Hong Kong — Hedge funds revealed their top investment ideas, ranging from Chinese self-driving taxis, an Indian drug retailer, to a Korean nuclear plant builder, at the annual Sohn investment conference in Hong Kong.
This year’s picks are geographically more diverse compared with last year, suggesting that investors are actively seeking to spread their exposure to counter tariff uncertainties and market volatility.
San Francisco-based Flight Deck Capital sees upside potential in Chinese search engine giant Baidu, betting on its fast-growing auto-driving business.
Similar to Google’s self-driving unit, Waymo, Baidu’s Apollo Go “is the only robo-taxi player in China that is not dependent on the capital markets to scale”, Flight Deck founder and managing partner Jay Kahn said at the conference on Friday.
He expects China’s taxi and ride-share industry to grow to about $237bn by 2034, with Apollo taking a 15% market share. But that segment, with Baidu’s cloud business, is now given zero valuation by the market, he said.
Notably, investor optimism on Chinese firms going overseas has not been derailed by the escalating US-China trade war.
Hong Kong’s Apeiron Capital pitched Chinese ride-hailing company DiDi Global, citing its improving margin at home and its quick market share building in Latin America. Meanwhile Triata Capital is upbeat on Chinese discount e-commerce player PDD, the owner of Temu.
“One statistic that a lot of people don’t know is that their MAU right now is bigger than Amazon,” Triata CIO Sean Ho said, referring to Temu’s monthly active users.
Two investors set their sights on India’s healthcare space.
Singapore’s Arisaig Partners favours MedPlus Health Services, a leading pharmacy chain in India, as its private label products strengthen its low-price proposition, widening the gap with competitors.
“Inflation is lower, government is focusing on the middle class and consumer spending is coming off a low base. I simply believe this is the time when the consumer space in general will do better,” Vatsal Mody, partner and head of India research at Arisaig Partners, said before the conference.
India-based hedge fund start-up Panvira Management is bullish on Piramal Pharma, a contract development and manufacturing organisation (CDMO), expecting its growth to accelerate to high teens and to benefit from tax rate normalisation.
Other emerging hedge funds focused on opportunities in the security sector driven by geopolitical conflicts.
Jon Jhun, who manages MY.Alpha Management’s new Korea-focused fund, chose Hyundai Engineering & Construction, which engages in nuclear plant engineering, procurement and construction (EPC).
“Korea dominates the ex-Russia, ex-China nuclear supply chain,” he said.
Hong Kong’s Frontline Global Management picked Spanish defence company Indra Sistemas, believing it will win more European contracts.
On the activist investor side, UK hedge fund Palliser Capital disclosed a 3% stake in Japan’s Toyo Tire at the event, urging the tyre maker to boost shareholder returns by setting a “best-in-class” performance target and releasing its excess capital of about $900m to shareholders.
Seth Fischer’s Oasis Management is long Japanese entertainment complex chain Round One, betting it will gain a rerating as it ventures into the restaurant industry aiming to bring Michelin-quality Japanese food to the US.
Reuters
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