Alibaba Group Holding Ltd (BABA)’s Fintech Potential Gets the Thumbs Up From Barron’s

Alibaba Group Holding Ltd (NYSE:BABA) will likely be in the spotlight on Monday courtesy of a weekend column from Barron’s. According to author Shuli Ren, Alibaba Group Holding Ltd (NYSE:BABA), along with China’s social media giant Tencent, could win the majority of the value of the next big thing in the world’s most populous country (and the world’s second largest economy), the coming financial technology boom. In this column, let’s find out what the smart money thinks of Alibaba Group Holding Ltd (NYSE:BABA), and what Barron’s had to say about Jack Ma’s company and its growth prospects.

What Does The Smart Money Sentiment Say?

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According to our data, the smart money in aggregate wasn’t as bullish in Q4 as they were in Q3. Of the 742 elite funds we track, 86 funds owned $5.9 billion of Alibaba Group Holding Ltd (NYSE:BABA) and accounted for 2.70% of the float on December 31, versus 104 funds and $8.27 billion respectively on September 30.

To be fair, some elite funds that are very savvy in the tech space did become bullish at the right time. Stephen Mandel‘s Lone Pine Capital raised its stake by 48% to 7.62 million shares in the fourth quarter, while Philippe Laffont‘s Coatue Management raised its holdings by 53% in the same time frame.

Barron’s Bullish on Fintech, Expects Alibaba Group Holding Ltd (NYSE:BABA) to Garner Substantial Market Share

Specifically in regard to Alibaba Group Holding Ltd (NYSE:BABA), writer Shuli Ren notes that Alibaba Group Holding Ltd (NYSE:BABA) could have 60% upside to its current valuation due to the expectation that Jack Ma’s company and Tencent will capture at least 50% of the financial technology space by 2020 (between the two of them). With analysts estimating the fintech space in China to amount to $65 billion by the end of the decade, that 50% market share could be worth more than $320 billion between the two companies assuming a 25 p/e ratio. (The upside is a less for Alibaba because it only owns 1/3 of Alipay, however).  Currently, Alibaba and Tencent are sitting in good position in the fast growing field, as they dominate the online payments sector, which is arguably the most important part of fintech, and allows the two companies to spread out to other internet finance areas such as wealth management and consumer loans. Although one could argue how much of Alibaba Group Holding Ltd (NYSE:BABA)’s potential has already been priced in, Alibaba shares have already been on a technical roll before, and this weekend’s Barron’s article certainly improves sentiment.


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