5 Stocks to Sell Now According to Ray Dalio

1. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 106

Alibaba Group Holding Limited (NYSE:BABA) is China’s largest e-commerce corporation. The company provides consumer-to-business, business-to-consumer, and business-to-business sales services.

Alibaba Group Holding Limited (NYSE:BABA) faced a number of headwinds in recent times. Firstly, the presence of China’s military in Chinese waters raised tensions between USA and China. Additionally, the re-emergence of COVID led to a lockdown in major Chinese cities. Resultantly, Alibaba Group Holding Limited (NYSE:BABA) saw a drop of 1% YoY in the e-commerce segment to 141.94 CNY in Q2 2022 from 144.03 billion CNY in the same quarter of 2021. Moreover, the cloud computing business saw a 10% YoY increase compared to 29% in Q2 2021.

In Q1 2022, Bridgewater Associates held 7.48 million shares of Alibaba Group Holding Limited (NYSE:BABA), valued at $813.88 million, representing 3.28% of the fund’s portfolio. Dalio sold the entirety of his position in the company in Q2.

Here is what Artisan Partners had to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2022 investor letter:

“Alibaba rose 4% during the quarter. We would love to say the share price performance was due to strong operational performance. Unfortunately, that was not the case. The most recent earnings results showed its core e-business still had not returned to growth, primarily due to the difficult retail environment caused by the government’s zero-COVID policy. Alibaba also appears to be losing market share due to its product mix tilted toward apparel and cosmetics, categories currently stalled in this environment. The share price performance this quarter was largely a function of exogenous items—specifically, government actions in the form of stimulus to support the economy and less regulations.

Despite the poor recent results, Alibaba remains a powerful economic engine. It is a global leader in e-commerce and cloud computing, both of which should grow nicely over time. Management has started taking actions to improve profitability, which has been burdened by significant investment in loss-making business ventures. The financial results should improve significantly when China’s economy starts to recover from COVID-19 outbreaks. The shares are incredibly cheap and have some of the highest upside potential in the portfolio. Even embedding significant losses from new ventures, we estimate they are trading at 11X-12X unlevered earnings. In our view, the shares could double, and they still would not be expensive.”

You can also take a look at 10 Stocks Analysts Are Downgrading After Weak Earnings Reports and 10 Stocks That the Russia-Ukraine War Will Affect in the Future.

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