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01-09

stay 60 to 70% invested in the market, diversify into a few sectors other than AI as its valuation is already pretty lofty. save some cash to buy the dip for possible market correction if it happens this year

2023-08-25

Fundamentals based on balance sheet ( net cash of debt), growing revenue and profit, free cash flow. This is all that matters. In the long term, market is a weighing machine.

Alibaba Stock: Nothing Seems To Fundamentally Change

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In the long term, market is a weighing machine.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/212528418324640","repostId":"2362696477","repostType":2,"repost":{"id":"2362696477","kind":"highlight","pubTimestamp":1692894461,"share":"https://ttm.financial/m/news/2362696477?lang=&edition=fundamental","pubTime":"2023-08-25 00:27","market":"us","language":"en","title":"Alibaba Stock: Nothing Seems To Fundamentally Change","url":"https://stock-news.laohu8.com/highlight/detail?id=2362696477","media":"seekingalpha","summary":"China's macroeconomy is in decline, with a real estate crisis, weak consumer demand, and declining exports, making Alibaba vulnerable.BABA is still the most overcrowded ADR among hedge fund managers, ","content":"<html><body><ul><li>China's macroeconomy is in decline, with a real estate crisis, weak consumer demand, and declining exports, making Alibaba vulnerable.</li><li>BABA is still the most overcrowded ADR among hedge fund managers, who are likely to sell their stakes on rips in my view.</li><li>The attractive valuation of Alibaba's stock is not enough to outweigh the risks and uncertainties associated with investing in the company in my opinion.</li></ul><p><figure><picture> <img height=\"2000px\" loading=\"lazy\" sizes=\"(max-width: 768px) calc(100vw - 36px), (max-width: 1024px) calc(100vw - 132px), (max-width: 1200px) calc(66.6vw - 72px), 600px\" src=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w750\" srcset=\"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w1536 1536w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w1280 1280w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w1080 1080w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w750 750w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w640 640w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w480 480w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w320 320w, https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg?io=getty-c-w240 240w\" width=\"3000px\"/> </picture><figcaption> <p>Andrew Burton</p></figcaption></figure></p> <p>I started covering <strong>Alibaba</strong> (<span>NYSE:BABA</span>) stock back in September 2021, when 1 share was trading at ~$150. My \"Sell\" rating at that time has stood the test of time, but I have been constantly updating my thesis and adding<span> new data and conclusions based on it, so I upgraded BABA stock to Neutral/Hold in </span>December 2021<span>, stating that the stock was cheap, but may become even cheaper. Since my upgrade, the stock is still down 20% [compared to the S&amp;P 500's 2% decline], but overall BABA stock has moved sideways in recent months.</span></p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2023/8/24/49513514-16928578281985335.png\"/></span><figcaption><p><span>Seeking Alpha, my BABA coverage</span></p></figcaption></figure></p> <p>As one of the largest companies in China, BABA has always attracted genuine interest from Western investors who are willing to ignore some very important risks to ride the \"phenomenal growth of the Red Dragon\" (\"Hongse Long\").</p> <p>In each<span> of my articles on BABA, I have tried to point out these risks and the pitfalls of the company's cheap valuation. Today's article is no exception, unfortunately for the bulls.</span></p> <h2>Nothing Changes</h2> <p>At the end of January 2023, as usual, I was reading the banks' research reports and came across a very interesting finding in one of them: the analysts from Morgan Stanley noted that hedge funds (also known as \"smart money investors\") had closed out a lot of their long positions in BABA's stock exactly at the local peak of the stock's rally.</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2023/8/24/49513514-1692858884309799.png\"/></span><figcaption><p><span>Seeking Alpha, author's notes</span></p></figcaption></figure></p> <p>Hedge funds then took advantage of the situation of renewed optimism about the growth prospects of BABA and sold their shares, as they usually do.