Breakfast | Tencent ADR fell more than 3% after earnings! Hillhouse bought Alibaba heavily in the second quarter, BlackRock increased its holdings in NVIDIA

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Overnight Morning Market

The three major U.S. stock indexes closed slightly higher. The S&P 500 rose 0.38% to 5455.21 points. The Dow rose 0.61% or 242.75 points to 40008.39 points. The Nasdaq rose 0.03% to 17192.60 points.

"Tech Seven Sisters" mostly down. NVIDIA rose 1.67%, Apple rose 0.2%, Microsoft rose 0.69%, while Tesla fell 3.1%, "metaverse" Meta fell 0.34%, Google Class A fell 2.31%, Amazon fell 0.08%.

Most AI concept stocks rose. "AI demon stock" AMD rose 1.7%, Dell Technologies rose 3.01%, Oracle rose 1%, Snowflake rose 0.19%, CrowdStrike rose 3.27%, C3.ai rose 0.48%, Palantir rose 2.01%, while BigBear.ai fell 5.47%, NVIDIA-backed AI voice company SoundHound AI fell 0.2%, NVIDIA-backed AI robot delivery company Serve Robotics rose 9.64%, BullFrog AI rose 2.39%.

Popular Chinese concept stocks generally fell, with the Nasdaq Golden Dragon China Index down 1.63%, Huya Live down 6.48%, Bilibili down 6.29%, Gaotu Group down 5.74%, Century Huateng down 5.46%, Dingdong Maicai down 5.34%, iQIYI down 5.15%, Vipshop down 4.56%, BOSS Zhipin down 4.21%, Legend Biotech down 4.2%. Tencent ADR fell nearly 6% and closed down over 3%.

Chinese new energy vehicle stocks all fell, with Nio down 4.24%, XPeng down 4.09%, Li Auto down 3.04%.

The parent company of the top-ranked canned potato chips, Kellogg's, rose 7.76%. Candy giant Mars and Kellogg's announced that they have reached a final agreement, with Mars agreeing to acquire Kellogg's for $83.50 per share in cash, totaling $35.9 billion.

Popular Financial Reports

Tencent's second-quarter revenue was 161.12 billion yuan, an 8% year-on-year increase; net profit attributable to equity holders of the company was 47.63 billion yuan, an 82% year-on-year increase. Domestic games resumed growth, negotiating with Apple on IOS game revenue. Video account total user time increased significantly year-on-year, mini program total user time increased by over 20% year-on-year.

UBS rose 5.61%. Second-quarter net profit was $1.14 billion, estimated at $520.8 million; total revenue was $11.90 billion, estimated at $11.49 billion; pre-tax profit was $1.47 billion, estimated at $986 million; earnings per share was $0.34, estimated at $0.16; common equity Tier 1 capital adequacy ratio was 14.9%, estimated at 14.8%; still targeting a $1 billion share buyback by 2024 Cisco surged more than 5% after hours. In the fourth quarter of 2024, the adjusted earnings per share were $0.87, exceeding expectations of $0.85; revenue was $13.64 billion, surpassing the expected $13.53 billion; net profit was $2.16 billion, slightly below the expected $2.18 billion. Cisco is planning further layoffs, with an expected provision of up to $1 billion in pre-tax expenses.

Victoria's Secret soared by 16.41%, with the company reporting better-than-expected adjusted earnings per share for the second quarter and appointing a new CEO.

13F Overview

Berkshire Hathaway, under Buffett's leadership, increased its holdings in Occidental Petroleum and Aon in the second quarter. They reduced their Apple holdings by 389 million shares, lowering their stake to 30.52%; they also reduced positions in Chevron and T-Mobile. Berkshire Hathaway completely sold off Snowflake and Paramount Global. They initiated positions in beauty company Ulta Beauty and aerospace company HEICO. By the end of the second quarter, Berkshire Hathaway's total holdings decreased from $332 billion to $280 billion.

