Hedge Funds Increases Their Holdings in Alibaba (BABA) Stock

Updated: 05 Dec, 2020
2 mins read

Following Alibaba Group Holding Ltd’s (NYSE: BABA) Q4 earnings announcement in February, which significantly outperformed all forecasts, hedge funds that were previously invested in the company’s stock, began bulking up on their holdings.

On March 5, Alibaba, through its payment subsidiary, Ant Financial, acquired a major stake in Klarna, a European FinTech firm. Through that acquisition, Alibaba increased its presence and operations in the European Union zone.

Brandes Investment Partners LP took a new stake in the BABA shares according to a recent filing with the SEC. The fund bought 345,185 BABA shares which are valued at roughly $73,214,000. This new acquisition has brought up the fund’s total holdings in BABA to 1.7% of its portfolio.

Another large investor that updated its holdings in BABA shares is AO Asset Management LP, who grew its stake in the shares by 24% following the Q4 release. The fund now owns 153,765 BABA shares valued at $32,614,000 after adding 29,700 shares last quarter.

Other hedge funds that took up more holdings after the Q4 release announcement include Menard Financial Group LLC, Johnson Investment Counsel Inc., GQG Partners LLC, and Valley National Advisers Inc. About 48.5% of all BABA shares are now owned by institutional investors.

Fourth Quarter Earnings Release

According to the earnings report released on the 13th of February, the specialty retail company now has a market cap of $520.45 billion, a price-to-earnings ratio of 20.98, and a debt-to-equity ratio of 0.14.

The company reported $18.19 earnings per share for the Q4, surpassing analysts’ forecasts of $1.86 by $16.33. The company also reported a revenue of $161.46 billion in Q4 outshining analysts’ forecast of 156 billion by $5.46 billion.

Alibaba (BABA) stock price on a daily chart, as of March 16, 2020. Tradingview.com data

BABA’s Projected Performance

BABA shares closed on Friday, the 13th of March at $194 which represents a 13.51% drop since the earnings release as a result of the coronavirus outbreak. The stock has a fifty-two low of $147.95 and a fifty-two week high of $231.14. It has a 50-day moving average price of $214.24 and a 200-day moving average price of $186.26 on the daily chart.

Several equities research analysts have given their ratings for their expected performance of the BABA stock. Two analysts gave the stock a “hold” rating, twenty-three gave a “buy” rating, and one has given a “strong-buy” rating. The overall consensus price target is $241. However, this performance rating is expected to be actualized when the current virus scare has subsided.

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Justinas Baltrusaitis

Justin crafts insightful data-driven stories on finance, banking, and digital assets. His reports were cited by many influential outlets globally like Forbes, Financial Times, CNBC, Bloomberg, Business Insider, Nasdaq.com, Investing.com, Reuters, among others.