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In this article, we will examine Chinese billionaire Chen Tianqiao's corporate and investment career. We will also review billionaire Chen Tianqiao's top 10 stock picks for 2021. You can skip ahead to see Billionaire Chen Tianqiao's Top 5 Stock Picks.
Born in the Chinese province Zhejiang in 1973, the billionaire and online gaming pioneer Chen Tianqiao's investment philosophy includes investing primarily in undervalued publicly listed companies with significant turnaround potential. Chen also invests heavily in early developmental stage companies with truly disruptive technologies. Chen Tianqiao, 44, was one of the rising business stars of China in the 90s' and become a billionaire when he was only 30 years old. He was the founder of the online gaming company Shanda Interactive Entertainment Ltd, which was the first Chinese online gaming company listed in the U.S.. Shanda Interactive was the largest Internet company based on market capitalization in 2004.
After taking Shanda Group private in early 2012 and selling the entire stake in 2014, billionaire Chen Tianqiao started focusing on his investing activities. His investment firm Shanda Asset Management’s 13F portfolio market value stood around $1.8 billion at the end of 2020. The firm has been spreading investments across multiple sectors to capitalize on profit-making opportunities and reduce the risk of losses. The firm's most favorite investment areas include consumer discretionary, healthcare, and information technology businesses. Billionaire Chen Tianqiao's investment firm seeks to hold a long-term position in stocks that are involved in disruptive technologies. He is long on several tech stocks including Facebook, Inc. (NASDAQ: FB), Amazon.com, Inc. (NASDAQ: AMZN), Apple Inc. (NASDAQ: AAPL), Shopify Inc. (NYSE: SHOP), and others.
Shanda Asset Management also likes to take advantage of the market volatility, with the strategy of buying on the dip and selling when the stock reaches its fair value. For instance, Chen Tianqiao initiated a position in pandemic darling Zoom Video Communications, Inc. (NASDAQ: ZM) during the December quarter of 2019 and then sold his entire stake in the fourth quarter of 2020 to capitalize on the massive share price gains.
Chinese billionaire Chen was the major shareholder of Legg Mason and Sotheby's, which he sold in 2017. He has also been investing heavily in venture capitals that are working on truly disruptive technologies at their early developmental stage. Some of his venture capital investments include Propel and Ubiquity, 11.2 Capital, and Foundation Ventures. Chen’s personal net worth stands around $1.4 billion, according to Forbes. He received an award for lifetime achievement as tech entrepreneur in 2018.
Chen disappeared from the scene for a short time during the last decade due to mental issues. He, however, again reappeared on global stage in 2016. Along with investing activities, he has been devoting his wealth and time to charitable activities including mental health, education, medical programs, and other disaster relief activities in China. The billionaire and his wife are the founders of Tianqiao and Chrissy Chen Institute and denoted $1 billion to support fundamental brain research. Chen thinks society should now focus on human emotional well-being along with improving their living standards.
While Chen Tianqiao's reputation remains intact, the same can’t be said of the hedge fund industry as a whole, as its reputation has been tarnished in the last decade during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Let’s start reviewing Chinese billionaire Chen Tianqiao's top 10 stock picks:
Chinese billionaire Chen Tianqiao took advantage of the pandemic supported rally in the tech stocks. He bought a stake in an online e-commerce platform early in 2020 and then sold 33% of the stake during the December quarter to realize share price gains. Despite that, Shanda Asset Management held 10000 shares of Shopify valued at around $11.3 million. SHOP’s stock price is up 94% in the twelve months.
RGA Investment Advisors, an investment management firm, mentioned a few stocks including Shopify in the fourth quarter investor letter:
“While we are pleased with the results of these specific purchases, we made a huge mistake of omission at that time. This mistake will likely be one of the biggest we ever make in our careers. Specifically, we did deep work on Shopify and loved everything about the business qualitatively. Unfortunately, we ultimately found ourselves unable to get comfortable with the numbers.
We built our model up from the key performance indicators (KPIs) that drive revenues. Our last save of the model dated 8/3/2016 looked as follows: (Page 2). These numbers seemed right from everything we understood about the company. While we tend not to rely on sell-side consensus estimates before finishing our own workup of the business, we do give them a look once we feel comfortable with how we have approached our analysis as it is often helpful to get a sense of what the average participant in the market expects the business to do. With Shopify, the sell-side consensus was so far from where our numbers were shaking out, it seemed almost impossible that we were basing our analysis on the same underlying information. Our natural next step was thus to take the sell-side consensus data and work backward to figure out the implied expectations on each of the key revenue drivers. Here is what the sell-side consensus looked like as at the time: (Page 2)."
9. PayPal Holdings, Inc. (NYSE: PYPL)
The fintech company PayPal Holdings Inc (NYSE: PYPL) is a member of billionaire Chen Tianqiao's top 10 stock picks for 2021. He initiated a position in PayPal during the fourth quarter by purchasing 50,000 shares. PayPal stock price rallied 14% since the beginning of this year. The company appears in a strong position to capitalize on improving demand for online payments and crypto services.
