8/23/24 - $pdd - small dip buy @ $139 into next week print
Updated
8/23/24 :: VROCKSTAR :: 
PDD
small dip buy @ $139 into next week print
- earnings cagr'ing at 25-30% over the next 3 yrs (24-27) in theory
- results last q basically not rewarded
- ex cash (bc that's 1/4 of the cap stack) trades at 9x this year and 7 and change times next year EPS (rounding error with where these chinese stocks change... broad strokes fam)
- so unless someone at the department of chinese stonks has been leaking a bad figure for mon's print (i'd doubt it, but who the f knows these days), this is an interesting dip buy into print
- i've kept my size small so i can eval if i'd like to dip buy a miss (probably yes is my sense - again i like owning stuff w good valuations, good setups and where i'd dip buy a miss) but also enough where i can let it run if works so for me that's about 75 bps as of the writing.
- for my friends who are keeping tabs on chinese stonks (and not knowing the pdd print) i'd say my pecking order is as follows
PDD > 
BABA > 
VIPS > 
JD > 
BIDU and a stinky linky that i keep my eyes on but haven't owned is remx... a bag of rare earth mineral companies with super low floats. but let's not touch that one for now, just yet, superman.
V
PDDsmall dip buy @ $139 into next week print
- earnings cagr'ing at 25-30% over the next 3 yrs (24-27) in theory
- results last q basically not rewarded
- ex cash (bc that's 1/4 of the cap stack) trades at 9x this year and 7 and change times next year EPS (rounding error with where these chinese stocks change... broad strokes fam)
- so unless someone at the department of chinese stonks has been leaking a bad figure for mon's print (i'd doubt it, but who the f knows these days), this is an interesting dip buy into print
- i've kept my size small so i can eval if i'd like to dip buy a miss (probably yes is my sense - again i like owning stuff w good valuations, good setups and where i'd dip buy a miss) but also enough where i can let it run if works so for me that's about 75 bps as of the writing.
- for my friends who are keeping tabs on chinese stonks (and not knowing the pdd print) i'd say my pecking order is as follows
PDD > BABA > VIPS > JD > BIDU and a stinky linky that i keep my eyes on but haven't owned is remx... a bag of rare earth mineral companies with super low floats. but let's not touch that one for now, just yet, superman.V
Note
given the big info + oddity of US mkts today. salad stonks ripping. other memes dipping. you have a situation where US funds are degrossing china to regross US. esp given y day's cool off move on a risk on mkt (still) and in the context of 
NVDA next week. i don't think that the market is wrong or acting irrationally here (actually it often doesn't! it's us that acts irrationally!) but my point here is the risk off on PDD might simply be a function of these flows, not stock specific info or leaks. web traffic seems to remain strong/ high. it's the best chinese beta (look at "PDD/KWEB" - kweb being the "ETF" for CN tech-stonk).
After gaming it out, i used a bit of today's gain to buy myself a 10/18 130C on PDD. Just two, for meme sake only. not my typical play. but i like this cash gen, valuation, nothing seems broken. you know, what i wrote in the main comment. good beta without further necking on my notional exposure.
V
Note
damn... conflicted. genuine L here...
"In the past quarter, our revenue growth rate slowed quarter-on-quarter. Looking ahead, revenue growth will inevitably face pressure due to intensified competition and external challenges," said Ms. Jun Liu, VP of Finance of PDD Holdings. "Profitability will also likely to be impacted as we continue to invest resolutely."
Trade closed manually
it's really really hard to keep this even though chinese stonks do weird things at the open. i shed my shares b/c i think they're no only dead $ but will probably draw out some emotion - so i'm just taking an L there. will see what to do with the C's, but they're also probably going to be -80% or s/t. broke my rules here.
lessons learned
- chinese stocks pre-earnings move might be more instructive of other EM's (leaks - as this clearly seemed to be the case)
- stick with shares in this environment esp for co's at near-ish highs even tho valuations attractive
- size manage could have been better.
chalk this up to the "lose some and then some" category. frustrating. part of the game. need to make sure this is well-spent tuition money going fwd.
realistically still would like to own, but my target is considerably more greedy. probably closer to $100. if we get there, great. otherwise, i'll just let it go. idk how you can read that speech about investment cycles (and given the non openness of these co's to do a true investor relations effort) and say "i'll wait it out". apparently
BABA is the only chinese stock now you can buy b/c AI... but even still... it's really hard to own given this backdrop (PDD is the largest component of 
KWEB).
anyone have anything to offer? i'm going to close it out and move on. rough start to the week but can't let it affect me. will be lots more to do.
V
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