Here’s Why Baidu (BIDU) Became a Top Contributor in Longleaf’s Q4 2020 Portfolio

Longleaf Partners International Fund, an independent investment management firm, published its fourth quarter 2020  investor letter – a copy of which can be downloaded here. A return of 22.73% was recorded by the fund in the fourth quarter of 2020, outperforming its MSCI EAFE benchmark that delivered a 16.05% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Longleaf Partners International Fund, in their Q4 2020 investor letter, mentioned Baidu, Inc. (NASDAQ: BIDU) and emphasized their views on the company. Baidu, Inc. is a Beijing, China-based technology company that currently has a $70.2 billion market capitalization. Since the beginning of the year, BIDU delivered a -3.53% return, impressively extending its 12-month gains to 113.67%. As of March 26, 2021, the stock closed at $208.61 per share.

Here is what Longleaf Partners International Fund has to say about Baidu, Inc. in their Q4 2020 investor letter:

“Baidu (71%, 2.72%; 70%, 3.03%), the dominant online search business in China, was a top contributor in the fourth quarter and for the year. Baidu’s search advertising business was negatively affected by the pandemic this year. While the lockdown increased users’ time spent online and brought more traffic to the platform, it also hurt advertisers’ budgets, as companies cut costs in a difficult environment. As China began to see success in controlling the pandemic, there was a robust sequential recovery in Baidu’s business. Baidu delivered margin expansion, benefiting from both positive mix change and more disciplined return on investment-driven spending. The non-advertising business also made progress in the year. In September, Baidu raised equity financing for its DuerOS smart speaker business at a valuation of RMB 20 billion. In November, Baidu opened Apollo Go robotaxi services in Beijing, the third city in China where passengers can call a robotaxi from Baidu Maps. Baidu announced its intention to acquire JOYY’s live streaming business in China. JOYY, the pioneer and leading live streaming platform in China, would strengthen Baidu’s live streaming operation and expand the non-advertising offerings in its ecosystem.”

Baidu Inc (ADR) (NASDAQ:BIDU), Icon, app, Symbol, Sign, logo, smarphone

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Our calculations show that Baidu, Inc. (NASDAQ: BIDU) does not belong in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Baidu, Inc. was in 51 hedge fund portfolios, compared to 43 funds in the third quarter. BIDU delivered a 9.21% return in the past 3 months.