In this article, we discuss the top 5 stock picks of Eduardo Costa’s Calixto Global Investors. If you want to read our detailed analysis of Costa’s investment philosophy and performance, go directly to Top 9 Stock Picks of Eduardo Costa’s Calixto Global Investors.
5. Alibaba Group Holding Limited (NYSE:BABA)
Calixto Global Investors’ Stake Value: $9,924,000
Percentage of Calixto Global Investors’ 13F Portfolio: 9.92%
Number of Hedge Fund Holders: 106
Alibaba Group Holding Limited (NYSE:BABA) operates online marketplaces for retail and wholesale trading. A financial technology unit of Alibaba Group Holding Limited (NYSE: BABA), Ant Group, announced intentions to use its cross-border payment service Alipay+ to let four Asian e-wallets enter South Korea on September 26 as travel restrictions loosen throughout Asia. Calixto Global Investors added Alibaba Group Holding Limited (NYSE:BABA) to its portfolio in the second quarter by buying 87,300 shares.
Leo Chiang, an analyst at Deutsche Bank, maintained a “Buy” recommendation on Alibaba Group Holding Limited (NYSE:BABA) on August 8 after the company’s June quarter net income and adjusted net margins topped forecasts. He also increased his price target from $155 to $160.
According to Insider Monkey’s data, 106 hedge funds were bullish on Alibaba Group Holding Limited (NYSE:BABA) at the end of Q2 2022, compared to 100 funds in the last quarter. Ken Fisher’s Fisher Asset Management is the largest stakeholder of Alibaba Group Holding Limited (NYSE:BABA), with 14.48 million shares worth $1.65 billion.
In its Q2 2022 investor letter, Artisan Partners mentioned Alibaba Group (NYSE:BABA). Here is what the fund 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.”
