Warren Buffett’s Right-Hand Man Gets Greedy On Alibaba – Try These 3 China Games Instead

Warren Buffett’s Right-Hand Man Gets Greedy On Alibaba – Try These 3 China Games Instead

Warren Buffett is known for “getting greedy when others are afraid.”

And his right-hand man Charlie Munger isn’t against going against the herd either.

Munger, best known as the vice chairman of Berkshire Hathaway and longtime business partner of Buffett, is also the chairman of Daily Journal, a newspaper publisher with a sizable equity portfolio of its own.

In a recent filing, it was revealed that Munger’s company had increased its stake in Chinese e-commerce gorilla Alibaba Group by 83% to more than 300,000 shares in the third quarter.

Alibaba is by far the largest player in China’s e-commerce industry, but its shares are down about 46% so far. That’s in stark contrast to the performance of its North American peers: Over the same period, Amazon is up 2%, Shopify is up 21%, and eBay is up a whopping 45%.

Alibaba is not the only player in the growing Chinese e-commerce space.

If you’re looking to invest in the fast-growing market, here are three under-the-radar stocks to help you diversify your bet. One of them may be worth buying with your change.

Pin duo (PDD)

Holding in hands PinDuoDuo company logo on smartphone.

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Pinduoduo is a young Chinese e-commerce company founded in September 2015.

But in just a few years, Pinduoduo has become a major online destination for Chinese shoppers.

In the 12 months ending June 30, 2021, the company had a whopping 849.9 million active buyers. That is 24% more than in the 12-month period ending June 30, 2020.

More importantly, that growth is reflected in the financial numbers. In the second quarter of 2021, revenue was $3.6 billion, an 89% year-over-year increase. It also made a quarterly profit of $638.9 million.

Despite solid numbers, Pinduoduo shares are down more than 40% since the beginning of this year. Given the momentum in his business, this could be an excellent opportunity to buy the dip with your digital nickels and dimes.

VIPshop holding companies (VIPS)

Home page of the Vipshop Holdings website.  Vipshop Holdings logo visible on the phone screen.

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Vipshop is an online discount store for brands in China. The company is known for offering popular branded products to consumers at significant discounts off retail prices.

In the second quarter, the number of active customers reached 51.1 million.

Vipshop is smaller than Pinduoduo – and much smaller than Alibaba – in terms of customer base and market cap. But it is expanding quickly.

Gross trading volume (GMV) — a critical measure of an e-commerce platform’s performance — rose 25% year-over-year to about $7.5 billion in the second quarter.

Of course, with most Chinese e-commerce stocks still burdened by regulatory uncertainty, investing in the space isn’t easy.

The good news? If you’re hesitating to jump in, some investment apps gives you a free portion of Vipshop or Pinduoduo just for signing up.

Baozun (BZUN)

Illustrative editing of the Baozun Inc website homepage.  Baozun Inc logo visible on screen.

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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, retail 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 the second quarter of 2021, GMV grew by 23.3% year-on-year, while net sales increased by 7.1%.

Most recently, Baozun announced that its logistics subsidiary would receive a strategic investment of $218 million from Cainiao Network – the logistics subsidiary of Alibaba.

Since Chinese e-commerce stocks are not market darlings these days, Baozun stocks are currently trading at just 0.9 times sales.

Secret property of the super rich

Not every investor is comfortable buying the dip.

And often, trying to catch a falling knife can be hazardous to your assets.

If you want to invest in something that has little correlation to the ups and downs of the stock market, you may want to consider an overlooked asset – visual arts.

Investing in fine art by the likes of Banksy and Andy Warhol used to be an option only for the ultra-wealthy like Munger.

But with a new investment platform, you can also invest in iconic works of art, like Jeff Bezos and Peggy Guggenheim.

On average, contemporary artworks increase in value at 14% per year, easily surpassing the 9.5% average return you’d see with the S&P 500.

This article provides information only and should not be construed as advice. It comes without any kind of warranty.