Greenwoods Asset Management (“Greenwoods”) , a Chinese investment management company, opened a position in Tesla and increased its holdings in XPeng and Li Auto at the end of the fourth quarter of 2021.
According to its 13F filing with the SEC on February 11, Greenwoods held 218,370 shares of XPeng worth about $11 million and held 984,500 shares of Li Auto valued at about $31.6 million at the end of the fourth quarter of 2021, compared to 80370 shares and 70050 shares, respectively, in the third quarter.
Also, Greenwoods made its first buy of 14,285 shares of Tesla during the fourth quarter, valued at about $15 million.
Greenwoods is an investment management company specialising in managing funds primarily investing into Chinese companies, including but not limited to H shares, Red Chips, ADRs, A shares, and B shares. Greenwoods and affiliates manage funds and managed accounts investing in Greater China equities or A-shares for global investors.
Why Greenwoods increased it holdings in Chinese new energy vehicles
Greenwoods’s main investment logic in the US stock market in Q4 2021 is: counter-trend plunge, especially for Chinese Internet companies and new energy auto track.
For new energy vehicles, Greenwood points out that, referring to the smartphone industry, after the penetration rate exceeds 20%, the increase in penetration rate accelerates and enters an explosive period.
It is expected that around 2025, the global penetration rate of new energy vehicles will exceed 20% (China and European markets will be faster). In the next 10 years, the new energy vehicle industry will be an industry with a compound growth rate of more than 30%, with huge industry growth space, according to Greenwood.
The market may usher in a double bottom of economic and corporate fundamentals
Greenwoods latest view: The global market is currently in a phase of fragile confidence, weak economic fundamentals and recurring epidemics leading to a serious weakening of social activities. In the next one or two quarters, it is likely to see a continued deceleration or even decline in economic data, while macro policies to stabilise growth will also be introduced gradually.
Such a macro background to the stock market will bring an increase in valuation levels to hedge the decline in corporate earnings, and the market will most likely find a double bottom in economic and corporate fundamentals in the next turbulent quarter or two.
In the long term, Greenwoods remains optimistic about the future of China’s economy and capital markets. The more complex and shaky the market is, the more it also provides an opportunity for patient long-term investors to buy good companies on the cheap.