Polen Capital: “We View Alibaba (BABA) as One of the Most Dominant Businesses in the World”

Polen Capital, an investment management firm, published its “Polen Global Growth” first quarter 2021 investor letter – a copy of which can be downloaded here. A return of 1.39% was delivered by the fund for the Q1 of 2021, trailing its MSCI All-Country World benchmark that delivered a 4.58% return for the same period. You can view the fund’s top 5 holdings to have a peek at their top bets for 2021.

Polen Global Growth Fund, in its Q1 2021 investor letter, mentioned Alibaba Group Holding Limited (NYSE: BABA), and shared their insights on the company. Alibaba Group Holding Limited is a Hangzhou, China-based e-commerce company that currently has a $602.9 billion market capitalization. Since the beginning of the year, BABA delivered a -10.40% return, while its 12-month gains are up by 2.38%. As of May 13, 2021, the stock closed at $206.08 per share.

Here is what Polen Global Growth Fund has to say about Alibaba Group Holding Limited in its Q1 2021 investor letter:

 “In the case of Alibaba, two significant news events impacted the company’s shares in the last few months of 2020. First, the Chinese government intervened to halt–for an undetermined period of time–Ant Group’s IPO. Alibaba owns 33% of Ant Group, and Ant Group’s “Alipay” application facilitates financing and payments around the Alibaba ecosystem. Second, rumors of Chinese regulatory oversight in the internet space were solidified at the end of 2020 when China’s State Administration for Market Regulation announced an investigation under the nation’s AntiMonopoly Law. In combination, these events contributed to a selloff in BABA shares that resulted in a roughly 30% decline from highs in late October 2020.

We view Alibaba as arguably one of the most dominant businesses in the world.

We believe the company is also playing an integral role in China’s ambitions to reorient its economy from one that is export-driven to one that is domestically consumption-driven. Alibaba’s marketplaces—TaoBao and Tmall—in combination with its logistics capabilities may well provide the most efficient way to purchase and receive goods in many of China’s lower-tier cities. Important to the investment case, Alibaba’s core commerce business continues to compound at high rates while enjoying low total addressable market penetration and multiple competitive advantages, not the least of which consist of two-sided network
effects between merchants and consumers. At approximately 19x next twelve month’s earnings, we think Alibaba will provide a
favorable investment outcome even if it must pay fines or modify some business practices. We continue to expect earnings growth in excess of 20% over the next three to five years. Even if earnings growth were to fall to 15%, we think it would still result in a favorable outcome at the price at which we added to the position.”

Alibaba Group Holding Ltd (NYSE:BABA), sign on a building, logo, share, stock, New York, offering

Christopher Penler / Shutterstock.com

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 a -22.15% return in the past 3 months.

The top 10 stocks among hedge funds returned 231.2% between 2015 and 2020, and outperformed the S&P 500 Index ETFs by more than 126 percentage points. We know it sounds unbelievable. You have been dismissing our articles about top hedge fund stocks mostly because you were fed biased information by other media outlets about hedge funds’ poor performance. You could have doubled the size of your nest egg by investing in the top hedge fund stocks instead of dumb S&P 500 ETFs. Here you can watch our video about the top 5 hedge fund stocks right now. All of these stocks had positive returns in 2020.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best innovative stocks to buy to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website:

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