After Alibaba Group Holding Ltd (NYSE:BABA) went public at the end of September 2014, it quickly gained the attention of both big money managers and smaller investors. However, as the data for the last quarter of 2014 shows, the atmosphere of excitement started to cool down and Alibaba saw a withdrawal of capital during the last three months of 2014. Among 737 funds that we track at the end of 2014, 90 funds reported holding shares of Alibaba, the aggregate value of their stakes amounting to $7.11 billion. This number represents a decrease from 110 funds holding some $7.69 billion worth of the company’s stock that we saw at the end of September. On the other hand, Apple Inc. (NASDAQ:AAPL) also lost some popularity but still remained the top choice among investors, the company being included in the equity portfolio of 149 funds that held in aggregate of some $20.88 billion, versus 154 funds with $22.51 billion worth of stock in the previous quarter.
After analyzing the data for the third quarter, we noticed that many investors that initiated stakes in newly public Alibaba Group Holding Ltd (NYSE:BABA) cut their positions in Apple Inc. (NASDAQ:AAPL). For example, Andreas Halvorsen’s Viking Global dumped its entire stake in Apple and initiated a $1.01 billion stake in Alibaba. George Soros sold some 693,800 shares of Apple and disclosed ownership of 4.40 million shares of Alibaba. D.E. Shaw & Co. held 4.05 million shares of Alibaba at the end of September and some 11.66 million shares of Apple, down by 233,500 shares. So let’s take a look how this trend developed throughout the last three months of 2014.
At first glance we can see that investors have not been switching from Apple to Alibaba Group Holding Ltd (NYSE:BABA). While the former still remained the most popular stock among investors, Alibaba has seen a significant decrease in popularity, moving down a couple of positions in our ranking. It seems to have been the right call, as since its IPO on September 19 Alibaba’s stock has lost around 9.3%, while at the end of the year it closed up by around 10.70%. Meanwhile, between September and February, Apple Inc. (NASDAQ:AAPL)’s stock gained 26%.
During this period, Apple has released two new smartphones, announced the Apple Watch and Apple Pay and provided stellar results for the last quarter of 2014. On the other hand, Alibaba Group Holding Ltd (NYSE:BABA), even though it announced record-breaking sales of $9.0 billion during the “Singles Day” in China, posted revenue below the expectations in its last financial report. The fact that the revenue has actually grown in year-on-year terms and earnings per share (EPS) came above the estimates didn’t help, and Alibaba’s stock lost over 8% on the day the report was released and led to several analysts reducing their price targets on the stock.
Investors however are not affected much by short-term movements of a particular company and are more looking towards the long-term performance of a company. That’s why it is interesting to see their actions that can be observed from the last round of 13F filings. In this way, we see that Dan Loeb of Third Point, who sold his entire stake in Apple during the first quarter of 2014 (the shares had been acquired a quarter earlier), has further increased his exposure to Alibaba Group Holding Ltd (NYSE:BABA) and is currently the largest shareholder among funds that we track, holding 10.0 million shares, valued at $1.04 billion. On the other hand, George Soros kept his stake in Alibaba unchanged, the company currently representing his largest holding, but he also sold the rest of his stake in Apple Inc. (NASDAQ:AAPL). David E. Shaw cut his positions in both Apple and Alibaba. D.E. Shaw & Co sold 6.37 million shares of Apple and 3.97 million shares of Alibaba, retaining 5.28 million shares and 80,000 shares respectively. Viking Global also significantly cut its stake in Alibaba by 62% to 3.71 million shares.
We shall see how investors will be repaid in the following months. So far things look good as Apple’s stock gained around 16.40% year-to-date. As it was mentioned the company provided strong financial results and a solid cash position, a big part of which is going to be returned to shareholders in buybacks and dividends. Apple is also going to release its Watch in April and Apple Pay will certainly have an impact on its financial figures as well. Alibaba is also planning some big developments such as the IPO of its financial wing in the next couple of years. However, with Yahoo’s plans to spin-off its stake in Alibaba Group Holding Ltd (NYSE:BABA), there is a small fear among analysts that this will reduce the liquidity of Alibaba’s shares.
Disclosure: None
