H World Group’s 49% Surge: A Fund’s Petty Victory

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Let’s cut through the noise: Singapore’s Serenity Capital Management just committed a minor social transgression by buying H World Group Limited (HTHT +1.55%) shares. Why? Because someone forgot to mention in the SEC filing that the fund’s 710,431-share increase would result in a $30.7 million value shift. Classic oversight. Now they’re stuck owning 1.3 million shares, or 6.3% of their AUM, which feels like a middle finger to whoever designed the filing system.

A Minor Investment Infraction

The SEC filing from November 13 reveals Serenity Capital’s latest crime: inflating their HTHT stake by 710,431 shares. Their total holding now sits at $49.8 million, which is 12.6% of the fund’s AUM. This isn’t just a purchase-it’s a declaration of war against the universe’s indifference to their portfolio’s order. The fund’s top holdings now read like a spreadsheet written by someone who refuses to alphabetize their groceries: BZ ($117.6M), ZTO ($97.1M), TAL ($53M), HTHT ($49.8M), and EDU ($34.9M). Neat, but why EDU? Did they misread a memo?

The Fund’s Complicated Closet

At $48.95 per share, HTHT’s 49% annual gain is a slap in the face to the S&P 500’s 16.5% performance. But let’s not get carried away-this isn’t a miracle. It’s a calculated response to a world that refuses to acknowledge H World Group’s existence until it’s too late. The company’s $15.1B market cap, $3.4B revenue, and 3.7% dividend yield are just numbers until you realize they’re the result of someone deciding to franchise instead of lease. Again, a small rebellion against the chaos of hotel ownership.

Metric Value
Market Capitalization $15.1 billion
Revenue (TTM) $3.4 billion
Net Income (TTM) $534 million
Dividend Yield 3.7%

Hotel Brand Drama

  • H World Group’s portfolio reads like a family feud: HanTing, JI Hotel, Orange Hotel, and Steigenberger. Each brand is a character in a soap opera of operational efficiency.
  • They make money by either owning hotels or pretending to own them. The manachised model is just a fancy way of saying, “We’ll manage your hotel if you stop calling us at 3 a.m.”
  • With 12,700 hotels, they’ve mastered the art of scaling without actually building anything. A genius workaround for anyone who dislikes construction permits.

H World Group is China’s answer to hoteliers who refuse to grow up. Their strategy? Expand via franchising because no one wants to deal with the logistics of owning real estate. It’s the financial equivalent of ordering takeout instead of cooking. Efficient? Yes. Socially acceptable? Only if you ignore the delivery fee.

Foolish Take

After a 55% drop from its 2021 peak, H World Group has quietly rebuilt itself. They’ve done it by scaling up, cutting costs, and pretending they never owned a hotel in their life. The latest quarter? A masterclass in pettiness: $978M revenue, 8.1% growth, and a 27% jump in manachised revenue. They’re expanding margins without touching capital-because no one likes carrying a backpack full of bricks anymore. Non-GAAP EBITDA stayed steady at $346M, and operating margins hit 30%. It’s like watching a toddler tidy their room for the first time. Progress, but still a mess.

This position isn’t the fund’s crown jewel-it’s buried behind logistics and internet plays. But it’s a clever bet on domestic consumption and reopening. Shares are still 20% below pre-crash highs, but the balance sheet now looks less like a sinking ship and more like a slightly damp towel. Growth is back, and the pipeline of 2,700 hotels? A decade-long excuse to keep pretending they’re not in the hotel business.

Glossary

Assets Under Management (AUM): The total value of investments managed by a fund. Think of it as a cluttered closet where nothing matches.

Reportable Assets: The portion of a fund’s assets that must be disclosed. A regulatory requirement that feels like a passive-aggressive note from the government.

Position: The amount of a security held by an investor. Often a source of mild embarrassment during tax season.

Dividend Yield: Annual dividends divided by share price. A number that makes retirees feel slightly less obsolete.

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Forward Price-to-Earnings Ratio: A metric that tells you if a company is overvalued. Usually ignored by people who bought stocks based on TikTok trends.

Trailing Twelve Months (TTM): The 12-month period ending with the latest quarterly report. A time capsule of financial decisions you can’t unmake.

Manachised: A hybrid management model. Like being both a babysitter and a landlord, but worse.

Asset-light Franchising: A strategy to avoid owning things. The financial equivalent of renting a car instead of buying one.

Operational Efficiency: Doing more with less. A skill most people lack but pretend to have in meetings.

Margin Expansion: Increasing profitability by cutting costs. Often achieved by firing people, which is always a crowd-pleaser.

🤷♂️

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2025-12-19 23:52