Ken Fisher’s Latest Portfolio: 5 Best Picks Under $30

1. Alibaba Group Holding Ltd. (NYSE:BABA)

Fisher Investments’ Stake Value: $1.65B

Percentage of  Fisher Investments’ 13F Portfolio: 1.16%

Number of Hedge Fund Holdings: 106

Share Price (As of September 15): $11.01

Based in Hangzhou, Zhejiang, Alibaba Group (NYSE:BABA) is a Chinese multinational technology company which specializes in e-commerce, retail, IoT, and technology. The company also provides consumer-to-consumer (C2C), business-to-consumer (B2C), and business-to-business (B2B) sales services via web portals, as well as electronic payment services, shopping search engines, and cloud computing services

Investor interest around Alibaba Group (NYSE:BABA) has skyrocketed in the second quarter of 2022, with 106 hedge funds long the stock, as compared to 100 in the preceding quarter. As of Q2 2022, Fisher Investments in the largest shareholder in the company, with a total stake value of $1.65 billion.

Artisan Partners, an asset management firm, mentioned Alibaba Group (NYSE:BABA) in their Q2 2022 investor letter. This is what they had to say:

“Alibaba rose 4% during the quarter. We would love to say the share price performance was due to strong operational performance. Unfortunately, that was not the case. The most recent earnings results showed its core e-business still had not returned to growth, primarily due to the difficult retail environment caused by the government’s zero-COVID policy. Alibaba also appears to be losing market share due to its product mix tilted toward apparel and cosmetics, categories currently stalled in this environment. The share price performance this quarter was largely a function of exogenous items—specifically, government actions in the form of stimulus to support the economy and less regulations.

Despite the poor recent results, Alibaba remains a powerful economic engine. It is a global leader in e-commerce and cloud computing, both of which should grow nicely over time. Management has started taking actions to improve profitability, which has been burdened by significant investment in loss-making business ventures. The financial results should improve significantly when China’s economy starts to recover from COVID-19 outbreaks. The shares are incredibly cheap and have some of the highest upside potential in the portfolio. Even embedding significant losses from new ventures, we estimate they are trading at 11X-12X unlevered earnings. In our view, the shares could double, and they still would not be expensive.”

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