Here’s Why SGA Global Growth Strategy Acquired a Position in Alibaba (BABA)

Sustainable Growth Advisers (SGA), an investment management company, released its third-quarter investor letter for its “Global Growth Strategy.” A copy of the letter can be downloaded here. The portfolio returned -2.3% (Gross) and -2.5% (Net) in the third quarter, compared to a 7.6% return for the MSCI ACWI and a 9.0% return for the MSCI ACWI Growth. The index returns were fueled by enthusiasm for AI, whereas factors aligned with SGA’s strategy, like quality and sales stability, lagged. SGA’s investment objective is to invest in high-quality growth businesses expected to achieve consistent mid-teens earnings growth, accompanied by stable revenue and cash flow.  In addition, please check the fund’s top five holdings to know its best picks in 2025.

In its third-quarter 2025 investor letter, SGA Global Growth Strategy highlighted stocks such as Alibaba Group Holding Limited (NYSE:BABA). Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach. The one-month return of Alibaba Group Holding Limited (NYSE:BABA) was -1.51%, and its shares gained 82.11% of their value over the last 52 weeks. On January 2, 2026, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $155.74 per share, with a market capitalization of $371.601 billion.

SGA Global Growth Strategy stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its third quarter 2025 investor letter:

“During the quarter, we initiated a position in Alibaba Group Holding Limited (NYSE:BABA), a leading Chinese technology company with dominant platforms in e commerce and cloud computing, and growing capabilities in artificial intelligence. Since we last owned the stock, Alibaba has undergone meaningful organizational transformation, improving its pricing power, growth visibility, and management execution. The company’s mission is now closely aligned with China’s national agenda to pursue AI leadership and transition to a consumption-driven economy.

Alibaba’s new leadership, composed of long-tenured internal talent, has refocused the business on two strategic pillars: Commerce and “AI + cloud.” In Commerce, the company has corrected prior missteps, including divesting offline retail assets and reestablishing the Taobao App as its primary user gateway. These changes have made Alibaba more agile and competitive, as evidenced by its rapid success in quick commerce, where it nearly matched market leader Meituan’s share within months by leveraging its ecosystem, including Taobao, AliPay, and Amap…” (Click here to read the full text)

Alibaba (BABA) Soars 8% on US Chip Exports Ease to China

Alibaba Group Holding Limited (NYSE:BABA) is in the 17th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 130 hedge fund portfolios held Alibaba Group Holding Limited (NYSE:BABA) at the end of the third quarter, which was 101 in the previous quarter. In the fiscal first quarter of 2026, Alibaba Group Holding Limited (NYSE:BABA) reported revenue of RMB 247.7 billion. While we acknowledge the risk and potential of Alibaba Group Holding Limited (NYSE:BABA) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than Alibaba Group Holding Limited (NYSE:BABA) and that has 10,000% upside potential, check out our report about this cheapest AI stock.

In another article, we covered Alibaba Group Holding Limited (NYSE:BABA) and shared Baird Chautauqua International and Global Growth Fund’s views on the company. In addition, please check out our hedge fund investor letters Q3 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.