2. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 91
Alibaba Group Holding Limited (NYSE:BABA) is a leading Chinese multinational conglomerate primarily known for its operations in the internet retail industry. The company provides a wide range of technology infrastructure and marketing platforms that facilitate online commerce.
It operates through seven main segments, each catering to different aspects of e-commerce and technology. For instance, the China Commerce segment includes major platforms like Taobao, Tmall, and Freshippo, whereas the International Commerce segment includes platforms like AliExpress and Lazada, targeting international retail and wholesale markets. The company has operations in cloud computing as well where it offers various cloud services, including data storage and computing power, catering to businesses of all sizes.
Alibaba Group Holding Limited’s (NYSE:BABA) international digital commerce segment is leading the company in revenue. During its first quarter results for fiscal 2025 (June Quarter), the segment revenue increased 32% year-over-year to reach approximately $4.12 billion. The strong performance of the segment was led by cross-border business growth, particularly by Choice business on AliExpress. Choice Business is a hybrid e-commerce model introduced by AliExpress to enhance the shopping experience for consumers and streamline operations for merchants. During the quarter AliExpress and Trendyol platforms stepped up investments in initiatives to increase mindshare in select markets in Europe and the Gulf region.
The company is not only a pioneer when it comes to e-commerce but holds a 42% market share in the Chinese e-commerce industry, as per DBS Bank. It ranks 2nd on our list of best internet retail stocks to buy now and was held by 91 hedge funds in Q2 2024 as per Insider Monkey’s database.
Patient Capital Management stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2024 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) experienced a massive rebound gaining +47% in the quarter following the announced stimulus program from the Chinese government. As the unexpectedly strong government support was announced, shorts were reversed and any name exposed to China was off to the races. We have long liked Alibaba as the company has continued to trade at a significant discount to its sum-of-the-parts valuation. With most investors writing off Chinese companies entirely, you had an opportunity to invest in a high-quality business at rock bottom prices. Over that time, the company initiated both a dividend (0.9% Yield) and buyback program, repurchasing 9% of shares outstanding over the last twelve months. Despite the strong move in the quarter, the company trades at just 12.4x next-year’s earnings. We see potential for continued multiple expansion as the Chinese economy rebounds and the country becomes investable again.”
