3. Alibaba Group Holding Limited (NYSE:BABA)
Number of Hedge Fund Holders: 96
Alibaba Group Holding Limited (NYSE:BABA) is a Chinese company that offers technology infrastructure and e-commerce solutions to customers around the globe. James Langevin, the U.S. representative for Rhode Island’s 2nd congressional district, sold Alibaba Group Holding Limited (NYSE:BABA) shares on February 11, worth between $50,001 and $100,000. The transaction was disclosed on March 4.
On February 24, Alibaba Group Holding Limited (NYSE:BABA) reported its Q4 results, posting GAAP earnings per share of $1.19, missing consensus estimates by $0.48. The $38.33 billion revenue also fell short of analysts’ predictions by $520.17 million.
JPMorgan analyst Alex Yao double downgraded Alibaba Group Holding Limited (NYSE:BABA) on March 14 to Underweight from Overweight with a price target of $65, down from $180. The analyst noted that the rising geopolitical and macro risks are leading several global investors to reduce exposure to the Chinese internet sector.
Hedge fund sentiment around Alibaba Group Holding Limited (NYSE:BABA) turned negative in the fourth quarter of 2021, when 96 hedge funds were found to be bullish on the stock, compared to 115 funds in the earlier quarter. Fisher Asset Management owned the largest Alibaba Group Holding Limited (NYSE:BABA) stake, 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 E-commerce. These are future growth drivers but are depressing the 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.”
