Baillie Gifford Sells Tesla, Buys More NIO, SPOT,TCEHY,MANA
$Tesla Motors(TSLA)$early investor, Scotland-based investment management firm Baillie Gifford, founded in 1908, sold almost its entire holdings in Chinese e-commerce companies and trimmed positions in other Chinese stocks.
The firm sold off about 40% of its $Tesla Motors(TSLA)$ stake in the quarter
Baillie Gifford reshuffled its portfolio in the second quarter, with the noteworthy change being a drastic cut in its holding of Chinesed stocks, a 13F filing by the firm on Monday showed.
The investment strategy of Baillie Gifford is a long-term global growth strategy, which is to explore and invest in the most competitive, innovative and high-quality companies with growth efficiency on a global scale. The holding period is more than five years; the average holding period of its investment is close to 10 Years, and regards price fluctuations, news and even quarterly reports as noise during the period.
In the second quarter, Baillie Gifford held 493 stocks with a total market value of US$97.508 billion, a decrease of 31.6% from US$142.654 billion in the previous quarter. The company newly opened 28 stocks and cleared 33 stocks.
Baillie Gifford's 13F Portfolio - Q2 2022， source: seakingalpha
1. China Stocks Fall Out Of Favor: $Alibaba Group Holding Limited(BABAF)$,$JD.com(JD)$,$Baidu(BIDU)$,$NetEase(NTES)$
The 13F shows, Baillie Gifford once again significantly reduced its holdings of $Alibaba(BABA)$ and $JD.com(JD)$'s US stock ADRs, and both stocks are almost liquidated. The remaining Chinese concept stocks were all reduced, and $Yatsen Holding Limited(YSG)$, $OneConnect Financial Technology Co., Ltd.(OCFT)$, $Uxin(UXIN)$ and $Sohu.com(SOHU)$ were liquidated.
- $Alibaba Group Holding Limited(BABAF)$ Holding Limited holding reduced from 1.75 million to 13 shares.
- $JD.com(JD)$ , Inc. stake drastically cut from 68,377 shares to one share.
- $Baidu(BIDU)$ , Inc. stake taken down from 3.75 million ADRs to 3.08 million ADRs.
- $Tencent Holding Ltd.(TCEHY)$ Music Entertainment Group shares reduced from 50.09 million to 31.09 million.
- $NetEase(NTES)$ , Inc. stake cut in half from 263,352 shares to 103,340 shares.
There are some rumors and speculations that Baillie Gifford may exchange Alibaba ADRs for Hong Kong stocks. Because the 13F position report does not need to disclose securities holdings outside the United States, it is displayed as a sell, but as of press time, Baillie Gifford has not officially responded to this.
2. Holding position of $Moderna, Inc.(MRNA)$ , $Tencent Holding Ltd.(TCEHY)$,$NIO Inc.(NIO)$ , $EHang Holdings Ltd(EH)$, $Shopify(SHOP)$
Among the Chinese concept stocks held by the company, the company slightly opened positions in $Tencent Holding Ltd.(TCEHY)$, and increased positions in $NIO Inc.(NIO)$ , $EHang Holdings Ltd(EH)$ .
The worsening Sino-U.S. ties, potential U.S. delisting risk, and the domestic regulatory backlash all have led to a massive sell-off in the shares. This has rendered both institutional and retail investors cautious toward these stocks.
Most of the heavily held stocks of Baillie Gifford have had poor returns since the beginning of the year, but benefiting from the recent rebound in U.S. stocks, the company’s holdings have outperformed the S&P 500 since June 30.
As an early investor in$Tesla Motors(TSLA)$ , Baillie Gifford has been out of pocket since 2020 as the company's stock price has risen. The current cumulative return of Berkey Capital on Tesla has exceeded 1,100%. This quarter's $Moderna, Inc.(MRNA)$ overtake $Tesla Motors(TSLA)$ as the No. 1 holding in Baillie Gifford's 13F report.
In addition to $NIO Inc.(NIO)$ , the fund also increased its positions in MercadoLivre , the "South American Taobao", and $Spotify Technology S.A.(SPOT)$ , one of the world's largest music streaming service providers.
On July 27, Spotify’s Q2 report for 2022 showed that Spotify’s total revenue in the second quarter was $2.906 billion, a year-on-year increase of 23%. Net loss was $127 million, widening significantly year over year. The company's MAU was 433 million, an increase of 19% year-over-year and 5 million higher than the guidance estimate.
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Thanks @Capital_Insights on Baillie Gifford's 13F report which shows that the well known fund house has almost divested its shareholding in Chinese ADRs. This shows a heightened response to the recent talks of potential delisting concerns by Chinese ADRs in the US. Let's hope both countries will continue their talks to reach mutual understanding and cooperation to resolve this issue.