JD - JD.COM

[Broeb22]

Tencent was also a big buyer during the quarter, and Hillhouse (which is no longer a big holder in JD anyways) invested in JD Logisitics' financing round earlier this year, so I'm not sure you can take a lot of information out of that statement in isolation.

 

 

 

[lucasnascimento]

no position

 

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

 

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

 

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

 

Very strange. But after all, investing is an act of arrogance. Hope to be right.

 

 

 

 

 

 

[BG2008]

When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind.  Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment? 

[lucasnascimento]

When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind. Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment?

 

Got your point, but in this case Liu didn't commit any crime. However, any sanction by the Chinese government would be a killer to the stock.

 

[mwtorock]

no position

 

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

 

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

 

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

 

Very strange. But after all, investing is an act of arrogance. Hope to be right.

 

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?

 

[Liberty]

no position

 

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

 

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

 

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

 

Very strange. But after all, investing is an act of arrogance. Hope to be right.

 

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?

 

I saw some speculation that BABA might have forced them to sell JD if they wanted to have a chance to invest in Ant Financial. No idea if there's any truth to it, but that seems to be a fairly common practice in China (ie. as a third party, you can be part of team Tencent or Team Alibaba, but it's hard to do business with both).

[mwtorock]

no position

 

For every buyer, there is a seller. In the case of JD, the sellers are tiger and hillhouse. Rumor has it that they both are out of JD position in Q3, but hillhouse really started dumping in Q2. So anyone buying now is confident that he or she knows better about JD than hillhouse?

 

This is a very compelling point. I indeed feel that some people are selling because they (Hill & Tiger) are selling. Don't know if I should sell just because they are selling, given what I wrote about valuation. I see everybody commenting that they are selling but nobody talks about WHY they are selling. I mean, what is the argument?

 

And why have Hillhouse invested ~1B in JD Logistics in the beginning of the year? What happened since then that made they sell JD if that is the case? They are still growing, users are growing, cash generation is on track. Hillhouse knew that margins would come lower bc of logistics because well they had access to the JDL financials, and even so they decided to invest.

 

Very strange. But after all, investing is an act of arrogance. Hope to be right.

 

In the same Q2 13f of hillhouse, one can see that they increased BABA holdings 300%+ (1b usd investment). maybe they just think BABA is a better platform business for eCom, and they got JD's best part/future in JDL?

 

I saw some speculation that BABA might have forced them to sell JD if they wanted to have a chance to invest in Ant Financial. No idea if there's any truth to it, but that seems to be a fairly common practice in China (ie. as a third party, you can be part of team Tencent or Team Alibaba, but it's hard to do business with both).

 

i actually heard about the same thing :). the fact that hillhouse chose team baba though in this case does sound like picking a winning platform in China eCommence.

[lucasnascimento]

Do you guys remember some cases in which big investors dumped positions but stock trended higher monhts/years later? Peter Thiel on Facebook is the only that came in my mind.

[Liberty]

https://www.bloomberg.com/news/articles/2018-09-04/arrest-of-jd-s-billionaire-ceo-connected-to-suspected-rape

[sleepydragon]

what a shame!

[Happy]

Tiger Global didn't sell in Q2. Is there any real evidence that they actually sold out in Q3?

 

It seems much more likely to me that the rape allegations are a false accusation. He always seemed like a man of high integrity to me. But if it turns out to be true, I would sell my stock even at a lower price.

[kab60]

No horse in this race, and all is speculation at this point, but this part would make me a bit uneasy as an investor (if one prefers a CEO that doesn't fuck around):

 

The arrest comes shortly after Mr. Liu was in the spotlight for another incident involving sexual misconduct. He tried to distance himself from a sexual assault that was said to have taken place after a 2015 party at his penthouse in Australia. A guest at the party, Longwei Xu, was found guilty this July of seven charges, including having sex with his accuser without her consent. (https://www.nytimes.com/2018/09/02/business/richard-liu-arrest-minnesota-china.html)

 

I mean, what kind of party was that? (this gives one an idea: https://www.smh.com.au/national/nsw/longwei-xu-found-guilty-of-sexually-assaulting-model-after-exclusive-dinner-party-20180723-p4zt4h.html)

[Spekulatius]

When you invest in China, you have to keep an eye on how the Chinese government will react to the recent news.  There were a few high flyers like Anbang and HNA that were forced to unwind.  Granted they tend to be de-leveraging actions.  From my experience, the Chinese government does not view headlines like arrested for sexual misconduct favorably.  If the CEO is the quasi Jeff Bezos of China and he is forced out, then what do you have as your investment?

 

In addition, since R Lui holds 80% of the vot8ng rights and seems firmly in control, you own an IOU on an ownership stake in a leaderless company.

[Foreign Tuffett]

News services are reporting that the victim/accuser here is a Chinese national. I bet there's been a frenzy of activity in China over the last few days as various parties attempt to contact her family and influence them.

 

Rape is a criminal charge, so ultimately it's the prosecutor's office that will decide to proceed with the case. I linked below to a case where a foreign national was raped by a US citizen on US soil. A jury convicted him even though the foreign national did not return to the US to testify at the trial. While this is unusual, it can happen.

 

http://www.sandiegouniontribune.com/news/courts/sd-me-skorniak-notebook-20170623-story.html

 

 

 

 

[Broeb22]

Regardless of whether the allegations are true, it is hard to avoid that he was most likely cheating on his wife with a college student, which is damaging on its own.

 

As a shareholder, I am extremely disappointed.

 

The primary reason I have not sold yet is that any large business is more than one person, although it becomes more difficult to make that argument when that one person holds 80% of votes.