Polen Capital Management, a value-driven, concentrated, long-term investment management firm, highlighted a few stocks including PayPal in the fourth-quarter investor letter. Here is what Polen Capital Management stated:
“For the full year 2020, one of the top performers was PayPal, which we purchased in 2019, the company continues to take market share in digital payments and has seen an acceleration in user adoption and engagement, especially within their “silver tech” or older user demographic. We expect many more years of ongoing double-digit growth from their various business segments and new initiatives.”
8. Amazon.com, Inc. (NASDAQ: AMZN)
The world’s largest e-commerce platform Amazon.com (NASDAQ: AMZN) represents 8.25% of the Shanda Asset Management’s portfolio at the end of the December quarter. The firm has been holding a stake in Amazon.com since the final quarter of 2018. Shares of Amazon rallied 42% in the past twelve months.
Saturna Capital Corporation, an investment management firm, mentioned a few stocks including Amazon.com in the Q4 investor letter. Here is what Shanda Asset Management stated:
“Technology claimed six of the 10 Largest Contributors for 2020, demonstrating the effect of the pandemic, remote work, and the acceleration of various Technology and Consumer trends. Indeed, a more expansive definition of Technology might include Consumer stock Amazon. Regardless of classification, Amazon was the leading contributor to Fund returns based not only on its dominant e-commerce position but also its leading cloud business, Amazon Web Services.”
7. Wayfair Inc. (NYSE: W)
Shanda Asset Management has been enjoying the strong bull run in the e-commerce platform Wayfair Inc. (NYSE: W) over the last year. Shares of e-commerce platform rallied 250% in the past four quarters, thanks to robust demand for its home sector branded products. Billionaire Chen Tianqiao raised his stake in Wayfair by 50% to 60,000 shares at the end of December. It is ranked at fourth spot in the list of billionaire Chen Tianqiao's top 10 stock picks.
Vulcan Value Partners, an investment management firm, expressed confidence in Wayfair in an investor letter. Here is what Vulcan Value Partners stated:
“Wayfair Inc. is a premier e-commerce retailer for home goods and furnishings. Its platform connects buyers to sellers, offering customers over 18 million SKUs from 12,000 suppliers. The company also provides fast delivery for all items, including large, bulky products. Wayfair’s unique shopping experience, inventory-light model, scale, and excellent customer service platform make it an attractive business. The company has a small market share in this large and growing total addressable market (TAM) across North America and Europe. During 2020, consumer trends that would have normally taken years to accomplish were compressed into months, Wayfair’s free cash flow production and margins improved dramatically. Wayfair’s business hit an inflection point, and we expect the company to continue to grow steadily, gain market share, and generate free cash flow for years to come.”
6. Uber Technologies (NYSE: UBER)
Shanda Asset Management first initiated a position in Uber Technologies (NYSE: UBER) at the end of 2019 and raised its position by 100% in the December quarter of 2020. It is the fifth-largest stock holding of billionaire Chen Tianqiao portfolio, according to the latest 13F filings. Shares of Uber Technology are up 13% so far this year.
In the Q4 investor letter, RiverPark Advisors, LLC highlighted a few stocks including Uber Technologies. Here is what RiverPark Advisors stated:
“UBER was also a strong contributor, as shares rallied following the approval of California’s Proposition 22 by voters, allowing the company’s California-based drivers to remain independent contractors (rather than become more expensive employees). We believe this news is not just about the 10%-15% of Uber’s revenue tied to California, but the influence this will have on other states reassessing driver pay. UBER also reported strong third quarter results with Delivery Gross Bookings growing 135% year-over-year which nearly fully offset a reduction in Mobility Gross Bookings, which were down 50% year over year. Total Gross Bookings for the quarter were down only 10% year over year as compared with down 35% last quarter.
Despite the COVID disruption, UBER remains the undisputed global leader in ride sharing (44% of the Company’s third quarter revenue), with greater than 50% share in every major region in which it operates. The company is also a leader in food delivery (46% of revenue), where it is number one or two in the more than 25 countries in which it operates. We view UBER as more than just ride sharing and food delivery, but also as a global mobility platform with the ability to sell to its more than 100 million users (by comparison, Amazon Prime has 130+ million members) and penetrate new markets of on-demand services, such as grocery delivery, truck brokerage and worker staffing for shift work. At its current $96 billion market capitalization, UBER trades at only 6x next year’s revenue from its two core businesses. Additionally, the company has substantial, seemingly unrecognized, value in its several nascent development businesses and another $12 billion in equity stakes in synergistic businesses around the world.”
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Disclosure: None. Billionaire Chen Tianqiao's Top 10 Stock Picks is originally published on Insider Monkey.