1. Alibaba Group Holding Limited (NYSE:BABA)
Gain in Share Price in the Last 5 Days as of March 23: 18.32%
Number of Hedge Fund Holders: 96
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese tech and ecommerce giant that has gained 18.32% in the last couple of days as China eases the year-long regulations on leading technology firms. Redditors have reported long positions in Alibaba Group Holding Limited (NYSE:BABA) recently.
On March 21, Alibaba Group Holding Limited (NYSE:BABA) reported that its board has approved to upgrade its share repurchase program from $15 billion to $25 billion. The management is confident in Alibaba Group Holding Limited (NYSE:BABA)’s continued growth in the future.
JPMorgan analyst Alex Yao downgraded Alibaba Group Holding Limited (NYSE:BABA) to Underweight from Overweight with a $65 price target on March 14, citing that the uncertain macro backdrop is making global investors exit the stock to limit their exposure to the Chinese internet sector.
Hedge fund sentiment has been negative around Alibaba Group Holding Limited (NYSE:BABA). In Q4 2021, 96 funds were bullish on the stock, down from 115 funds in the prior quarter. Fisher Asset Management is the biggest shareholder of the firm, with more than 14 million shares worth $1.6 billion.
Here is what Longleaf Partners International Fund has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2021 investor letter:
“Alibaba (-50%, -2.26%; -22%, -0.82%), the largest online retail platform in China, was another top detractor for the year and in the fourth quarter. Alibaba reported weak quarterly results and downgraded its sales outlook for the current fiscal year to 20- 23% growth, down from original guidance of 29-32% growth. Macro headwinds, weak consumer sentiment, regulatory scrutiny and competitive forces are having a larger than expected impact on overall retail sales and Alibaba’s market share. Notably, overall retail sales in China slowed down to a meager 5% growth in the September quarter. Slowing consumption, combined with stiff competition from new entrants in livestreaming ecommerce, have resulted in transitory deceleration in Alibaba’s core ecommerce growth trajectory. Additionally, the company is accelerating strategic investments in new initiatives, including Community Group Buying (Taocaicai), Taobao Deals, Local Consumer Services and International Ecommerce. These are future growth drivers but are depressing company’s earnings today. In December, we exited our full position in Alibaba. This was more of a tactical move than a change in investment conviction. We initiated the position early in 2021, and the continued challenges in the second half of the year resulted in a loss that was material enough to be helpful from a tax distribution management point of view. We are sensitive to taxable gains and try to minimize where sensible, so we took advantage of the opportunity to reduce that liability and plan on revisiting the Alibaba opportunity in 2022. We continue to own Alibaba in our Asia Pacific strategy.”
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