Alibaba (BABA), A Large Detractor in Oakmark Global Select’s Q4 Results

Oakmark Funds, a long-term value investment management firm, published its “Oakmark Global Select Fund” fourth quarter 2020 investor letter – a copy of which can be seen here. A return of 24.4% was recorded by the fund in the fourth quarter of 2020, outperforming its MSCI World benchmark that delivered a 14.0% return in the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Oakmark Global Select Fund, in their Q4 2020 investor letter, mentioned Alibaba Group Holding Limited (NYSE: BABA) and emphasized their views on the company. Alibaba Group Holding Limited is a Hangzhou, China-based e-commerce company that currently has a $603.3 billion market capitalization. Since the beginning of the year, BABA delivered a -2.35% return, while its 12-month gains are still up by 18.82%. As of March 26, 2021, the stock closed at $227.26 per share.

Here is what Oakmark Global Select Fund has to say about Alibaba Group Holding Limited in their Q4 2020 investor letter:

“Alibaba Group, a China-based internet and direct marketing retailer, was a large detractor in the fourth quarter. The company faced regulatory headwinds during the quarter due to China’s new anti-monopoly law as well as the suspension of the highly anticipated initial public offering of Ant Group, wherein Alibaba holds an approximately one-third ownership stake. The increased regulations on both Alibaba and Ant are still in the consultation phase and have not yet been finalized. While we find it difficult to accurately quantify these risks, we believe it is likely Alibaba will face greater regulatory scrutiny and slower growth going forward. However, the company remains an important driver of innovation in China and even with its slower growth, we believe its valuation is compelling. In the meantime, we continue to monitor this fluid situation.”

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Our calculations show that Alibaba Group Holding Limited (NYSE: BABA) ranks 7th in our list of the 30 Most Popular Stocks Among Hedge Funds. As of the end of the fourth quarter of 2020, Alibaba Group Holding Limited was in 156 hedge fund portfolios, compared to 166 funds in the third quarter. BABA delivered an 18.82% return in the past 3 months.