Aikya Investment Management: “Alibaba (BABA) has Proven to Be Less Resilient than First Perceived”

Aikya Investment Management, an asset management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. In its letter, Aikya emphasized its twin purpose: to generate healthy long-term returns for its clients with strong downside protection and make a significant impact when it comes to addressing the sustainable development challenges facing Emerging Markets. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.

Aikya, in its Q4 2021 investor letter, mentioned Alibaba Group Holding Limited (NYSE: BABA) and discussed its stance on the firm. Alibaba Group Holding Limited is a Hangzhou, China-based e-commerce company with a $351.9 billion market capitalization. BABA delivered an 8.26% return since the beginning of the year, while its 12-month returns are down by -47.18%. The stock closed at $128.60 per share on January 18, 2022.

Here is what Aikya has to say about Alibaba Group Holding Limited in its Q4 2021 investor letter:

“Most investors looking to invest in highquality and sustainable businesses in Emerging Markets start their assessment by analysing the franchise and the financial statements – but often miss the risks associated with questionable stewardship. For example:

Alibaba was widely understood to be a high-quality and sustainable company, with the appearance of a business that empowered SME merchants while generally contributing to technology and financial infrastructure in China. Its dominant e-commerce franchise delivered healthy ROEs for several years, to the contentment of investors. We believe that the competitive advantage was explained mostly by the management’s early links to the Shanghai faction of the CCP. As the political winds have changed, the business has proven to be less resilient than first perceived.”

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Our calculations show that Alibaba Group Holding Limited (NYSE: BABA) ranks 13th on our list of the 30 Most Popular Stocks Among Hedge Funds. BABA was in 115 hedge fund portfolios at the end of the third quarter of 2021, compared to 146 funds in the previous quarter. Alibaba Group Holding Limited (NYSE: BABA) delivered a -22.91% return in the past 3 months.

In December 2021, we also shared another hedge fund’s views on BABA in another article. You can find other letters from hedge funds and prominent investors on our hedge fund investor letters 2021 Q4 page.

Disclosure: None. This article is originally published at Insider Monkey.