</p> <p>But don't think that none of the smart money investors have stayed in BABA since. As Goldman Sachs analysts wrote in a recent note [August 21, 2023 - proprietary source], BABA is still the most popular ADR among hedge fund managers, although their amount has declined by ~6.3% recently:</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2023/8/24/49513514-16928592283289247.png\"/></span><figcaption><p><span>Goldman Sach, Hedge Fund Trend Monitor [August 21, 2023 - proprietary source]</span></p></figcaption></figure></p> <p>In my opinion, it therefore makes no sense to buy BABA with the expectation that it is no longer an overcrowded name: the stock still attracts many retail and professional investors. <em>And I believe the latter type of investor is probably waiting to get rid of their shares as soon as such an opportunity arises.</em></p> <p>Since I raised the problems of the Chinese economy, not only have they not been solved, but they have actually gotten worse, as far as I can see.</p> <blockquote> <p>What we are watching is the fiscal policy response. And to the extent to which that has not been coming through, we had to bring in the growth numbers lower.\" Chetan Ahya, chief Asia economist at Morgan Stanley, explains why the bank now sees China's gross domestic product expanding 4.7% this year, down from an earlier projection of 5%. Morgan Stanley also lowered next year’s forecast to 4.2% from 4.5%.</p> <p>Source: Morgan Stanley at Bloomberg [August 18th, 2023]</p> </blockquote> <p>China's attempt to rein in its booming real estate sector three years ago as part of President Xi Jinping's \"common prosperity\" drive seems to have backfired, another Bloomberg article noted on August 24th, 2023.</p> <p>The situation around China's real estate is escalating, with more developers facing troubles, home prices plummeting in smaller cities, and fears spreading throughout China's $60 trillion financial system. This real estate crisis, compounded by weak consumer demand, declining exports, and geopolitical tensions, is partly a result of the government's earlier decisions to privatize property, which fueled unsustainable growth. The real estate sector, once a significant driver of China's economy, has become a major concern due to its size and impact on household savings and confidence. Despite the attempts to narrow the wealth gap, these actions have led to unaffordable housing for the younger generation. Defaults by major developers and the collapse of the real estate bond market have further exacerbated the situation. Many Chinese developers' dollar-denominated bonds are in default, leaving billions of dollars in unpaid debt.</p> <p>The youth unemployment rate in the country is also accelerating rapidly. The situation is so bad that Chinese government authorities have stopped publishing statistics on this indicator.</p> <p><figure contenteditable=\"false\"><span><img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2023/8/24/49513514-1692863885660833.png\"/></span><figcaption><p><span>Bloomberg [August 15, 2023]</span></p></figcaption></figure></p> <p>The demographic situation in the country is horrendous - in my opinion, it will be very difficult for China to grow with so many unemployed young people. Less demand for real estate, and less demand for discretionary goods, basically.</p> <p>As the accumulated macro problems escalate, BABA looks quite vulnerable if we consider that a) this is the most popular ADR among institutional investors, and b) its founder had problems with the authoritarian government, which could reinforce its oppression again at any time.</p> <p>Yes, in many ways the BABA stock looks attractive at its current level - it's not just about valuation, as you can see in the Seeking Alpha Quant System:</p> <p><figure contenteditable=\"false\"><picture> <img contenteditable=\"false\" loading=\"lazy\" src=\"https://static.seekingalpha.com/uploads/2023/8/24/49513514-16928671908369985.png\"/> </picture><figcaption><p><span>Seeking Alpha</span></p></figcaption></figure></p> <p>But I still prefer to stay away from it because nothing fundamentally changes: China's macroeconomy is in decline, and the discount for many unquantifiable risks remains. BABA's EPS CAGR is estimated at 6.1% over the next 6 years, which is great at a P/E of ~10x. However, we must remember that the bulk of the firm's revenue comes from selling goods in yuan, which will likely continue to weaken. Moreover, the organizational structure of BABA's and other Chinese companies' subsidiaries that you buy does not allow you to expect full ownership of these assets.</p> <h2>Concluding Thoughts</h2> <p>Much of the bullish thesis around BABA is based on the stock's attractive valuation and the belief that the firm's growth will soon resume. But the state of the Chinese economy leaves me on the sidelines. The growth after COVID, which many expected, has proven insufficient to mask the internal crisis processes in the country in my view, which are now too pent up.</p> <p>Many other companies deserve your attention if your goal is to diversify into non-U.S. stocks. Take Kaspi.kz for example - why not a candidate to replace the Chinese giant?</p> <p>While the current price of BABA might appear appealing, I urge everyone to consider the broader perspective and question the underlying reasons for the existence of this \"buying\" opportunity, especially given the company's widespread popularity.