Investing

Yale-Backed Billionaire Investor Is Bullish On These Stocks Right Now

Will Ashworth

Published: March 1, 2025 8:36 am

You wouldn’t be alone if you aren’t familiar with the name Zhang Lei. 

Despite an estimated $3 billion net worth according to Forbes, the founder of Hillhouse Investment Management and HHLR Advisors, the investment manager’s hedge fund, there’s not much information written about Zhang. 

However, one thing is known: Zhang founded Hillhouse in 2005 in Asia after graduating from the university in 2002 with an MBA and a Master’s in International Relations. To help cover his schooling beyond the scholarship he received, he interned under David Swensen, the iconic investment manager in charge of the Yale Investment Office, which managed the assets of the Yale Endowment Fund.

When Zhang launched Hillhouse–named after a street near the Yale Investment Office in New Haven, Connecticut–it was with a $20 million investment from Yale’s endowment fund. Today, Hillhouse manages over $50 billion, according to its latest ADV form. 

While it does not publish its performance record, the New York Times said this in 2015 about Hillhouse’s 10-year record:

“The firm says little about its investors or its investing record, emphasizing only that it holds on to investments for long stretches. One investor said that Hillhouse had returned a yearly average of 39 percent since it was founded in 2005,” the paper reported in April 2015. 

Hillhouse’s hedge fund, HHLR, reported in its Q4 2024 13F holdings report that it had $2.89 billion invested in 45 U.S.-listed securities.

These are three of the biggest from the fourth quarter. 

Key Points About This Article:

• Yale MBA grad Zhang Lei, the founder of Hillhouse Investment Management, got $20 million in startup capital from the Yale Endowment Fund in 2005. 
• Chinese e-commerce appears to be on the way out for Zhang’s hedge fund. 
• Data-driven financial analytics businesses have captured the hedge fund’s attention.
• The billionaire made a value play in the fourth quarter buying a significant stake in WNS Holdings (NYSE:WNS).
• Sit back and let dividends do the heavy lifting for a simple, steady path to serious wealth creation over time. Grab a free copy of “2 Legendary High-Yield Dividend Stocks” now.

Cut Down on Exposure to Chinese E-Commerce

In the fourth quarter, HHLR cut its positions by nearly half in Alibaba (NYSE:BABA) and PDD Holdings (NASDAQ:PDD). Both companies have significant e-commerce businesses through their various platforms. 

Alibaba’s stock has done considerably better over the past year, up 77% compared to a 9% decline in PDD’s share price. 

At the end of September, BABA was HHLR’s second-largest position, accounting for 14.35% of its portfolio, while PDD was the third-largest, at 9.84%. In the quarter, the hedge fund cut Alibaba’s stake by 44.6% and PDD’s position by 42.7% to 4.22%. Despite the selling, they remained in their respective portfolio rankings. 

In mid-October, BABA stock traded near $120, so it’s likely that the hedge fund took profits at that point in the quarter. The same explanation would apply for PPD. Its shares gained over 60% in September, falling off through the end of 2024. 

Altimeter Capital closed out its $100-million-plus position in KraneShares CSI China Internet ETF (NYSEARCA:KWEB) in the fourth quarter. Alibaba and PDD are the ETF’s largest and fourth-largest holdings, respectively. 

It suggests the pros aren’t sold on China’s economy recovering anytime soon.

Went Deep on Moody’s and MSCI

HHLR made four moves on the two financial services stocks in the final quarter. Many of the hedge fund’s biggest moves were as a subadvisor for Evergreen Quality Fund GP, a Cayman-based private fund affiliated with Hillhouse.

Both Moody’s (NYSE:MCO) and MSCI (NYSE:MSCI) are data-driven businesses that help their financial services clients assess risk and analyze opportunities. 

In the quarter, acting as subadvisor, Moody increased its weighting in MCO by 415,200 shares to 4.57% from 1.21% at the end of September, a 253.1% increase. It also acquired an additional 2,975 shares for its own account, a 198.1% increase. Moody finished the quarter as HHLR’s 33rd-largest position and the fourth-largest of its affiliated client. 

As for MSCI, it made new purchases for both itself and in its capacity as subadvisor. In the former, it acquired 3,650 shares in the quarter, making it the hedge fund’s 32nd-largest position. In the latter, it acquired 589,500 shares, making MSCI its client’s third-largest position with a market value over $350 million. 

Based on the average price paid for both stocks, it’s up in 2025 on MCO, but down on MSCI. 

I’m surprised it also didn’t buy S&P Global (NYSE:SPGI) for the data analytics trifecta.   

Makes a Bet on BPM Leader

The last vital move to cover was the hedge fund’s new purchase: 1.53 million shares of WNS Holdings (NYSE:WNS), a New York, London, and Mumbai-based provider of BPM (business process management) services to over 600 clients worldwide. 

The share purchase made WNS stock the 10th-largest hedge fund’s portfolio position. WhaleWisdom estimates that it paid $50.75 a share for the stock. It’s up about 10% from that so far in 2025. 

It’s difficult to know why HHLR bought WNS stock. 

In the third quarter ended Dec. 31, its non-GAAP revenue less repair payments, was $319.1 million, 1.0% higher than a year ago, while its adjusted net income was $47.0 million, 19.7% lower than in Q3 2024. However, it did add seven new clients in the quarter and expanded its relationship with 52 others. 

In 2025, it expects revenues to be flat to down slightly over a year ago, with earnings per share of $4.51, nine cents higher than in 2024. Its shares trade at 12.5 times its guidance. 

Based on this multiple, WNS shares are trading at their lowest valuation in the past decade. While it competes with other enterprise BPM service providers, HHLR has bought WNS as a deep-value play.