Chinese stocks surged since Tuesday, stimulated by China's three major favorable policies. $HSI(HSI)$ $HSTECH(HSTECH)$ $Direxion Daily FTSE China Bull 3X Shares(YINN)$ $KraneShares CSI China Internet ETF(KWEB)$
The two trades of Duan Yongping, the so called Chinese Buffett, in August were once again praised by the market.
Duan Yongping and Buffett
On August 20, Duan Yongping publicly released a trade in one Chinese investment community: On August 14, after the earnings release of $TENCENT(00700)$ $Tencent - main 2409(TCHmain)$ $Tencent Holding Ltd.(TCEHY)$, he sold some of Tencent's August-expiring Puts at a price of around HK$5, and also wrote: "Strive to sell 1,000 puts every day, and the ultimate goal is to become a shareholder with a 1% stake in Tencent! Strive to achieve this goal in three to five years, but don't force it." [Tongue]
On August 27, Duan Yongping wrote in his social account again: "Start selling $PDD Holdings Inc(PDD)$ Although I don't fully understand PDD's business model, I still find it quite interesting after watching it over the years." [Surprised]
Looking back now, the two stocks rose after Duan Yongping's trades, and Duan Yongping's timing of selling and putting the two stocks was still very accurate and good enough.
The stock price did not fall to his paid strike price extent, stock prices goes up, and all the premiums were earned.
Supplement Tencent and PDD ‘s key earnings data:
In Q2 2024, Tencent achieved an 8% year-on-year increase in revenue to 161.1 billion yuan, and adjusted net profit increased by 53% year-on-year to 57.3 billion yuan. In the first half of this year, Tencent repurchased a total of 52.3 billion Hong Kong dollars. If it follows the previous repurchase plan of 100 billion Hong Kong dollars, there will be a repurchase quota of 47.7 billion yuan in the second half of the year. After the financial report data, Tencent's stock price fluctuated flat[Miser]
In Q2 2024, Pinduoduo's revenue increased by 86% year-on-year to 97.1 billion yuan, but it still fell short of market expectations. Adjusted net profit attributable to ordinary shareholders increased by 125% year-on-year to 34.4 billion yuan. From the performance alone, this performance can be said to be very outstanding, but the management's answer in the earnings call made the market and investors more worried about the continuity of Pinduoduo's future performance growth. The sharp drop in Pinduoduo's stock price after the financial report also attracted market attention. [Cry]
Who is YONG PING DUAN?
It is said that Duan Yongping's investment account in the United States is called "H&H International Investment". According to the latest data, as of Q2, the account has 9 US stocks with a holding value of up to US$16.6 billion. The holding size increased by 17% compared with Q1, mainly from $Apple(AAPL)$ contribution. In addition, the account also has $Berkshire Hathaway(BRK.A)$ $Berkshire Hathaway(BRK.B)$ , $PDD Holdings Inc(PDD)$ ,and $Bank of America(BAC)$ and other stocks. [Onlooker]
Interestingly, Duan Yongping and Buffett both bought $Occidental(OXY)$ in Q2 and sold some $Apple(AAPL)$ . In terms of Hong Kong A-shares, Duan Yongping previously revealed that A-shares are mainly invested in $Kweichow Moutai Co.,Ltd.(600519)$ and Hong Kong stocks are mainly $Tencent Holding Ltd.(TCEHY)$ Holdings.
Duan Yongping previously said that Tencent's PE is actually lower than 20, and good companies will eventually start dividends and repurchases due to cash flow overflow. Sell Put is to bet that the stock price will not fall to that low level, and then be willing to take over even if it falls. [Observation]
How to smart use of Sell Put?
On both Stocks, Duan Yongping used the Sell Put Strategy. Sell put strategy has two possibilities:
The expiration stock price is greater than the exercise price, the buyer gives up the exercise, and the seller earns the premium: if the increase is small, but the increase does not cover the premium, the return on this investment will outperform the purchase of the underlying stock; if it rises sharply, only the premium can be earned;
The expiration stock price is lower than the exercise price, and the buyer needs to buy the stock at the exercise price: if there is a surplus after the premium is deducted from the decline, it is profitable; if the decline is greater than the premium, but the loss is equivalent to a loss at the market price of the stock, in fact, it is the purchase of the underlying stock.
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