Charlie Munger just doubled his bet on tech giant Alibaba to $71.5 million — try these 3 China plays instead to diversify your exposure
Warren Buffett is famous for getting "greedy when others are fearful."
And his right-hand man Charlie Munger isn't opposed to going against the herd, either.
Best known as Berkshire Hathaway’s vice chairman and Buffett’s long-time business partner, Munger also serves as the chairman of Daily Journal, a newspaper publisher with a sizable stock portfolio of its own.
In a Tuesday filing with the Securities and Exchange Commission, it was revealed that Munger’s firm nearly doubled its stake in Chinese ecommerce gorilla Alibaba Group to 602,060 shares — an investment worth roughly $71.5 million.
Alibaba is by far the biggest player in China’s e-commerce industry, but its shares are down almost 50% over the past year. That’s in sharp contrast with the performance of its North American peers: over the same period, Amazon is up 5%, Shopify has risen 12%, and eBay has gained an impressive 28%.
Alibaba isn’t the only player in the growing Chinese e-commerce space.
If you'd like to invest in the booming market, here are three under-the-radar stocks to help diversify your bet. One of them could be worth buying with your extra cash.
Pinduoduo (PDD)
Pinduoduo is a young Chinese e-commerce company founded in September 2015.
Yet in just a few short years, Pinduoduo has grown to become a major online destination for Chinese shoppers.
In Q3, average monthly active users clocked in at 741.5 million. That’s up 15% over the year-ago period.
More importantly, that growth is being reflected in the financials. During the quarter, revenue totaled $3.3 billion, up 51% year over year. It also turned a quarterly profit of $254.5 million.
Despite posting solid numbers, Pinduoduo shares have tumbled more than 55% over the past six months. Given the momentum in its business, this could be a prime opportunity to buy the dip with your digital nickels and dimes.
Vipshop Holdings (VIPS)
Vipshop is an online discount retailer for brands in China. The company is known for offering popular branded products to consumers at significant discounts from retail prices.
In Q3, the number of its active customers increased to 43.9 million from 43.4 million in the prior year period.
Vipshop is smaller than Pinduoduo — and much smaller than Alibaba — in terms of customer base and market cap. But it is expanding.
Gross merchandise volume (GMV) — a critical measure of an e-commerce platform’s performance — rose 5% year over year to roughly $6.3 billion in Q3..
Of course, with most Chinese e-commerce stocks continuing to be weighed down by regulatory uncertainty, investing in the space isn’t easy.
If you don’t want to gamble on individual winners and losers, you can always build a diversified portfolio just by using your spare change.
Baozun (BZUN)
Baozun is one of the pioneers in the brand e-commerce service industry in China.
It offers a wide range of services covering all aspects of the e-commerce value chain, including IT solutions, store operations, digital marketing, customer service, warehousing and fulfillment.
From 2016 to 2020, Baozun’s GMV increased at a compound annual growth rate of 49%.
In Q3 of 2021, GMV rose 48% year over year while net revenue improved 3.8%.
And recently, Baozun announced that its logistics subsidiary would be getting a $218 million strategic investment from Cainiao Network — Alibaba’s logistics affiliate.
Because Chinese e-commerce stocks aren’t market darlings these days, Baozun trades at price-to-sales of just 0.8.
Secret asset of the super-rich
Not every investor is comfortable with buying the dip.
And even Munger admits the overall market is 'even crazier' than the dot-com bust.
If you want to invest in something that has little correlation with the ups and downs of the stock market, you might want to consider an overlooked asset — fine art.
Investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-rich like Munger.
But with a new investing platform, you can invest in iconic artworks too, just like Jeff Bezos and Bill Gates.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