</p> <p><em>Thanks for reading!</em></p> <div></div> <p>Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.</p></body></html>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Alibaba Stock: Nothing Seems To Fundamentally Change</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nAlibaba Stock: Nothing Seems To Fundamentally Change\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-08-25 00:27 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4630862-alibaba-stock-nothing-seems-to-fundamentally-change><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>China's macroeconomy is in decline, with a real estate crisis, weak consumer demand, and declining exports, making Alibaba vulnerable.BABA is still the most overcrowded ADR among hedge fund managers, ...</p>\n\n<a href=\"https://seekingalpha.com/article/4630862-alibaba-stock-nothing-seems-to-fundamentally-change\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"https://static.seekingalpha.com/cdn/s3/uploads/getty_images/455722524/image_455722524.jpg","relate_stocks":{"BK4122":"互联网与直销零售","LU1989772840.SGD":"CPR Invest - Climate Action A2 Acc SGD-H","BK4503":"景林资产持仓","LU0098860793.USD":"FRANKLIN INCOME \"A\" INC","LU1989772923.USD":"CPR Invest - Climate Action A2 Acc USD-H","LU1162221912.USD":"FRANKLIN INCOME \"A\" (USD) ACC","BK4502":"阿里概念","LU1267930227.SGD":"TEMPLETON GLOBAL BALANCED \"AS\" (SGD) ACC A","GS":"高盛","BK4505":"高瓴资本持仓","BK4581":"高盛持仓","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","LU0128525689.USD":"TEMPLETON GLOBAL BALANCED \"A\"(USD) ACC","LU0320765646.SGD":"FTIF - Franklin Income A MDIS SGD-H1","BK4548":"巴美列捷福持仓","IE00BZ1G4Q59.USD":"LEGG MASON CLEARBRIDGE US EQUITY SUSTAINABILITY LEADER \"A\"(USD) INC (A)","LU1363072403.SGD":"Fidelity Global Financial Services A-ACC-SGD","LU0106831901.USD":"贝莱德世界金融基金A2","BK4127":"投资银行业与经纪业","BK4565":"NFT概念","LU0821914370.USD":"贝莱德亚洲成长领袖A2","LU1688375341.USD":"贝莱德中国灵活股票基金","BK4554":"元宇宙及AR概念","BABA":"阿里巴巴","09988":"阿里巴巴-W","MS":"摩根士丹利","BK4531":"中概回港概念","LU0971096721.USD":"富达环球金融服务 A","LU1074936037.SGD":"JPMorgan Funds - US Value A (acc) SGD","BK4534":"瑞士信贷持仓","BK4585":"ETF&股票定投概念","IE00BKVL7J92.USD":"Legg Mason ClearBridge - US Equity Sustainability Leaders A Acc USD","BK4533":"AQR资本管理(全球第二大对冲基金)","LU1668664300.SGD":"Blackrock World Financials A2 SGD-H","LU1880383366.USD":"东方汇理中国股票基金 A2 (C)","LU1051768304.USD":"贝莱德新兴市场股票收益A6","BK4575":"芯片概念","BK4587":"ChatGPT概念","BK4524":"宅经济概念","LU1046422090.SGD":"Fidelity Pacific A-SGD","BK4535":"淡马锡持仓","BK4220":"综合零售","LU0251143458.SGD":"Fidelity Emerging Markets A-SGD","BK4538":"云计算","LU1515016050.SGD":"Blackrock Emerging Markets Equity Income A6 SGD-H","BK4588":"碎股","BK4579":"人工智能","BK4550":"红杉资本持仓","LU0052756011.USD":"TEMPLETON GLOBAL BALANCED \"A\" (USD) INC","BK4552":"Archegos爆仓风波概念"},"source_url":"https://seekingalpha.com/article/4630862-alibaba-stock-nothing-seems-to-fundamentally-change","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"2362696477","content_text":"China's macroeconomy is in decline, with a real estate crisis, weak consumer demand, and declining exports, making Alibaba vulnerable.BABA is still the most overcrowded ADR among hedge fund managers, who are likely to sell their stakes on rips in my view.The attractive valuation of Alibaba's stock is not enough to outweigh the risks and uncertainties associated with investing in the company in my opinion.   Andrew Burton I started covering Alibaba (NYSE:BABA) stock back in September 2021, when 1 share was trading at ~$150. My \"Sell\" rating at that time has stood the test of time, but I have been constantly updating my thesis and adding new data and conclusions based on it, so I upgraded BABA stock to Neutral/Hold in December 2021, stating that the stock was cheap, but may become even cheaper. Since my upgrade, the stock is still down 20% [compared to the S&P 500's 2% decline], but overall BABA stock has moved sideways in recent months. Seeking Alpha, my BABA coverage As one of the largest companies in China, BABA has always attracted genuine interest from Western investors who are willing to ignore some very important risks to ride the \"phenomenal growth of the Red Dragon\" (\"Hongse Long\"). In each of my articles on BABA, I have tried to point out these risks and the pitfalls of the company's cheap valuation. Today's article is no exception, unfortunately for the bulls. Nothing Changes At the end of January 2023, as usual, I was reading the banks' research reports and came across a very interesting finding in one of them: the analysts from Morgan Stanley noted that hedge funds (also known as \"smart money investors\") had closed out a lot of their long positions in BABA's stock exactly at the local peak of the stock's rally. Seeking Alpha, author's notes Hedge funds then took advantage of the situation of renewed optimism about the growth prospects