Former Hedge Fund Manager: Baidu Is The 'Best Way To Invest In China,' But Will Q4 Shine?

Former hedge fund manager Cody Willard thinks that Baidu Inc (ADR) BIDU is the "best way to invest in China." "It is a very well managed, very well connected platform-centric Internet play based in China," Willard, who now serves as chairman of Scutify (a financial social network), told Benzinga. "I personally don't like to invest overseas, so I don't own it. But I have in the past. I made some good money on it."

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Baidu Vs. Alibaba

When asked why Baidu is better than China's other hot property, Alibaba Group Holding Ltd BABA, Willard said that he wouldn't necessarily call it a "better" play. "I think that [Baidu's] model and moat are better than Alibaba," said Willard. "I'm not as enamored with Jack Ma as your typical pundit. "He did take a company from nothing to $200 billion in valuation, one of the largest IPOs in the history of the planet. The guy at Baidu, his timing wasn't quite as good."

Things To Watch For This Quarter

Willard said that investors will want to focus on top-line growth and margins. "It's a high-margin business, and as long as they're continuing those margins and you can see it in the numbers, I feel good about it," said Willard. "The reason I don't own Baidu – the only reason – [is because] it's so hard to make money and trust numbers in the United States. We have hundreds of years of experience doing this, and yet you still get Enrons and Nortels. I can't risk my capital on a company based on China for the long-term." That begs the question: Why did Willard invest in Baidu at all? "It was just down so much," he said. "It was back in 2010, 2011. It was a trade, not an investment. I'm an opportunist, so I do what I do when the opportunities arise." Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.