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Lookback: Tao Value’s 2019 Pinduoduo (PDD) Thesis

Alex Smith
·4 min read

If you are looking for the best ideas for your portfolio you may want to consider some of Tao Value’s top stock picks. Tao Value, an investment management firm, is bullish on Pinduoduo Inc. (NASDAQ:PDD) stock. In its Q3 2019 investor letter – you can download a copy here – the firm discussed its investment thesis on Pinduoduo Inc. (NASDAQ:PDD) stock. Pinduoduo Inc. (NASDAQ:PDD) is the largest interactive e-commerce platform in China and in the world.

On October 30, 2019, Tao Value had released its Q3 2019 investor letter. The investment firm said that Pinduoduo Inc. (NASDAQ:PDD) was one of the biggest contributors to its performance in Q3 2019. The stock has posted a return of 289.2% in the trailing one year period, outperforming the S&P 500 Index which returned 15.8% in the same period. This suggests that the investment firm was right in its decision.

Tao Value fund posted a return of 1.26% in the third quarter of 2019, underperforming the S&P 500 Index which returned 1.87% in the same quarter. Let’s take a look at comments made by Tao Value about Pinduoduo Inc. (NASDAQ:PDD) in the Q3 2019 investor letter.

"PDD was a relatively new position since last year (refer to our 2018 Q3 letter for detailed thesis: [Link] 1 ). PDD returned +56% over this past quarter, helped by the very positive earnings surprise. In its announced Q2 18 results, PDD booked +169% YoY revenue growth, +171% YoY GMV growth, 41% YoY active buyer growth & a +98% annual spending by active buyer, all beating street’s estimate by big margin. However, it was no surprise to us as our evaluation has concluded that PDD highly possibly stood a chance to compete with the incumbents. Now that the question changes from “whether” PDD can compete to “how” it competes, it may become a fiercer battle. But given its superior mission & vision, we can be patient with its exploration in other adjacent playfields. I am particularly intrigued to seeing the development in their brand cultivating (C2M) & logistics initiatives."

Biggest eCommerce Websites in the World
Biggest eCommerce Websites in the World

Last month, we published an article revealing Tao Value's bullish investment thesis on Pinduoduo Inc. (NASDAQ:PDD) stock in its Q3 2020 investor letter. This suggests that the investment firm has been bullish for a long time on Pinduoduo Inc. (NASDAQ:PDD).

In Q2 2020, the number of bullish hedge fund positions on Pinduoduo Inc. (NASDAQ:PDD) stock increased by about 7% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in Pinduoduo's growth potential. Our calculations showed that Pinduoduo Inc. (NASDAQ:PDD) isn't ranked among the 30 most popular stocks among hedge funds.

The top 10 stocks among hedge funds returned 216% since the end of 2014 and outperformed the S&P 500 Index ETFs by more than 121 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds' poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Below you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

Video: Top 5 Stocks Among Hedge Funds

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla's stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

Disclosure: None. This article is originally published at Insider Monkey.