Altron Capital Management, an investment management firm, published its fourth-quarter 2021 investor letter – a copy of which can be downloaded here. The S&P500 had a return of 11.0% in the fourth quarter, bringing the total return for 2021 to 28.7%. The firm’s portfolios have underperformed this quarter, but are taking this opportunity to buy more into some of its current positions. Spare some time to check the fund’s top 5 holdings to have a clue about their top bets for 2022.
Altron Capital Management, in its Q4 2021 investor letter, mentioned Alibaba Group Holding Limited (NYSE:BABA) and discussed its stance on the firm. Founded in 1999, Alibaba Group Holding Limited (NYSE:BABA) is a Hangzhou, China-based e-commerce company with a $288.5 billion market capitalization, and is currently spearheaded by its CEO, Daniel Zhang. Alibaba Group Holding Limited (NYSE:BABA) delivered a -12.85% return since the beginning of the year, while its 12-month returns are down by -57.57%. The stock closed at $104.27 per share on April 08, 2022.
Here is what Altron Capital Management has to say about Alibaba Group Holding Limited (NYSE:BABA) in its Q4 2021 investor letter:
“The negative headlines surrounding Alibaba seemingly have no end and have certainly tested our conviction in this investment over the past half year or so. The company’s latest earnings report brought lower margins, partially because of slowdown in China and partially because of increased investment into its businesses. Alibaba also lowered its guidance for the coming year, adding even more pressure to the share price. Furthermore, the Chinese government’s talk of “common prosperity” and Alibaba’s USD 15.5 billion ‘investment’ toward the cause has not helped turn around short-term sentiment for Alibaba investors. Fellow tech giant Didi has also announced that they would delist from New York, sparking fears that Alibaba may be next. Despite all the negative press, we still maintain our bullish position in Alibaba. While increased government regulation will likely result in lower long-term margins and/or increased effective tax rates, we still believe the current share price drastically undervalues the company. The company’s core commerce business is still growing at double-digit rates, as are its cloud business and international ecommerce platform. The cloud business, once at scale, should provide high-margin growth offsetting some of the negatives of new regulations. With Alibaba currently trading at a low-teens multiple of future earnings, we see no reason to sell even though our estimate of the company’s fair value has certainly decreased since we first purchased shares in the company. The issues surrounding Alibaba are complex and addressing each issue surrounding the company would take up far too much space in these letters than we would like. However, any clients that have concerns about our investment in Alibaba that have not been addressed in previous letters or discussions are encouraged to contact us with your questions.
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Our calculations show that Alibaba Group Holding Limited (NYSE:BABA) ranks 20th on our list of the 30 Most Popular Stocks Among Hedge Funds. Alibaba Group Holding Limited (NYSE:BABA) was in 96 hedge fund portfolios at the end of the fourth quarter of 2021, compared to 115 funds in the previous quarter. Alibaba Group Holding Limited (NYSE:BABA) delivered a -19.31% return in the past 3 months.
In March 2022, we also shared another hedge fund’s views on Alibaba Group Holding Limited (NYSE: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.
