Hedge Funds Prefer These 5 Stocks Over Square

4. Alibaba Group Holding Limited (NYSE:BABA)

Number of Hedge Fund Holders: 146   

Alibaba Group Holding Limited (NYSE:BABA) is a China-based firm that provides technology infrastructure. It is placed fourth on our list of 10 stocks that hedge funds prefer over Square, Inc. (NYSE:SQ).

On October 1, investment advisory Raymond James downgraded Alibaba Group Holding Limited (NYSE:BABA) stock to Outperform from Strong Buy with a price target of $240. Aaron Kessler, an analyst at the advisory, issued the ratings update. 

Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Alibaba Group Holding Limited (NYSE:BABA) with 14 million shares worth more than $3.2 billion. 

In its Q1 2021 investor letter, Polen Capital Management, an asset management firm, highlighted a few stocks and Alibaba Group Holding Limited (NYSE:BABA) was one of them. Here is what the fund said:

“Alibaba also detracted from performance as the company continues to remain under regulatory scrutiny from both the Chinese State Administration for Market Regulation on antitrust concerns and the U.S. Securities and Exchange Commission on ADR listing requirements. Despite the regulatory overhang, we believe that Alibaba’s competitive positioning and growth outlook remains intact, even if the company must pay fines or modify some business practices. We viewed the current valuation at <20x next twelve month’s earnings as a compelling opportunity to add to our position. Alibaba is the second largest position in the Portfolio.”