How long have you held the stock?
We initiated the position in February 2013. We have followed Baidu closely for many years but the opportunity to invest arose as investors had become increasingly worried about new competitors entering the market, as well as the shift occurring, as mobile search becomes more prevalent. This had resulted in the share price declining over 50% from its 2011 high of US$164.36. The Fund's average entry price was US$93.99.
What do you like about it?
Baidu, China’s version of Google, commands a dominant position within the Chinese search market that is equal, if not stronger, than Google’s in the US. Management has consistently built upon their market position, which currently sits at 70%, after gaining the number one position back in 2010. This has resulted in a very strong margin and return profile for the business with ROE of around 50%. The profitability profile of the business has allowed management to reinvest into its search technologies and ensure its market leadership continues.