Jim Cramer is Talking About These 5 Stocks

2. Alibaba Group Holding Ltd – ADR (NYSE:BABA)

Number of Hedge Fund Investors: 116

Jim Cramer recently reiterated that he isn’t a “fan” of Chinese stocks but if you were to have a Chinese name in your portfolio, Cramer thinks it should be Alibaba Group Holding Ltd – ADR (NYSE:BABA). The CNBC host said Alibaba Group Holding Ltd – ADR (NYSE:BABA) has the most “American-like financials.”

“BABA is the one if you want to go there.”

Alibaba Group Holding Ltd – ADR (NYSE:BABA) shares are down about 25% over the past one year. Recently, the Chinese ecommerce giant said it bought back a whopping 524 million ordinary shares in the first quarter of 2024 for $4.8 billion. This was Alibaba Group Holding Ltd – ADR’s (NYSE:BABA) biggest quarterly buyback ever.

Alibaba Group Holding Ltd – ADR (NYSE:BABA) is also quite popular among the 933 hedge funds tracked by Insider Monkey since 116 funds reported owning stakes in Alibaba Group Holding Ltd – ADR (NYSE:BABA) as of the end of 2023, compared to 110 funds in the previous quarter.

Artisan Select Equity Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its fourth quarter 2023 investor letter:

“Pretty much all of our holdings rose during the quarter. Only one stock declined by more than a couple of percent—Alibaba Group Holding Limited (NYSE:BABA), which was down 9% for the quarter and 12% for the year. This investment continues to be a disappointment. We estimate the shares are trading at around 5X EBITA—a valuation normally reserved for a company with evaporating profits. While it’s true Alibaba is underperforming its peers in the market, the fact is it remains the market leader in its core businesses, and the business is still growing. In the most recent quarter, revenues grew 9% and profits grew 26%.It’s not evaporating.

The management seems to be making meaningful changes designed to enhance shareholder value, including structural changes to improve profitability and restore its competitive position. It is monetizing non-core assets and making improvements in capital allocation. A lot of good things are happening that are not yet recognized in the share price. There are reasons—primarily geopolitical—for this, but at the current valuation, we could easily see the shares double and they would still be cheap.”