Hedge Fund Calls Out JD for `Silly' Deals, Over-Hyped Stock

(Bloomberg) -- A prominent hedge-fund manager has publicly attacked JD.com Inc. and its billionaire founder Richard Liu, calling China’s No. 2 e-commerce operator over-valued and upbraiding its top executive for persistent losses.

Kok Hoi Wong, chief investment officer for APS Asset Management Pte, pulled no punches in criticizing JD at the Sohn conference Wednesday. He accused the company of making “regrettable and silly investments” -- in Bitauto Holdings Ltd., among others -- and warned about its inability to make a profit in a cut-throat Chinese arena. Wong drew laughs after accusing Liu of never having run a profitable company in his life, and said his own internal valuation for the $52 billion company was “a tiny figure.”

“All the evidence I’ve seen suggests to me that JD is a super-hyped stock,” Wong, whose Singapore-based firm manages about $3 billion, told the annual gathering of hedge fund and investment managers in Hong Kong. “JD is between a rock and a hard place.”

JD responded to say that long-term investors should understand its business. “We hear criticism when we invest in areas like a vertically integrated logistics network to create value and economies of scale, but history shows the industry moves toward our vision, not the other way around,” the company said in an emailed statement.

JD, which is backed by Tencent Holdings Ltd. and competes fiercely with Alibaba Group Holding Ltd., hasn’t made an annual profit but is expected to do so this year. The company had incurred enormous costs building an in-house logistics network to better control delivery times and quality. This month, it reported a quarterly profit that fell short of expectations.

While JD has 29 analysts rating the stock a buy -- with just one sell -- investors seem to have agreed with Wong in past months. The shares have slid 28 percent since a January peak.

“Despite more than doubling its revenue in the past two years, the company is still bleeding,” Wong said.

To contact the reporters on this story: Moxy Ying in Hong Kong at yying13@bloomberg.net;Kana Nishizawa in Hong Kong at knishizawa5@bloomberg.net;Bei Hu in Hong Kong at bhu5@bloomberg.net

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan, Philip Glamann

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