"Smart Money" buys BABA-SWR

Author | Liu Baodan

After four years of turbulence, Alibaba is entering a new phase of development. Many industry leaders and institutions have almost simultaneously increased their holdings of BABA-SWR stocks.

Following the news of Jack Ma and Joseph Tsai's increased holdings, the latest 13F filings from several institutions show that in the fourth quarter of last year, BABA-SWR also received significant increases in holdings from several well-known financial institutions.

As of December 31st, the Canada Pension Plan Investment Board (CPPIB) held 3.6 million shares of BABA-SWR, with a market value of $279 million. BABA-SWR was the largest new buy target for CPPIB in the fourth quarter.

Michael Burry, the prototype of the movie "The Big Short," increased his holdings of Alibaba by 25,000 shares through his hedge fund Scion Asset Management LLC, with a total holding of 75,000 shares. As of the end of the fourth quarter of 2023, Alibaba was Scion's largest holding in terms of market value, accounting for 6.1% of its assets.

Soros Fund Management increased its Alibaba stock holdings by 87.5% in the fourth quarter, with a holding value of approximately $5.81 million.

Hedge fund Appaloosa, known as the "bottom-fishing king," increased its Alibaba holdings by 20%, adding 4.35 million shares of Alibaba stock in the quarter ending December 2023.

It is worth noting that the institutions mentioned above increased their holdings at the same time as Jack Ma and Joseph Tsai's increased holdings of BABA-SWR.

Jack Ma increased his holdings of BABA-SWR Hong Kong-listed stocks worth $50 million in the fourth quarter of last year, while Joseph Tsai purchased Alibaba's U.S.-listed stocks worth approximately $151 million during the same period.

According to a Morgan Stanley research report, as of May last year, SoftBank's stake in BABA-SWR had dropped from 6%-7% in December 2022 to less than 0.5%, lower than Jack Ma's 4.5%. In other words, Jack Ma had already replaced SoftBank as the largest shareholder of BABA-SWR in the first half of last year.

In fact, since being surpassed by Pinduoduo in market value at the end of November last year, BABA-SWR has taken a series of countermeasures to boost market confidence.

On December 6th last year, BABA-SWR decisively took action to defend its stock price by announcing a dividend for the 2023 fiscal year, totaling approximately $2.5 billion (about RMB 18 billion). This was the third and largest dividend in BABA-SWR's history. The last time was in 2010, when BABA-SWR distributed only about HKD 1.1 billion. A week ago, BABA-SWR released its third-quarter report for the 2024 fiscal year, with a total revenue of CNY 260.348 billion, a YoY growth of 5%. BABA-SWR sent a signal of further focus, stating that it will concentrate on its core business and invest in domestic and international e-commerce and cloud computing.

In the third-quarter report, BABA-SWR announced a new share repurchase plan of USD 25 billion (approximately CNY 179.84 billion). After the adjustment, BABA-SWR still has a share repurchase quota of USD 35.3 billion (approximately CNY 253.934 billion) for the next three fiscal years. BABA-SWR's goal is to reduce the number of outstanding shares by at least 3% annually over the next three fiscal years.

After the release of the third-quarter report, investment banks such as Goldman Sachs, Baird, and CICC issued research reports expressing optimism about BABA-SWR's proactive approach to investment-driven growth and its actual actions to increase shareholder returns, giving BABA-SWR "outperform" or "buy" ratings.

Jefferies also focused on Alibaba's strategy of "increasing investment to revive growth" and emphasized that the expansion of BABA-SWR's share repurchase program reflects the company's confidence in its future prospects.

Goldman Sachs pointed out that Alibaba's valuation is attractive, as its current market value only reflects the value of Taobao and Tmall, without taking into account the leading public cloud and international business in China. Baird also emphasized the value of Alibaba's e-commerce and cloud businesses.

On Wednesday, February 14th, all three major U.S. stock indexes closed higher, with Alibaba's stock price rising by 2.5%, outperforming the broader market.