Tiger Global Management, the hedge fund headed by Chase Coleman III disclosed a significant stage in Vipshop Holdings Ltd, an operator of an online discount retailer in China.
Based on its 13G filing with the Securities and Exchange Commission (SEC), Tiger Global beneficially owns 9,900,000 shares or 9.96% of the outstanding shares of Vipshop Holdings.
The shares of Vipshop Holdings are trading $15.72 per share, up by nearly 10% at the time of this writing around 12:12 in the afternoon in New York on Friday, November 20.
Historically, the Chinese market has been relatively isolated from international investors, but much is changing there now, making China virtually impossible for the diversified investor to ignore. Earlier this year, CNBC pointed to signs that Chinese regulators may start easing up on their scrutiny of companies after months of clamping down on tech firms. That Read More
Tiger Global disclosed its stake one week after the company’s stock suffered a huge decline when it released its preliminary results for the third quarter that disappointed investors. In September, the company’s stock was also negatively impacted by investors’ concern regarding the potential further decline of the Chinese markets.
Vipshop Holdings recovered some of its losses on Wednesday when the company reported its third-quarter financial results and provided better-than-expected guidance for the fourth quarter.
The Chinese discount online retailer reported that its non-GAAP net income increased 62% to $71 million or $0.12 per diluted American Depositary Share (ADS). Its total revenue of $1.36 billion, up by 63%.Vipshop Holdings also reported that its operating expenses declined from 23.3% to 20.7% of revenue. For the fourth quarter, the company expected to deliver total revenue in the range of RMB12.0 billion and RMB12.5 billion.
TheStreet Quant Ratings recently rated the shares of Vipshop Holdings as a “Buy” due to the company’s strengths in multiple areas including a robust revenue growth, notable return on equity, impressive record of EPS growth, and compelling growth in net income.
In May, several short-sellers accused Vipshop Holdings of accounting fraud by massively overstating its assets, revenue, and profits in its regulatory filing with the SEC. J Capital Research even issued a $0 price target on the stock. The company refuted the allegations as “unfounded, contain numerous errors, unsupported speculation, and a general misunderstanding of its business model.”
Tiger Global investments in India
Meanwhile, a report from Economic Times indicated that Tiger Global decided to limit its aggressive style of investing in India.
Lee Fixel, the co-head of Tiger Global’s private equity and venture capital investing is developing a two-track approach when it comes to providing funding to companies in its portfolio. Fixel is willing to support those with leadership positions in the market.
“I will be leading very few investments in the next six to eight months, but if you use your cash and survive this cycle, then the pressure will ease out,” said Fixel during his conversation with one of the founders of a company in the country.
A venture capital investor with several co-investments with Tiger Global said, “He is going to go slow in India going forward. He has basically told all portfolio companies that if you cannot raise funding externally then I will not invest.”
Tiger Global owns significant stakes in Flipkart, an online retailer and Ola, a cab aggregator in India. The hedge fund invested around $2 billion in more than 35 Indian companies.