In the second quarter, Bridgewater Associates reduced its holdings in NVIDIA by 489,000 shares, Google by 828,000 shares, and Pinduoduo by 289,000 shares; they significantly increased their positions in Amazon by 1.59 million shares and Microsoft by 510,000 shares, representing increases of 152% and 88% respectively. Bridgewater also sold nearly 75% of its Apple holdings, reducing it to 469,000 shares.

HHLR Advisors, a subsidiary of Hillhouse Capital, held a total of 78 stocks in the US stock market in the second quarter, with a total market value of approximately $4.054 billion. Specifically, HHLR increased its holdings in Alibaba by 5.24 million shares in the second quarter, making it the third largest holding, increased positions in Vipshop by 14.61 million shares, as well as other Chinese concept stocks like NetEase and Ctrip. They reduced their Pinduoduo holdings by 2.9 million shares, but it remains their top holding, and reduced their Ke Holdings holdings by over 6 million shares. Among the seven US tech giants, Apple, NVIDIA, Google, and Meta were increased, while Amazon and Microsoft were reduced.

In the second quarter, prominent private equity firm Hillhouse Capital continued to increase its largest holding, Pinduoduo, by 447,200 shares, with a market value of $211 million, accounting for 23.89% of Hillhouse's US stock holdings. By the end of the second quarter, Hillhouse's US stock holdings reached $762 million, a 37.68% increase compared to the previous quarter, with the top ten holdings concentrated at 88.62%.

BlackRock, a major asset manager, increased its holdings in the seven US tech giants in the second quarter, with significant increases in NVIDIA by 16.88 million shares, Apple by 9.69 million shares, and Microsoft by nearly 9 million shares; they reduced positions in Broadcom and Berkshire Hathaway. Additionally, BlackRock increased its holdings in Exxon Mobil by 30 million shares. By the end of the second quarter, BlackRock reported holdings valued at $4.42 trillion, up from $4.3 trillion in the previous quarter.

Michael Burry, the inspiration behind the movie "The Big Short," through Scion Asset Management, increased its holdings in Alibaba by 30,000 shares and Baidu by 35,000 shares in the second quarter, while reducing its JD.com holdings by 30% to 250,000 shares. Alibaba remains its largest holding, accounting for 21%. By the end of the second quarter, Scion Asset Management's holdings were valued at $52.5 million, a significant decrease from the previous quarter Deutsche Bank initiated long positions in GE Vernova and Palantir in the second quarter. They cleared out positions in SPFR Bloomberg Emerging Markets Local Currency Bond ETF, among others. They increased holdings in Apple, Google Class C, Bank of America, Deutsche Bank, and AMD. They reduced holdings in Home Depot, Meta, Disney, Visa, among others. Top holdings include Microsoft, NVIDIA, Apple, Google Class A, and Amazon.

The Gates Foundation cleared out Carvana in the second quarter. They increased holdings in Berkshire Hathaway Class B shares. They reduced holdings in Microsoft. Top holdings include Microsoft, Berkshire Hathaway Class B shares, WM, Canadian National, and Caterpillar.

Norway's Sovereign Wealth Fund disclosed that in the first half of the year, they reduced holdings in Meta, Novo Nordisk, and Assa Abloy shares. Their stake in Meta decreased from 1.22% at the end of 2023 to 1.18%; their holdings in Novo Nordisk dropped to 1.75%, lower than the 1.87% at the end of December last year; during the same period, their holdings in Assa Abloy decreased from 2.61% to 2.54%.

Macro: Taking You Around the World

In the U.S., July CPI rose by 2.9% year-on-year, marking the fourth consecutive month of decline and returning to the "2% range" for the first time since March 2021, which is in line with expectations. Core CPI growth hit a new low in over three years, but rental inflation stopped its downward trend. The data reinforced the market's expectation of the Fed starting rate cuts in September.

Japanese Prime Minister Fumio Kishida has decided not to participate in the Liberal Democratic Party's leadership election in September. This means that after the new LDP leader is elected, Fumio Kishida will resign as prime minister