Looking at $BIDU
after its dramatic fall after Friday's guidance cut. The latest SA articles are helpful. One thing I noticed is that Bill Miller's fund, Miller Value Partners, bought $BIDU
in Q1, and funded it by selling $NWL
. Here's the relevant excerpt from his Q1 Letter:
"We continue to sift through lots of new ideas. One new name, Baidu Inc, made it into the portfolio in the quarter. We funded this by selling Newell Brands, which we exited shortly after quarter end. We didn't own it very long and it was a mistake that we chose to exit quickly as the turnaround stumbled. We believe Baidu has significant upside and excellent long-term prospects. Baidu is one of the top Chinese Internet companies with a wide range of businesses from search to video-streaming to autonomous driving. It is one of the leaders in artificial intelligence and machine learning. The stock fell from a peak of $284 to a low of $154 as the Chinese economy weakened and Baidu ramped investments to position it well for the long term. The market hates investments that hurt profits, but if successful they can pay off handsomely, as we believe Baidu's are likely to do. We believe we paid a good price too. When we were buying shares, they were trading at roughly 10x trailing "core" profits (excluding iQiyi's (mini version of Netflix) losses) despite attractive growth prospects. This is a name that we think has the potential to be both cyclically and secularly mispriced, our favorite combination."