JD.com, Inc.
Thesis
Despite recent concerns over key man risk due to the potential conviction of Mr. Liu, we believe that the $10 billion loss in market cap has already factored in this risk. Furthermore, even if JD loses Mr. Liu, the company could benefit from a management team that is more focused on returns and profitability. JD's integrated retail model and logistics network provide a competitive advantage that is difficult for rivals to replicate.
Did it work?
The long thesis argued that the ~$10 billion market cap loss from key man risk was an overreaction and that JD's logistics-driven retail model provided a durable competitive advantage. The subsequent +310.6% price return decisively validates the view that the selloff overpriced the risk, as the market rewarded the company's fundamentals regardless of whether the management transition scenario occurred. Such a large gain in the thesis's direction constitutes a decisive confirmation independent of the unknown time horizon.