is an online sports lottery service provider in China. The company has a market cap of approximately $1.2 billion, and is currently trades at around $35 per share. The consensus average target price for the company’s is $43.33 for, while the consensus average recommendation is ‘Overweight.’

Like other companies in China, 500.com Ltd (NYSE:WBAI) is facing the legal and regulatory issues, which hurts the company’s stock. In a program on CNBC, Jason Moser, Senior Analyst at The Motley Fool, said that 500.com Ltd (NYSE:WBAI) must follow the established accounting and regulatory norms in order to attract the customers. According to Moser, the company needs to address accounting irregularities, which are keeping investors away from it.

Two week ago, analysts at Deutsche Bank upgraded 500.com Ltd (NYSE: WBAI) shares to Buy.

From a financial point of view, 500.com Ltd (NYSE:WBAI) stands very strongly. The company reported net revenues of $25.2million for the second quarter of 2014, representing a 185.4% increase from the second quarter of 2013. It posted net income attributable to ordinary shareholders of $12.2 million, up 544.4% from the same quarter a year ago. During the second quarter, the company’s active users increased by 121.2% to approximately 2.53 million from 1.14 million in the first quarter of 2014.

500.com Ltd (NYSE:WBAI) anticipates the total purchase amount to be between $354.6 million and $370.8 million for the third quarter of 2014, 500.com Ltd (NYSE:WBAI) anticipates the total purchase amount to be between $354.6 million and $370.8 million. This represents a sequential increase of 5.1% – 9.9% and a year-over-year increase of 214.3% – 228.6%.

However, 500.com Ltd (NYSE:WBAI) stock has not been performing well. The stock lost over 7% year-to-date, and  it dropped by 0.94% on Monday. Greenwoods Asset Management Ltd. first disclosed a stake in 500.com Ltd (NYSE:WBAI) in February. Since then, the company’s stock lost over around 17%.

Other largest shareholders of 500.com Ltd (NYSE:WBAI) that we track at Insider Monkey include Pine River Capital Management, led by Brian Taylor, Millennium Management, run by Israel Englander, and Jane Mendillo’s Harvard Management Co. During the second quarter, Pine River Capital upped its stake in the company to 30,000 shares, while Millennium Management reduced its position to 6,900 shares. Harvard Management holds 45,088 shares of 500.com Ltd (NYSE:WBAI).

In May 2014, 500.com Ltd (NYSE:WBAI) said in its regulatory filing with the SEC that it obtained proper and necessary approvals to legally provide online sports lottery services in China. The company stated that it came to know about an online article which made several unsubstantiated speculations on various aspects of its business operations. Further, the company stated that it refutes each of such unsubstantiated speculations and reiterates that it obtained all relevant and necessary licenses and approvals to legally provide online sports lottery services in China, and it made accurate and full disclosures on its business operations.

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