Hedge funds may be facing losses totalling billions of dollars due to a steep decline in the shares of Chinese e-commerce giant PDD Holdings, the parent company of budget retailer Temu, according to a report by Reuters.
The US-listed shares of PDD plunged by 33% this week and have fallen 30% during the third quarter, following disappointing comments from the company’s executives.
According to WhaleWisdom, a platform that tracks US 13F filings, as of the end of June, global hedge funds collectively held 102.8 million shares of PDD, an increase from 91.7 million shares in the previous quarter. While it remains unclear whether these funds have adjusted their positions since then, a 30% drop in PDD’s share price from 30 June to 29 August would have wiped out approximately $4 billion in value from these holdings, according to Reuters’ calculations.
Some of Asia’s largest hedge funds, including HHLR Advisors, Tairen Capital, and Greenwoods Asset Management, were among the significant investors in PDD as of 30 June, according to WhaleWisdom. In addition, global hedge fund giant Appaloosa Management, led by David Tepper, owned 1.94 million shares of PDD at the end of the second quarter, valued at over $250m.
The stock’s sharp decline followed PDD’s failure to meet market expectations for quarterly revenue. During an earnings call, the company warned that revenue growth would be under pressure due to increased competition and external challenges. Additionally, PDD announced that it had no plans for dividends or share buybacks, further disappointing investors.
PDD has been a favoured investment among funds focusing on China, as it has continued to deliver growth and expand globally despite the broader economic downturn in the country. However, the unexpectedly negative outlook, combined with the stock’s slump, has deepened pessimism toward Chinese equities, particularly in the tech and consumer sectors.
