Why is Duan Yongping heavily increasing his holdings in Pinduoduo?

In the previous article, a reader said:

"Duan Yongping reduced his Nvidia holdings by half in Q2, also significantly trimmed Google, but instead added Pinduoduo, which is baffling."

My first reaction was also: indeed, it's a bit hard to understand.

And this event instantly reminded me of Munger's investment in his later years, which he himself called "one of the worst mistakes"—his heavy position in Alibaba.

Looking at these two investments together, there are many similarities.

So today let's discuss them together and see if we can learn something from the investment strategies of these two masters.

First, let's talk about how Munger built his position in Alibaba back then.

In the first quarter of 2021, Alibaba suddenly appeared in the Daily Journal account, which was led by Munger.

He bought 165,300 shares in one go. At the end of the quarter, the market value was approximately $37.5 million, accounting for about 19% of the entire US stock portfolio, directly becoming the third largest heavyweight stock.

This wasn't all.

As Alibaba's stock continued to fall, Munger kept buying.

By the third quarter of 2021, the holding increased from 165,000 shares to 302,000 shares; in the fourth quarter, it nearly doubled, reaching 602,000 shares.

At the same time, Alibaba's stock price nearly halved throughout 2021.

In other words, this was a very typical case of:

Buying more as the price falls.

Just like many people now question why Duan Yongping is buying Pinduoduo, there were also quite a few people questioning Munger at that time.

At the 2022 Daily Journal shareholders' meeting, someone asked him directly:

Why invest in China?

The implication was actually quite simple:

There are so many high-quality assets in the US that you don't buy, why do you have to go to a market with such high uncertainty?

Munger's answer was also very direct:

Because for the same one dollar, you can buy companies in China that have stronger competitiveness but are cheaper.

In other words, in Munger's view, Chinese enterprises had a huge valuation discount, and this discount was sufficient to compensate for the additional risk taken.

I believe this is also one of the important reasons why Duan Yongping continues to buy Pinduoduo now:

It's really cheap.

But as a value investor, being cheap is obviously not enough.

We often say:

A good business + a good price.

So Munger's real judgment at the time was actually: Alibaba is still a strong enterprise, but it encountered a series of troubles, and the market drove the price too low because of these troubles.

So Munger didn't run away; instead, he kept adding to his position.

However, in the first quarter of 2022, Daily Journal suddenly reduced its Alibaba holding from 602,000 shares to 300,000 shares, basically cutting off all the positions added in the previous quarter.

At the 2023 Daily Journal shareholders' meeting, Munger finally reviewed this investment personally.

He said: Investing in Alibaba was one of the worst mistakes I've made.

He was attracted by Alibaba's position in China's internet industry, but ignored a crucial thing—Alibaba is ultimately engaged in retail, and retail is an extremely competitive business.

This lesson is actually very important.

Because value investors are particularly prone to making a certain type of mistake:

After seeing the price fall enough, subconsciously interpreting "cheap" as "undervalued".

But these two things are completely different.

A company dropping from $100 to $50 only proves it became half as expensive.

Whether it is undervalued depends on what it is truly worth.

If you originally thought it was worth $120, but later found out it was only worth $40, then $50 is still not cheap.

So the margin of safety has a hidden premise:

You must first roughly get the "value" right; only then does a low price constitute a margin of safety.

Otherwise, the so-called margin of safety might just be underestimating the risk.

Regrettably, although Alibaba rose significantly in 2025 driven by AI, growth in Alibaba Cloud, and the revaluation of Chinese tech stocks, the core logic of this rally was completely different from the logic Munger valued when he initially bought Alibaba. Until Munger passed away in November 2023, this investment had still not broken even, becoming the most famous investment failure of this investment master in his later years.

It is precisely because of this that when I saw Duan Yongping significantly reducing his holdings in Nvidia and Google while continuing to increase his Pinduoduo position, eventually making Pinduoduo the third largest holding in H&H's disclosed US stock 13F portfolio, my first reaction was:

Why does this plot feel somewhat familiar?

In Q2 2026, H&H increased its Pinduoduo holdings by over 5.27 million shares, raising total holdings to approximately 25.02 million shares, accounting for nearly 10% of the disclosed 13F portfolio; meanwhile, Nvidia holdings decreased by about 54.6%, and Google Class C shares decreased by about 46.9%.

However, as I continued to research, I found:

Although Duan Yongping buying Pinduoduo and Munger buying Alibaba look similar, their underlying logics are not exactly the same.

Duan Yongping himself has never treated Pinduoduo as a "high certainty investment" like Apple.

