Miller Value Partners recently released its Q2 2021 Investor Letter, a copy of which you can download here. The Miller Opportunity Trust Class I gained 4.18%, underperforming its benchmark, the S&P 500 Index which returned 8.55% in the same quarter. You should check out Miller Value Partners’ top 5 stock picks for investors to buy right now, which could be the biggest winners of this year.
In the Q2 2021 Investor Letter, the fund highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) is one of them. Alibaba Group Holding Limited (NYSE:BABA) is an e-commerce company. In the last three months, Alibaba Group Holding Limited (NYSE:BABA) stock lost 29%. Here is what the fund said:
“Alibaba (BABA), one of our largest growth holdings, exemplifies our approach here. The stock ($206) is down 35% from its highs hit in October 2020 primarily on fears regarding China’s regulatory crackdown. New headlines surface daily on the aggressive new approach by the Chinese government. We believe the worst is behind Alibaba. It has already been fined and agreed to changes in how it operates. The government’s focus has shifted elsewhere, most recently to Didi who just barely IPO’d. Recent press reports suggest the government is partnering with Alibaba to purchase a stake in troubled Suning.com indicating BABA could be back in the good graces of the government. These concerns have depressed expectations creating a divergence between those and what we believe are very strong fundamentals.
Alibaba is the largest, most dominant ecommerce site in China with a smattering of other interesting businesses, like its cloud and logistics businesses. BABA has historically grown revenues between 32% in poor years (i.e.,China’s slowdown in 2016) and high 50%’s in stronger years. It trades at 23x next year’s earnings. We think it should be able to continue to grow revenues 20%+ conservatively implying a similar compound rate of capital if the valuation just holds steady. We believe it’s an ideal holding for patiently compounding capital. It doesn’t surprise us that notable value investor, Charlie Munger, recently bought Alibaba stock.”
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Earlier this month, we published an article revealing that Alibaba Group Holding Limited (NYSE:BABA) was one of the 5 trending technology stocks on Reddit.
In Q2 2021, the number of bullish hedge fund positions on Alibaba Group Holding Limited (NYSE:BABA) stock increased by about 8% from the previous quarter (see the chart here), so a number of other hedge fund managers believe in BABA’s growth potential. Our calculations showed that Alibaba Group Holding Limited (NYSE:BABA) is ranked #8 among the 30 most popular stocks among hedge funds.
The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.
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Disclosure: None. This article is originally published at Insider Monkey.