 

I am trying to assess what JD would be without Richard Liu, which I still believe would be a formidable company.

[Foreign Tuffett]

Regardless of whether the allegations are true, it is hard to avoid that he was most likely cheating on his wife with a college student, which is damaging on its own.

 

As a shareholder, I am extremely disappointed.

 

The primary reason I have not sold yet is that any large business is more than one person, although it becomes more difficult to make that argument when that one person holds 80% of votes.

 

I am trying to assess what JD would be without Richard Liu, which I still believe would be a formidable company.

 

Could have said the same thing about the Warren Buffett-Kathleen Graham situation back in the day.

 

http://www.nydailynews.com/entertainment/gossip/warren-buffett-opens-love-life-snowball-article-1.326077

[wachtwoord]

I started a position today.

 

I don't like the dual class stock structure but decided the risk this causes to minority shareholders is sufficiently compensated by today's price.

[KCLarkin]

Do you guys remember some cases in which big investors dumped positions but stock trended higher monhts/years later? Peter Thiel on Facebook is the only that came in my mind.

 

Not sure exactly what you are asking but this happens every day. A few prominent recent examples off the top of my head: Icahn selling Netflix and Apple; Ubben selling Adobe.

 

Knowledge that a big investor is selling has no actionable value. Once they have sold, that information is already in the price of the stock. By the time you've found out about the sale, the market impact will change the investment thesis.

 

There are very, very few cases where a big investor selling is meaningful information. Buffett selling FNMA might be one example, but is that just hindsight bias? And there are countless examples when Buffett sold and the stock still did great (Disney is a famous example).

 

--

Tiger selling would have zero impact on my approach to any investment. In this specific case, Hillhouse selling might have some impact since they are unquestionably more knowledgeable about Chinese internet than I am.

[Liberty]

https://www.wsj.com/articles/arrest-of-chinese-billionaire-came-after-night-of-wine-and-japanese-food-in-minneapolis-1536143960

[Foreign Tuffett]

Here's a timeline based on the reporting by various American news outlets:

 

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

 

~1:00AM Friday morning - rape allegedly occurrs

 

Unclear - rape reported to authorities

 

Friday night - Liu arrested on business school campus

 

~11:30PM Friday night - Liu booked at jail

 

~4:00PM Saturday - Liu released from detention

 

 

Two questions for anyone familiar with these types of situations:

 

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

 

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.

 

 

 

 

[hillfronter83]

Here's a timeline based on the reporting by various American news outlets:

 

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

 

~1:00AM Friday morning - rape allegedly occurrs

 

Unclear - rape reported to authorities

 

Friday night - Liu arrested on business school campus

 

~11:30PM Friday night - Liu booked at jail

 

~4:00PM Saturday - Liu released from detention

 

 

Two questions for anyone familiar with these types of situations:

 

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

 

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.

 

From the WSJ article, it seems the alleged rape happened around 1am on Friday but the party at Japanese restaurant ended around 9pm. This is the detail I didn't read any where before. So they probably left the restaurant and went some where else, which the alleged rape occurred. It couldn't happen at the restaurant which closes at 10:30pm.

 

An early report read "a girl left restaurant crying", which is probably not true anymore. Certainly a lot of detail waiting to be discovered.

[Foreign Tuffett]

Here's a timeline based on the reporting by various American news outlets:

 

Thursday night until ~9:00PM - Liu and large entourage ate dinner and drank heavily at Minneapolis restaurant

 

~1:00AM Friday morning - rape allegedly occurrs

 

Unclear - rape reported to authorities

 

Friday night - Liu arrested on business school campus

 

~11:30PM Friday night - Liu booked at jail

 

~4:00PM Saturday - Liu released from detention

 

 

Two questions for anyone familiar with these types of situations:

 

1) Why the time lag between the alleged crime and Liu's arrest? Were the police slow to move, or was there a delay before the alleged crime was reported?

 

2) Why no bail or travel restrictions? Presumably everyone involved in the situation was aware that Liu would be returning to China imminently. Also, China doesn't have an extradition treaty with the US.

 

From the WSJ article, it seems the alleged rape happened around 1am on Friday but the party at Japanese restaurant ended around 9pm. This is the detail I didn't read any where before. So they probably left the restaurant and went some where else, which the alleged rape occurred. It couldn't happen at the restaurant which closes at 10:30pm.

 

An early report read "a girl left restaurant crying", which is probably not true anymore. Certainly a lot of detail waiting to be discovered.

 

Yeah, I saw that too. The same article also misreported the type of restaurant. Clearly not a credible source.

[Spekulatius]

In my opinion, it’s better to buy the “collateral damage“ in stocks like BABA or Tencent etc rather than JD, if interested in a trade. Much less risk and they probably will recover faster.

[Jurgis]

In my opinion, it’s better to buy the “collateral damage“ in stocks like BABA or Tencent etc rather than JD, if interested in a trade. Much less risk and they probably will recover faster.

 

I'm not sure BABA/Tencent are dropping because JD is dropping. I am not even sure JD is dropping because of the CEO/rape (although it could be part of the reason). A lot of US tech stocks are dropping for whatever reasons. And a lot (?) of China shares are dropping because of tariffs (?), EM crisis (?), game approval stoppage, etc.

 

You do your DD and you make your choices.

 

Did you sell your JD position or still holding?

[Foreign Tuffett]

New article from Bloomberg that (somewhat) echoes one of the questions I posed earlier today:

 

https://www.bloomberg.com/news/articles/2018-09-05/jd-com-ceo-s-release-from-u-s-jail-suggests-police-lacked-proof

 

Obviously tremendous uncertainty surrounds the entire situation at this point.