Why One Fund Made a $12.5 Million Bet on KE Holdings Despite a 12% One-Year Stock Slide
Key Points
China-based Perseverance Asset Management initiated a position in KE Holdings during the third quarter, buying up a total of 659,849 shares.
The shares were worth an estimated $12.54 million at quarter-end.
BEKE is not among the fund’s top five holdings as of September 30.
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China-based Perseverance Asset Management International initiated a new position in KE Holdings Inc. (NYSE:BEKE), adding 659,849 shares with a transaction value of approximately $12.54 million, according to its November 14 SEC filing.
What Happened
According to a filing with the Securities and Exchange Commission dated November 14, Perseverance Asset Management International reported a new position in KE Holdings Inc. (NYSE:BEKE), acquiring 659,849 shares during the third quarter. The stake was valued at $12.54 million at quarter-end, including shares held both with sole and defined discretion. The fund’s disclosure showed 23 total reportable positions and $840.49 million in U.S. equity assets under management as of September 30.
What Else to Know
Top five holdings after the filing:
- NASDAQ: HTHT: $312.00 million (37.12% of AUM)
- NASDAQ: PDD: $275.46 million (32.77% of AUM)
- NASDAQ: GOOGL: $73.07 million (8.69% of AUM)
- NYSE: RLX: $31.59 million (3.76% of AUM)
- NASDAQ: NTES: $31.01 million (3.69% of AUM)
As of Friday, shares of KE Holdings Inc. were priced at $16.22, down 12% over the past year and well underperforming the S&P 500, which is instead up about 15% in the same period.
Company Overview
| Metric | Value |
|---|---|
| Price (as of Friday) | $16.22 |
| Market capitalization | $18.86 billion |
| Revenue (TTM) | $14.52 billion |
| Net income (TTM) | $549.10 million |
Company Snapshot
- KE Holdings offers an integrated platform for housing transactions and services, including existing and new home sales, home renovation, rental management, and related services.
- The company operates a hybrid online-offline business model, generating revenue primarily from transaction commissions, service fees, and value-added offerings across its platform brands.
- It serves home buyers, sellers, renters, and real estate agents across China, targeting both individual consumers and institutional clients in the residential property sector.
KE Holdings Inc. is a leading real estate services provider in China, leveraging technology to connect buyers, sellers, and agents through its Beike and Lianjia platforms. The company’s scale, comprehensive service portfolio, and integrated digital infrastructure support a defensible position in the competitive housing market. KE Holdings’ focus on both online and offline channels enables broad market reach and operational resilience.
Foolish Take
This move appears less about short-term sentiment around China and more about exposure to a scaled platform that is still generating real cash in a cyclical downturn. KE Holdings sits at the center of China’s housing ecosystem, and even in a sluggish property environment, the company produced $3.2 billion in net revenue (up 2% year over year), though its $105 million in net income in the third quarter was down a steep 36% year over year. Gross transaction value held at $103.5 billion, with existing home transactions growing year over year, helping offset ongoing pressure in new home sales.
What stands out is balance-sheet strength. KE ended the quarter with roughly $7.8 billion in cash, cash equivalents, restricted cash, and short-term investments, while continuing to return capital aggressively. The company repurchased $281 million of shares in the quarter alone and about $675 million year to date, reducing its share count by roughly 3% this year. That matters when earnings are volatile and confidence is scarce.
In the context of the broader portfolio, this stake is small but deliberate, sitting alongside concentrated positions in Chinese consumer and internet platforms. The common thread is scale plus survivability. And for its part, KE also seems keen on restructuring to become more efficient, likely something patient investors will appreciate seeing.
Glossary
Initiated position: When an investor or fund buys a stock for the first time, creating a new holding.
13F reportable assets: U.S. equity holdings that institutional investment managers must disclose quarterly to the SEC on Form 13F.
Assets under management (AUM): The total market value of investments managed by a fund or investment firm.
Stake: The amount of ownership or shares an investor holds in a company.
Top five holdings: The five largest investments in a portfolio, ranked by market value.
Hybrid online-offline business model: A strategy combining digital platforms and physical locations to deliver products or services.
Transaction commissions: Fees earned by facilitating the purchase or sale of assets, such as real estate or securities.
Service fees: Charges for providing specific services, separate from commissions or product sales.
Value-added offerings: Additional services or features provided to customers beyond the core product or service.
Institutional clients: Organizations such as funds, banks, or corporations that invest large sums, as opposed to individual investors.
Defensible position: A company's ability to maintain its market share and profitability against competitors.
TTM: The 12-month period ending with the most recent quarterly report.
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Jonathan Ponciano has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool recommends NetEase. The Motley Fool has a disclosure policy.
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