PDD Sees Bulls Pour Millions of Dollars Into Call Options After Tepper Boosts Stake

$Pinduoduo Inc.(PDD)$   saw bulls pour millions of dollars into call options after billionaire David Tepper's Appaloosa Management boosted its stake in the parent company of online retailer Temu. 

Appaloosa added 3.36 million PDD American depositary receipts to its portfolio, taking its stake in the company to 456.7 million ADRs as of Sept. 30, according to Bloomberg data from the investment firm's 13F filing with the Securities and Exchange Commission. That position was valued at $714.5 million. 

On Friday afternoon an active buyer paid a $2.91 million premium for call options that gives the holders the right to buy 909,400 PDD ADRs at $119 each by the end of next week. That's the biggest, unusual options trade posted that day. 

In early May, PDD climbed to the highest since 2021 on optimism that China's stimulus could help accelerate the Asian country's economic recovery. That rally fizzled amid investor worries that the measures won't be enough to bolster growth. 

On Friday, the ADRs rose 1.7% after government data showed China retail sales grew 4.8% in October, fueling optimism that the stimulus are starting to boost consumer confidence. That's the fastest pace of growth in retail sales in eight months, surpassing all the forecasts of economists, according to Bloomberg. 

Another unusual trade posted Friday afternoon was for $2.69 million in premium paid for call options that gives the holders the right to buy 300,000 PDD ADRs at $115 by Jan. 15, 2025.

Even Bloomberg's aggregated data on positions held by hedge funds, pension funds, sovereign wealth funds and other institutional investors showed a net reduction in their combined holdings in PDD by 9.16 million ADRs. 

The total was based on 7,402 13F filings submitted to the Securities and Exchange Commission and tallied by Bloomberg as of 3:46 p.m. Friday. Still, their combined holdings stood at 525 million PDD ADRs, valued as of Sept. 30 at $50.2 billion.

Still, the institutional investors that hold the biggest stake in the company continued to boost their holdings, data showed.

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