John Burbank's Passport Capital Halved Stake in JD.Com Before 27% Price Surge
Xu Wei
DATE:  Feb 26 2018
/ SOURCE:  Yicai
John Burbank's Passport Capital Halved Stake in JD.Com Before 27% Price Surge John Burbank's Passport Capital Halved Stake in JD.Com Before 27% Price Surge

(Yicai Global) Feb. 26 -- United States-based hedge fund Passport Capital LLC has almost halved its stake in Chinese e-commerce giant JD.Com Inc. amid expectations the company made a loss in the fourth quarter of last year.

The hedge fund, run by renowned manager John Burbank, held 146,900 shares in the Beijing-based e-tailer at the end of the third quarter (USD5.6 million at the time), according to a JD.Com regulatory filing for the period. The figure was down from 289,500 at the end of the first half.

JD.Com shares [NASDAQ:JD] were priced at USD38.2 at the end of the third quarter, and have since surged nearly 27 percent to USD48.35. However, market expectations suggest the firm will disclose losses of USD0.03 per share in its fourth quarter earnings report, to be published on March 2.

The online retailer has been spending big as it looks to cut costs through automation and expand overseas to the extent that half of its revenue comes from overseas. It already has a fully-automated logistics center in Shanghai, a fleet of delivery drones, and plans to use self-driving vans in Tianjin in the first half of this year.

However, its negative profit figures have long remained a contentious issue for investors. It ended an 11-year losing streak when it reported a net profit of CNY1.4 billion (USD219 million) in the first quarter of 2017, causing capital markets to pay close attention to its ability to generate sustainable profits.

"Many big companies care nothing but profit," JD.Com Chairman Liu Qiangdong said in an interview on the sidelines of the World Economic Forum in Davos last month.

"All they care is to make more money, and everything they do is to boost financials. They've lost their dreams," he added, while admitting that it was unrealistic to expect any viable business to stay loss-making forever.

Passport Capital announced in December that it would close its flagship fund after returns plummeted, Bloomberg reported on Dec. 12. The firm once handled assets worth around USD5 billion, but the figure dived to USD900 million last year, the report added.

"Returns over the past two years are unacceptable and cause me to rethink how to manage money in this environment," Bloomberg quoted Burbank as saying in a letter to investors on Dec. 11.

Follow Yicai Global on
Keywords:   U.S.,JD.com,John Burbank,Stock,Passport Capital