Posted on June 14th, 2021
Alibaba Group Holding Ltd. ADR (BABA) has seen volatility in its stock over the past year and ultimately has underperformed the S&P 500. Alibaba rose just 0.5% as of June 11, 2021, compared to the S&P’s gain of approximately 31.2% since 2020 started. Despite the stock’s struggles, Alibaba rose on the WhaleWisdom Heatmap, achieving a ranking of 24, a nice upward boost from its previous rank of 45.
Alibaba is a Chinese-based online commerce company that hosts merchants and businesses catering to millions of users. The company has a considerable presence worldwide through its three main sites: Taobao, Tmall, and Alibaba. The company has a history of shopping events that garner vendor additions and increased sales from customers. Alibaba’s mid-year online shopping festival has already begun to gather new vendors and brands, with boosts in sales expected to continue into late June.
Alibaba also provides internet infrastructure and content services. The e-commerce company offers a range of high-performing cloud products that bring storage resources and significant data processing capabilities. Additionally, Alibaba sells information technology equipment such as fiber optics and telecommunication tower routers.
Hedge Funds and Institutions Are Selling
The first-quarter activity brought disappointing actions by hedge funds and institutions. Overall, institutions decreased their aggregate holdings by about 12.5% to approximately 886 million from 1 billion. The aggregate 13F shares held by hedge funds decreased to about 229.7 million from 249.7 million, decreasing approximately 8.0%. Of the hedge funds, 53 created new positions, 161 added to an existing holding, 69 exited, and 151 reduced their stakes. The long-term 13F metrics demonstrate that despite less favorable recent changes in hedge funds’ core positions, belief in Alibaba’s investment potential has continued to grow over the past seven years.
Cloud of Regulatory Concerns Lingers
The United States continues to examine companies believed to fund China’s military, which may prohibit Americans from investing in such companies. However, Susquehanna analyst Shyam Patil maintains a Positive rating on the stock, with a $350 price target. Patil noted that Alibaba has excellent growth opportunities despite regulatory and listing concerns.
Optimism for Future Growth
Alibaba’s investment potential continued to grow over the past seven years, demonstrating a positive track record. The company currently holds a favorable WhaleWisdom ranking of twenty-four. While Alibaba still faces scrutiny as the United States continues to add to its list of companies supporting the Chinese military, growth opportunities beyond 2021 remain attractive for loyal investors.