Small Fund Scores Big Betting on Chinese Stocks and This Is Why You Should Follow It

In Align Technology, Inc. (NASDAQ:ALGN), Kylin Management initiated a stake containing 311,800 shares worth $35.77 million at the end of March. The position represents Kylin’s only investment in a U.S-based company and its only healthcare bet. The fund previously held a stake in Align Technology, Inc. (NASDAQ:ALGN), but that position of some 375,000 shares was unloaded during the second-quarter of 2016. The stock of Align Technology, a maker of scanners used in dentistry, has gained 21% since the beginning of April and is 41% in the green year-to-date. Shares received a boost at the end of April after Align Technology reported revenue of $310.34 million, beating estimates by $13 million. Even though the company’s EPS of $0.59 was lower than the expected $0.67, investors were pleased by its 30% revenue growth. Align Technology has been consistently reporting double-digit revenue growth for the past several years, and the stock’s growth story may not be over yet, with the dental products & materials market in the U.S currently estimated at around $12 billion. Other investors with large stakes in Align Technologies include Lone Pine Capital and Jim Simons’ Renaissance Technologies.

Melco Resorts & Entertainment Ltd (ADR) (NASDAQ:MLCO) is represented in Kylin Management’s 13F portfolio by a $29.40 million stake that contains 1.58 million shares as of the end of the first quarter. The stock of the Hong-Kong-based operator of casinos and casino resorts in Macau and the Philippines has appreciated by 40% since the beginning of the year. Kylin’s entrance in Melco Resorts & Entertainment Ltd (ADR) (NASDAQ:MLCO) is not surprising. The stock is still down by 50% from its 2014 highs, dragged down by a decline in the Macau gambling industry on the back of the Chinese government’s crackdown on graft. However, in the last several months, the numbers have shown a positive trend. In April, Macau’s casino receipts rose by 16% to $2.50 billion, showing the ninth-straight month of growth and the third-straight month of double-digit growth. Lei Zhang‘s Hillhouse Capital Management owned 10.25 million shares of Melco Resorts & Entertainment Ltd (ADR) (NASDAQ:MLCO) at the end of March, up by 40% on the quarter.

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