Learning the Essence of Value Investing from Duan Yongping: The Golden Rule and Practical Strategies

Known as the “Chinese Warren Buffett,” Dan Yongping is not just an investor but an innovative entrepreneur and practitioner of value investing. What can be learned from his investment philosophy and success stories holds extremely important significance for modern investors. Deeply understanding Dan Yongping’s investment philosophy can help many avoid common pitfalls in investing.

Dan Yongping: A Brilliant Transition from Entrepreneurship to Investment

Dan Yongping’s life can be divided into three clear stages. The first stage began in 1988 when, at age 28, he took over a small electronics factory facing a management crisis. At that time, the factory was over 2 million yuan in debt. He implemented management reforms and rapidly grew annual production value to around 10 billion yuan within a few years. This early success proved his business acumen and market understanding.

In 1995, Dan Yongping left Yihua Group and co-founded BBK with his core team. The company developed and sold consumer electronics such as learning machines, VCDs, MP3 players, and phones. Dan Yongping focused heavily on marketing strategies, winning CCTV’s Best Advertising Company Award for two consecutive years, and growing BBK into an industry giant.

In 1999, his strategic restructuring laid the foundation for two global smartphone brands, OPPO and Vivo. In 2001, at age 40, Dan Yongping stepped back from management and moved to the United States to focus on investing. This decision was a key turning point that led him to become a legendary investor. Today, his assets are estimated to exceed 30 billion dollars.

The Encounter Between Dan Yongping and Buffett: A Turning Point in Investment Philosophy

June 30, 2006, is a highly significant date in Dan Yongping’s investment life. On this day, he paid $620,100 to secure a lunch with Warren Buffett, becoming the first Chinese investor to receive this honor.

At the lunch, Dan Yongping passionately argued that Apple’s business model surpasses Coca-Cola in value. This suggestion greatly influenced Buffett, who subsequently bought large amounts of Apple stock. Meanwhile, Dan Yongping was deeply influenced by Buffett’s value investing philosophy, which he continued to practice throughout his investment career.

Insights from Five Major Investment Cases of Dan Yongping

NetEase: Turning Crisis into Opportunity

In 2001, NetEase faced a storm of lawsuits, causing its stock price to plummet to $0.8 per share. In this desperate situation, Dan Yongping boldly decided to invest heavily. His judgment proved correct. Within months, the stock soared, and his initial investment of about $2 million grew to over $100 million, yielding approximately 20 times return. Industry analysis reports a total return of 68 times over three years.

This success was rooted in Dan Yongping’s deep insight. He accurately recognized NetEase’s intrinsic value and had the courage to buy during market panic.

Apple: Power of Long-Term Holding

In 2011, when Apple’s market cap was still under $300 billion, Dan Yongping began gradually buying Apple shares. This decision has since become central to his investment portfolio for over 13 years.

By late 2024, the total value of Apple holdings in his US stock fund (H&H) reached $10.233 billion, accounting for 70.50% of the entire portfolio. This demonstrates his unwavering confidence in Apple’s long-term growth. He has held these shares for over 14 years without selling.

Kweichow Moutai: Recognizing Long-Term Value

Dan Yongping views Kweichow Moutai not just as a stock but as a “long-term bond.” He believes that if there are no better investment opportunities, allocating surplus funds to Moutai is the safest and most reliable choice.

He invests almost all his yuan accounts in Moutai because he is confident in its intrinsic value stability. He argues that Moutai’s long-term value is assured, and while its stock price fluctuates, patience and holding through volatility is correct. He predicts that in ten years, Moutai’s stock price will far outperform traditional assets like bank deposits.

Pinduoduo: Turning Market Pessimism into Opportunity

In August 2024, after Pinduoduo’s interim results fell short of expectations and its stock plunged, many investors rushed to sell. Dan Yongping used put options and actively built positions.

According to the US 13F filings, in Q3 2024, H&H added 3.8 million shares of Pinduoduo, making it the fund’s fifth-largest holding. This decision shows how Dan Yongping ignores market sentiment shifts and focuses on the company’s intrinsic value.

Tencent: Gradual Buying During Undervalued Phases

Between 2022 and 2023, during Tencent’s downturn, Dan Yongping repeatedly bought Tencent ADRs.

In early 2022, he reduced some Tencent holdings to reallocate to Apple. But by November 2023, he changed his stance and announced purchasing 200,000 Tencent ADRs at around $41.05–$41.10 per share (about $8.2 million).

