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Sunedison Inc (SUNE), Alibaba Group Holding Ltd (BABA), Baidu Inc (ADR) (BIDU): Indus Capital Bets on Chinese Tech Stocks

Indus Capital was founded in 2000 by David Kowitz and Sheldon Kasowitz and since then it has grown to around $6.0 billion in assets that are managed on the behalf of a large base of around 300 investors. Even though the fund is focused on the Asia-Pacific region, it also invests a significant amount of capital in US equities. In its latest 13F filing, Indus Capital disclosed an equity portfolio valued at $757.58 million, down from $1.02 billion in the previous filing. At the end of 2014, the fund held long positions in 23 stocks and around 10 positions in options. Indus’ last filing also revealed that the fund has significantly cut its exposure to most of its top 10 picks, which represent over 75% of its total equity portfolio value. Read on to see in which companies Indus has disclosed its largest holdings in terms of value.

Sunedison Inc (NYSE:SUNE)

David Kowitz and Sheldon Kasowitz are former partners at George Soros’ Soros Fund Management. With a team of around 90 employees and offices in London, Hong Kong and Tokyo, the New York-headquarted hedge fund employs a rigorous fundamental analysis and research in order to generate high annual returns and exploit the inefficiencies of the markets in which it operates. Indus manages seven funds that employ different investment strategies: Indus Asia Pacific Fund, Indus Japan Long Only Fund, Indus Emerging Markets Strategies, Indus Japan Fund, Indus Pacific Opportunities Fund, Indus Omni Fund, and Indus Select Fund.

In this article we will discuss five largest holdings in terms of value that Indus has disclosed in its latest 13F filing for the fourth quarter of 2014. The fund has drastically cut its stake in four of these companies, but they still represent nearly a half of its total equity portfolio value. On the first spot is Sunedison Inc (NYSE:SUNE), of which Indus disclosed ownership of 7.43 million shares, valued at $44.91 million. The position was reduced by 2.99 million shares during the October-December period. Indus first disclosed ownership of Sunedison stock in its 13F filing for the fourth quarter of 2013 and throughout last year, the fund has been mostly unloading shares of the company. The stock of the solar energy company gained around 3% during the fourth quarter and surged by 49% during 2014. Moreover, Sunedison Inc (NYSE:SUNE) was one of the stocks pitched by David Einhorn of Greenlight Capital at the last year’s Robin Hood Conference. Greenlight Capital held 21.27 million shares of Sunedison Inc (NYSE:SUNE) at the end of September and is yet to disclose its 13F filing for the fourth quarter of 2014.

Next on the list is Alibaba Group Holding Ltd (NYSE:BABA), in which Indus reported ownership of 1.11 million shares, worth $115.43 million. At the end of September, Alibaba represented the largest position in the fund’s equity portfolio, but the stake has been cut by 50% during the fourth quarter. Nevertheless, the position in the Chinese e-commerce giant represents 15% of Indus Capital’s 13F portfolio as of the end of December. Despite the fact that the stock of Alibaba Group Holding Ltd (NYSE:BABA) lost around 22% in the last three months, the company will most likely remain one of the favorite picks in the portfolios of many great investors. Chase Coleman, the CEO of Tiger Global Management in his letter to investors highlighted Alibaba and said that his firm benefited from the strong performance of the company in the first months following its IPO. Among other funds that have been bullish on Alibaba Group Holding Ltd (NYSE:BABA) is Andreas Halvorsen’s Viking Global, Dan Loeb’s Third Point, and Julian Robertson’s Tiger Management.

In Baidu Inc (ADR) (NASDAQ:BIDU), Indus revealed a $35.34 million position that contains around 155,000 shares. The same as with other holdings, the fund trimmed its position by roughly 88,800 shares during the third quarter. The stock of the Chinese Internet search provider has had a strong performance in the last half of 2014, advancing by around 26%. Meanwhile, Indus, after adding Baidu Inc (ADR) (NASDAQ:BIDU) to its portfolio during the second quarter of 2014, has boosted its stake by a 450% during the third quarter. The former boss of Indus’ founders George Soros has also raised his exposure to Baidu Inc (ADR) (NASDAQ:BIDU) during the second quarter and held 327,500 shares at the end of September.

With a stake valued at $34.40 million, Indus held 4.66 million shares of SouFun Holdings Ltd (NYSE:SFUN) at the end of December, down from 4.96 million shares held previously. SouFun Holdings Ltd (NYSE:SFUN) is another company in which Indus initiated a stake during the second quarter of last year. On the other hand, while Indus cut its stake in SouFun Holdings Ltd (NYSE:SFUN) during the fourth quarter, Jim Simons’ Renaissance Technologies initiated a stake with 141,800 shares.

HDFC Bank Limited (ADR) (NYSE:HDB) is the fifth-largest position in terms of value in Indus’ equity portfolio. The fund disclosed ownership of 480,500 shares, valued at $24.39 million; the stake was trimmed by 10% during the quarter. HDFC Bank Limited (ADR) (NYSE:HDB) is an India-based banking holding company, whose stock has had a strong growth over the last year, gaining around 80%. Another shareholder of the HDFC Bank Limited (ADR) (NYSE:HDB) Bank is Ken Fisher’s Fisher Asset Management, which reported 5.43 million shares in its latest 13F filing.

Disclosure: none

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