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5 Chinese Stocks Broadly Sold by Gurus in Past Quarter

Chinese stocks with high guru sells amid ongoing regulatory crackdown

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James Li
Sep 08, 2021

Summary

  • Hedge fund exposure to the China ADR market drops to two-year low.
  • Top guru sells include Baidu, New Oriental and JD.com.
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According to the Aggregated Portfolio of Gurus, a Premium feature, five China-based stocks broadly sold by gurus over the past three months include Baidu Inc. (

BIDU, Financial), New Oriental Education & Technology Group (EDU, Financial), JD.com Inc. (JD, Financial), TAL Education Group (TAL, Financial) and Vipshop Holdings Ltd. (VIPS, Financial).

Fund exposure to China stocks hit two-year low amid regulatory crackdown

Credit Suisse Group AG (

CS, Financial) said in an analyst note this week that hedge fund exposure to Chinese equities and indexes listed in the U.S. tumbled from approximately 2% at the end of 2020 to just around 0.75% as of Aug. 25, a two-year low. The Swiss-based firm said that 2021’s “sharp drop in ADR exposure” stems from price declines and client reductions as investors priced in regulatory uncertainty.

The Wall Street Journal added that

Daniel Loeb (Trades, Portfolio), leader of Third Point LLC, told investors that his firm pared back its exposure to China in recent months "out of fear that President Xi Jinping may continue exercising power over financial markets.” According to historical portfolio statistics, a Premium feature, Loeb sold his stake in Alibaba Group Holding Ltd. (BABA, Financial) during the first quarter.

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GuruFocus’ Aggregated Portfolio also looks at broadly sold stocks

While the Aggregated Portfolio primarily considers the most-broadly held stocks or the most-bought stocks, the portfolio also allows users to track the stocks broadly sold by gurus. Investors can also monitor trends in the stocks that gurus are discarding from their portfolios.

Baidu

Eighteen gurus sold shares of Baidu (

BIDU, Financial) during the past three months, including George Soros (Trades, Portfolio)’ Soros Fund Management and Catherine Wood (Trades, Portfolio)’s ARK Investment.

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GuruFocus ranks the online search giant’s profitability 8 out of 10 on the back of net profit margins and returns that outperform more than 82% of global competitors.

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Despite high profitability, Baidu’s interest coverage and debt ratios underperform more than 68% of global competitors, suggesting moderately low financial strength.

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New Oriental Education and Technology

Ten gurus sold shares of New Oriental Education and Technology (

EDU, Financial) during the past quarter, including Jeremy Grantham (Trades, Portfolio)’s GMO and Chase Coleman (Trades, Portfolio)’s Tiger Global Management.

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GuruFocus ranks the education company’s profitability 9 out of 10 on the back of a five-star business predictability rank and a three-year revenue growth rate that outperforms more than 83% of global competitors.

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Despite high profitability, New Oriental Education’s financial strength ranks 4 out of 10 on several warning signs, which include a weak Altman Z-score of 1.44 and a debt-to-equity ratio that is higher than 4 and underperforms over 75% of global competitors.

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JD.com

Nine gurus sold shares of JD.com (

JD, Financial) during the past quarter.

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GuruFocus ranks the e-commerce company’s financial strength 7 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7 and debt ratios outperforming more than 80% of global competitors.

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TAL Education Group

Nine gurus sold shares of TAL Education Group (

TAL, Financial) during the past quarter.

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GuruFocus ranks the tutoring company’s financial strength 4 out of 10 on several warning signs, which include a low Altman Z-score of 1.18 and a debt-to-equity ratio that underperforms more than 73% of global competitors.

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Vipshop Holdings

Eight gurus sold shares of Vipshop Holdings (

VIPS, Financial) during the past quarter.

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GuruFocus ranks the discount retailer’s financial strength 8 out of 10 on several positive investing signs, which include a high Piotroski F-score of 7, a strong Altman Z-score of 4.56 and interest coverage and debt ratios that outperform more than 86% of global competitors.

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Disclosures

I am/we are Long BABA and EDU.
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