He also plans to sell 1,000 Tencent put options daily to gradually expand his position, believing current prices are a good “insurance” timing relative to the company’s fundamentals.

Ten Investment Principles Taught by Dan Yongping: Theory and Practice

1. Choose the Right Place: “Fish Where There Are Fish”

Charlie Munger’s famous saying is also adopted by Dan Yongping. Choosing a profitable market is crucial; it’s about selecting the right direction for success.

While China’s A-shares have stagnated near 3,000 points for over a decade, US stocks have maintained a 20-year upward trend. His focus on US stocks reflects this choice. His decision proves that choosing the right direction is irreplaceable regardless of effort.

2. One Year for Selection, Ten Years for Holding: Be Friends with Time

After carefully selecting good stocks, patience is key. Buffett’s words, “If you cannot hold a stock for ten years, you should not hold it for even one second,” reflect Dan Yongping’s approach.

Legendary Chinese investor Lin Yuan says, “Big profits come while sleeping.” Truly profitable stocks are those you can hold peacefully for the long term—“sleeping stocks.” These maximize compound growth and wealth accumulation.

3. Investing in Stocks Is Investing in Businesses: Understand the Business Model

Buying stocks means owning part of a company. If the company offers excellent products, has a strong business model, and its founders have foresight and vision, short-term price fluctuations shouldn’t scare you.

Recent examples include Tencent and Tesla, which experienced sharp declines temporarily. If the core value remains intact, it’s an opportunity to buy more.

4. Unwavering Conviction Is Essential: Separate Investment and Speculation Accounts

If you truly believe in an investment, short-term market fluctuations shouldn’t shake you. Everyone has speculative impulses, so overcoming this psychological conflict is necessary.

Dan Yongping operates two accounts: one for value investing, holding long-term positions, and another for speculation, satisfying short-term profit pursuits. Over the long run, profits from the speculative account are minimal, emphasizing the importance of conviction.

5. No Shortcuts: Investing Is a Path of Cultivation

Anyone believing in shortcuts will still be searching for them 20 years later. Dan Yongping emphasizes that speculative “shortcuts” are illusions; the real game is patience and discipline.

The harsh reality is that speculation is akin to flipping coins, with a win rate around 55%. Long-term, it’s destined to lose.

6. Reduce the Number of Decisions: More Than 20 Decisions a Year Are Likely Wrong

Making over 20 investment decisions annually guarantees mistakes. Frequent decisions indicate a drift from value investing into speculation.

Dan Yongping advocates making about 20 decisions in a lifetime, carefully considering each, then holding with conviction. This is true value investing.

7. When No Profits Are Made, Reassess Strategies: Break Free from the Bad Cycle

If investments aren’t profitable, analyze causes and review strategies. His analogy: a thief, after being caught, keeps thinking about how to improve theft skills.

Similarly, investors who don’t profit from speculation should question whether they are truly improving. The answer is no; strategies need fundamental reevaluation.

8. Buy When No One Is Watching, Sell When Crowds Flock

Contrarian investing is perhaps the hardest principle. When asked why he bought NetEase at the time, Dan Yongping’s answer was straightforward:

“Why not buy when a stock worth 10 yuan is sold for 1 yuan?”

At that time, NetEase held 4 yuan in cash per share but traded at 1 yuan. Dan Yongping believed it was worth buying even if delisted, based on thorough analysis.

9. A-shares Are Not Gambling: Value Investors Profit

Many see A-shares as gambling, which is a misconception. True profits come from value investing.

For example, Kweichow Moutai has been held for over a decade without selling. This steadfastness leverages compound growth and generates enormous profits.

10. Believe in Destiny: You Will Become Who You Are Meant to Be

The final principle is philosophical. Dan Yongping believes human nature is unchangeable: if you are inherently a speculator, no teaching or persuasion can change you.

Conversely, if you genuinely resonate with value investing, you will naturally become that person. His dinner with Buffett exemplifies this—being a practitioner of value investing and achieving results through practice, he shares the same philosophy with Buffett.

What Dan Yongping’s Investment Philosophy Suggests

From his strategies and principles, it’s clear that the essence of investing is not short-term market prediction but recognizing long-term intrinsic value of companies and having the mental strength to trust that value.

His current assets and performance are not mere luck but the result of consistent philosophy and long-term practice. For those seeking success in investing, Dan Yongping’s journey and ideas serve as a highly trustworthy roadmap.