In a public interview in 2025, he explicitly stated that Pinduoduo is "still" a venture capital investment and did not recommend others to buy it.

His logic was probably:

If Pinduoduo's current business can sustain itself, then this price is indeed very cheap.

The problem is:

He doesn't know if it can actually sustain itself.

He doesn't know what factors will affect Pinduoduo in the future and explicitly said, "I don't know about the macro environment."

What he is truly confident about is Pinduoduo's team and corporate culture.

When asked if he could see clearly where Pinduoduo would be in five to ten years, his answer was completely different from that for Apple.

For Apple, he believed he could see relatively clearly.

For Pinduoduo, he himself admitted it wasn't that clear.

But there exists a possibility:

It might become much more powerful in the future than it is now.

So he defined this investment as "venture capital," believing it worth owning a portion of.

Here, it has already been stated very clearly.

Duan Yongping doesn't think:

I have completely understood Pinduoduo, so the market is severely undervaluing it now, and I am taking a heavy position.

Instead:

I know there are many things I cannot see clearly here, but the current price is cheap enough, and I trust this team, so the odds are worth betting on.

Moreover, between Duan Yongping and Pinduoduo, there is another element that ordinary investors can hardly replicate:

The relationship between him and Huang Zheng.

When Pinduoduo was just established, Huang Zheng sought investment from Duan Yongping.

Duan Yongping asked him:

Can it make money?

Huang Zheng said he didn't know, only that user growth was particularly fast, suppliers were very happy, and many agricultural products that couldn't be sold before were sold through the platform.

Duan Yongping finally said, then let's treat it as a public welfare project.

He also put forward a condition:

How much you want me to invest, you should invest the same amount yourself.

And Huang Zheng didn't lack this bit of money from Duan Yongping at the time; the greater purpose was inherently to bring Duan Yongping in as an investor.

So from the very beginning, this investment carried a very obvious "investing in the person" color.

To put it bluntly:

Duan Yongping really knows Huang Zheng.

It's not that he read a few interviews and shareholder letters and then thought, "This founder is nice."

It's that they have known each other for many years, interacted long-term, and formed his own judgments about this person's values, abilities, and working style.

Although Huang Zheng has since withdrawn from the daily management of Pinduoduo, judging by Duan Yongping's repeated discussions on corporate culture logic in the past, he clearly believes:

The corporate culture, organizational system, and consumer orientation left by Huang Zheng do not fully depend on Huang Zheng himself.

This might be the important reason why Duan Yongping dares to bet on Pinduoduo even under the circumstance of "not seeing clearly five to ten years ahead."

So. If it weren't Duan Yongping, but an ordinary investor running up to you and saying:

I can't really see clearly where this company will be in ten years;

I don't know about the macro environment either;

I can't predict how this industry will change in the future;

But I strongly believe in the founder and the corporate culture;

And the stock is very cheap now.

Then buys a large amount.

Would you feel:

This seems to no longer resemble the kind of value investing we usually talk about?

At least, it is no longer like Buffett investing in Coca-Cola or Apple:

I roughly know what this business will look like in ten years; I'll buy it as long as the price is right.

It's more like:

I know there is great uncertainty here, but the price is low enough, and the upside potential is large enough, so I am willing to bear this part of the risk.

This is exactly what Duan Yongping himself said:

Venture capital.

So the biggest difference between Munger buying Alibaba and Duan Yongping buying Pinduoduo lies here.

Munger thought he was buying an outstanding enterprise that was severely undervalued, only to later find out that his judgment on the competitive attributes of this business was overly optimistic.

Whereas Duan Yongping never claimed from the start that he completely understood Pinduoduo.

He knew what he didn't know.

So he didn't define Pinduoduo as Apple, but explicitly placed it into the box of "venture capital."

The difference between these two is very significant.

But for ordinary investors, I feel there is an even more important lesson here:

Never just copy the master's positions without copying the premises behind the master's bets.

All you see is:

Duan Yongping heavily buying Pinduoduo.

But behind him, there might be over twenty years of understanding of Huang Zheng, comprehension of corporate culture, and risk tolerance and asset scale far exceeding that of ordinary investors.

You don't have any of these things.

If in the end you only learn one sentence:

"Duan Yongping bought it, and it's so cheap, so I'll buy it too."

Then you have actually returned to the most dangerous logic:

Because it's cheap, therefore it's undervalued.

And Munger's Alibaba has already given us a lesson on this.

Masters certainly make mistakes.

What is truly worth learning is never which stock the master bought.

But rather:

Why he bought it, what he understood, and what things even he admitted he didn't understand.

This might be much more important than copying any 13F filing.