of BABA and sold their shares, as they usually do. But don't think that none of the smart money investors have stayed in BABA since. As Goldman Sachs analysts wrote in a recent note [August 21, 2023 - proprietary source], BABA is still the most popular ADR among hedge fund managers, although their amount has declined by ~6.3% recently: Goldman Sach, Hedge Fund Trend Monitor [August 21, 2023 - proprietary source] In my opinion, it therefore makes no sense to buy BABA with the expectation that it is no longer an overcrowded name: the stock still attracts many retail and professional investors. And I believe the latter type of investor is probably waiting to get rid of their shares as soon as such an opportunity arises. Since I raised the problems of the Chinese economy, not only have they not been solved, but they have actually gotten worse, as far as I can see.  What we are watching is the fiscal policy response. And to the extent to which that has not been coming through, we had to bring in the growth numbers lower.\" Chetan Ahya, chief Asia economist at Morgan Stanley, explains why the bank now sees China's gross domestic product expanding 4.7% this year, down from an earlier projection of 5%. Morgan Stanley also lowered next year’s forecast to 4.2% from 4.5%. Source: Morgan Stanley at Bloomberg [August 18th, 2023]  China's attempt to rein in its booming real estate sector three years ago as part of President Xi Jinping's \"common prosperity\" drive seems to have backfired, another Bloomberg article noted on August 24th, 2023. The situation around China's real estate is escalating, with more developers facing troubles, home prices plummeting in smaller cities, and fears spreading throughout China's $60 trillion financial system. This real estate crisis, compounded by weak consumer demand, declining exports, and geopolitical tensions, is partly a result of the government's earlier decisions to privatize property, which fueled unsustainable growth. The real estate sector, once a significant driver of China's economy, has become a major concern due to its size and impact on household savings and confidence. Despite the attempts to narrow the wealth gap, these actions have led to unaffordable housing for the younger generation. Defaults by major developers and the collapse of the real estate bond market have further exacerbated the situation. Many Chinese developers' dollar-denominated bonds are in default, leaving billions of dollars in unpaid debt. The youth unemployment rate in the country is also accelerating rapidly. The situation is so bad that Chinese government authorities have stopped publishing statistics on this indicator. Bloomberg [August 15, 2023] The demographic situation in the country is horrendous - in my opinion, it will be very difficult for China to grow with so many unemployed young people. Less demand for real estate, and less demand for discretionary goods, basically. As the accumulated macro problems escalate, BABA looks quite vulnerable if we consider that a) this is the most popular ADR among institutional investors, and b) its founder had problems with the authoritarian government, which could reinforce its oppression again at any time. Yes, in many ways the BABA stock looks attractive at its current level - it's not just about valuation, as you can see in the Seeking Alpha Quant System:   Seeking Alpha But I still prefer to stay away from it because nothing fundamentally changes: China's macroeconomy is in decline, and the discount for many unquantifiable risks remains. BABA's EPS CAGR is estimated at 6.1% over the next 6 years, which is great at a P/E of ~10x. However, we must remember that the bulk of the firm's revenue comes from selling goods in yuan, which will likely continue to weaken. Moreover, the organizational structure of BABA's and other Chinese companies' subsidiaries that you buy does not allow you to expect full ownership of these assets. Concluding Thoughts Much of the bullish thesis around BABA is based on the stock's attractive valuation and the belief that the firm's growth will soon resume. But the state of the Chinese economy leaves me on the sidelines. The growth after COVID, which many expected, has proven insufficient to mask the internal crisis processes in the country in my view, which are now too pent up. Many other companies deserve your attention if your goal is to diversify into non-U.S. stocks. Take Kaspi.kz for example - why not a candidate to replace the Chinese giant? While the current price of BABA might appear appealing, I urge everyone to consider the broader perspective and question the underlying reasons for the existence of this \"buying\" opportunity, especially given the company's widespread popularity. Thanks for reading!  Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.","news_type":1},"isVote":1,"tweetType":1,"viewCount":119,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"EN","totalScore":0}],"lives":[]}