I own $BABA as well and I am deeply (about -40%) in red but I‘ll let the time let play things out. I can‘t buy more as it is already a 5%+ position. I am based in Europe but I currently buy a lot of Hong Kong stocks and just bought into 0142.HK and 0882.HK You might find them interesting as well. First Pacific is rather only listed in HK but does most of its business in SEA but Tianjin is a real bargain in my opinion. It‘s a holding structure so a bit more complicated but their share in OTIS is pure gold!
I think it's one of the cases where the risks are so obvious it would be extremely hard to explain to clients if they do materialise (capital lock from conflict, loss of market share), especially as there's now precedent for both. The edge is being able to price the probabilities and payoffs accurately without the burden of external stake holders.
Couldn’t agree more, but that’s exactly the point. If you can stay rational, calculate probabilities reasonably, and avoid fearing Monday morning quarterbacking, you have a tremendous edge in this situation.
Tell me something I don't know I mean what about geopolitical risks? Wouldn't these ADRs be toast if a chinese conflict came to pass which seems somewhat probable in the next 5 to 10 years? There are tons of Chinese companies that are undervalued but that's typically because of the China being uninvestable narrative.
Alibaba is actually investing in generative AI heavily. However Bytedance, Pinduoduo, jd.com and the rest make alibaba's core e-commerce play much more difficult to turn around. I agree there's upside but I'm just not so sure where that might manifest anytime soon?
Following Daniel Zhang’s tenure, the company required some time to reorganize. I think they have recognized that spinning off the cloud and Cainiao businesses is not feasible as these are integral to their core operations. Consequently, it is unlikely that these divisions will be spun off in the near future. However, according to Joseph Tsai, the company plans to divest non-core assets as soon as they can secure a reasonable price.
My point is that, with conservative assumptions, one could argue that the Chinese e-commerce business alone is roughly equal to the current market capitalization. Essentially, the rest of the company is valued at nearly zero. What is the value of the remaining assets? While I can make certain assumptions and envision different scenarios, it doesn’t make sense to project earnings for Alibaba ($BABA) several years into the future. Instead, one must closely monitor how various segments develop and the prices they fetch for divested assets. In any case, I believe the downside risk is well-protected at current prices.
He says with his back of the envelope calculations he essentially arrives at BABA’s current valuation so there is limited downside and good prospects for upside
I own $BABA as well and I am deeply (about -40%) in red but I‘ll let the time let play things out. I can‘t buy more as it is already a 5%+ position. I am based in Europe but I currently buy a lot of Hong Kong stocks and just bought into 0142.HK and 0882.HK You might find them interesting as well. First Pacific is rather only listed in HK but does most of its business in SEA but Tianjin is a real bargain in my opinion. It‘s a holding structure so a bit more complicated but their share in OTIS is pure gold!
I think it's one of the cases where the risks are so obvious it would be extremely hard to explain to clients if they do materialise (capital lock from conflict, loss of market share), especially as there's now precedent for both. The edge is being able to price the probabilities and payoffs accurately without the burden of external stake holders.
Couldn’t agree more, but that’s exactly the point. If you can stay rational, calculate probabilities reasonably, and avoid fearing Monday morning quarterbacking, you have a tremendous edge in this situation.
Minor point but Tsai still owns the Brooklyn Nets. I believe he only sold a minority stake (~15%) to the Koch family and remains the majority owner.
https://nypost.com/2024/06/19/sports/joe-tsai-sells-nets-minority-stake-to-koch-family-after-6-billion-valuation/
Tell me something I don't know I mean what about geopolitical risks? Wouldn't these ADRs be toast if a chinese conflict came to pass which seems somewhat probable in the next 5 to 10 years? There are tons of Chinese companies that are undervalued but that's typically because of the China being uninvestable narrative.
Alibaba is actually investing in generative AI heavily. However Bytedance, Pinduoduo, jd.com and the rest make alibaba's core e-commerce play much more difficult to turn around. I agree there's upside but I'm just not so sure where that might manifest anytime soon?
Any thoughts on the scrapped Cainiao IPO and the lack of plans for further spin offs of the other business segments
Following Daniel Zhang’s tenure, the company required some time to reorganize. I think they have recognized that spinning off the cloud and Cainiao businesses is not feasible as these are integral to their core operations. Consequently, it is unlikely that these divisions will be spun off in the near future. However, according to Joseph Tsai, the company plans to divest non-core assets as soon as they can secure a reasonable price.
Did I miss it? What is your valuation of BABA?
My point is that, with conservative assumptions, one could argue that the Chinese e-commerce business alone is roughly equal to the current market capitalization. Essentially, the rest of the company is valued at nearly zero. What is the value of the remaining assets? While I can make certain assumptions and envision different scenarios, it doesn’t make sense to project earnings for Alibaba ($BABA) several years into the future. Instead, one must closely monitor how various segments develop and the prices they fetch for divested assets. In any case, I believe the downside risk is well-protected at current prices.
He says with his back of the envelope calculations he essentially arrives at BABA’s current valuation so there is limited downside and good prospects for upside