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Wen Yanfei

I’ve been a little annoyed lately.

On April 8, Puyuan Jingdian, a manufacturer of electronic measuring instruments, was listed on the science and innovation board, with a sharp drop of 34.66% on the first day, setting a record decline on the first day since the opening of the science and innovation board. At the same time, it is also the largest decline in new shares in Shanghai and Shenzhen this year.

Gaoling is one of the shareholders of Puyuan Jingdian. At the end of 2020, Gaoling Yaoheng, under the authority of the institution, spent 100 million yuan to purchase 2.286 million shares of Puyuan Jingdian, equivalent to 43.74 yuan per share, becoming the tenth largest shareholder. According to the closing price of this Thursday, the book loss of this investment of Hillhouse is nearly 7 million yuan.

Prior to the listing of Puyuan Jingdian, adverse rumors about Hillhouse have emerged one after another.

In mid March, it was rumored that Hillhouse’s investment in U.S. stocks lost more than $30 billion. Hillhouse immediately denied that its total position in U.S. stocks was only $6 billion. Then there was news in China: as of April 13, Gaoling investment Gree had suffered a floating loss of 12 billion yuan.

However, according to the alphabet survey, most of these noises are specious, and there are significant differences between the actual situation of Hillhouse and public cognition.

Compared with these noisy noises, what deserves more attention is the silence of Gaoling’s investment in the Internet industry in recent years.

In 2021, for example, 33 invested enterprises of Hillhouse were successfully listed, far exceeding 23 of Shenzhen Venture Capital and Sequoia China. Among these newly listed companies, 21 are from the biomedical industry, and the rest are from new materials, machinery manufacturing, software services, express logistics, etc. only monster charging, a shared charging treasure enterprise, is slightly connected with the Internet.

Since Zhang Lei founded Hillhouse capital 17 years ago, Hillhouse has created many investment myths, large and small. Among these myths, there are two most famous ones: one is that in 2006, the first investment of Hillhouse was invested in Tencent, whose market value was less than 2 billion US dollars at that time, and now it has already earned hundreds of times of profits; Another myth is more talked about because of its drama: in 2010, Liu qiangdong, trapped by money, found Zhang Lei and hoped to raise $75 million. However, after Zhang Lei’s research, he insisted on giving $300 million. If he didn’t receive the $300 million, he wouldn’t invest.

Lei Zhang

These two investment myths have laid a strategic position in the investment industry. The problem is that there has been no similar “new myth” in Hillhouse for a long time. Although Hillhouse has also won a large number of IPOs in recent years, most of them come from industries outside the Internet, and the volume and influence are difficult to compare with Tencent Jingdong in that year.

At present, it seems that it is not the harvest season for the pharmaceutical track where Hillhouse continues to bet. Baiji Shenzhou is the largest position in US stocks, accounting for 23%, with a market value of US $1.483 billion. Over the past year, Baiji Shenzhou’s share price has been weak. It was reported at $187.66 on Wednesday, down 56% from its 52 week high.

Why is it that the strategic position, which has always been good at advanced insight and layout in advance, has been unable to create a new investment myth for a long time?

In addition to being closely related to the peak dividend of Chinese Internet users, the eager mentality of investors and “melon eating people” is also an important factor. Coupled with the boost of Internet public opinion, Hillhouse naturally appears magical no longer and its aura fades.

But the underlying reason is that the golden age of Internet venture capital has passed. Investment institutions such as Hillhouse have shifted their focus to tracks outside the Internet. The myth of investing in Tencent and jd.com is not only unprecedented, but also likely to be extinct.

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“The recent situation of Hillhouse is poor, stock investment has been frustrated one after another, and floating losses have reached billions or even tens of billions of Yuan” - this is the market information received by the melon eaters; However, in the view of people in the investment circle, there is a significant difference between the actual situation of Hillhouse and public cognition. Especially for the scale of loss, due to information asymmetry, there are great loopholes in the external calculation methods and conclusions.

Taking Hillhouse’s stake in Gree Electric Appliance as an example, an anonymous person who has long been engaged in equity investment told the alphabet (ID: wujicaijing) that Hillhouse spent more than 40 billion yuan to buy 15% shares. Its trading paradigm is very different from the conventional stock trading in the secondary market, and can not apply the stock speculation logic of retail investors to it.

Other people close to Hillhouse believe that tens of billions of stock transactions usually need to set a lock-in period of several years. The rise and fall of stock prices in the medium and short term will not have an impact on the actual income of Hillhouse, and the floating profit and loss is only symbolic.

In addition, Gree Electric has a tradition of high dividends, which largely hedges the loss of stock price fluctuations.

Since 2012, the total annual dividend of Gree Electric appliance is about 30% of the distributable profit. After Hillhouse became a shareholder at the end of 2019, it received a total dividend of 4.69 billion yuan according to the equity distribution plan of Gree Electric in 2020 and 2021.

With the improvement of Gree’s performance and the change of dividend plan, Hillhouse’s investment income is expected to further improve.

In January this year, Gree Electric disclosed the shareholder return plan for the next three years. From 2022 to 24, it will distribute profits twice a year, and the total annual dividend will not be less than 50% of the net profit of that year, which is significantly higher than the previous 30%. Considering that Gaoling is the largest shareholder of Gree Electric Appliance and acts in concert with Dong Mingzhu, its dividend in Gree Electric appliance is very reliable.

For example, in the first half of last year, it was rumored that Hillhouse increased its position in Hengrui medicine in the second quarter and became the top ten shareholders. Subsequently, the share price of Hengrui pharmaceutical fell sharply, and it was calculated that Gaoling lost about 50%.

However, in fact, Hillhouse has completed the warehouse building before the second quarter of 2021, and the cost is much lower than the external speculation; The reason why it entered the list of the top ten shareholders is that a large fund cleared its positions, resulting in Hillhouse being “carried” into the top ten.

People familiar with the matter said that although Hengrui pharmaceutical’s share price fell sharply, Gaoling “certainly did not lose money, but only made more and less”.

Even in the Internet field in the cold winter, with its keen sense of smell accumulated over the years, Hillhouse cashed out before suffering heavy losses. This is particularly evident at the educational track.

Tal is the leading enterprise of online k12 education in China. Hillhouse has established its position since 2014 and once regarded it as the largest position in US stocks. However, from the fourth quarter of 2019, with the increasing wind of off campus training supervision, Hillhouse began to reduce its holdings of Tal until it was fully cleared in the first quarter of 2021.

Similar to tal, Hillhouse once held 27 million shares of New Oriental, but the same