Top 5 Stock Picks of Jonathan Esfandi’s JNE Partners

4. Alibaba Group Holding Limited (NYSE:BABA)

JNE Partners’ Stake Value: $16.6 million

Percentage of JNE Partners’ 13F Portfolio: 9.4%

Number of Hedge Fund Holders: 116

Alibaba Group Holding Limited (NYSE:BABA) is a Chinese electronic commerce giant that has also propelled its founder, Mr. Jack Ma, to fame globally. The Chinese company has also diversified its presence to target high growth areas including machine learning and cloud computing.

Mr. Esfandi’s hedge fund held 112,700 Alibaba Group Holding Limited (NYSE:BABA) shares as Q3 2021 ended. This enabled it to hold a $16.6 million stake that made up 9.4% of its portfolio. During the same time period, 115 out of 867 hedge funds surveyed by Insider Monkey held a stake in the company.

Alibaba Group Holding Limited (NYSE:BABA)’s largest investor is Ken Fisher’s Fisher Asset Management who owns 14 million shares worth $2 billion according to Insider Monkey’s research.

Artisan Partners mentioned Alibaba Group Holding Limited (NYSE:BABA) in its Q3 2021 investor letter, stating that:

“We also find Alibaba’s valuation compelling despite the prospect of increased regulation. The share price declined 35% during the quarter. Alibaba is China’s largest e-commerce business and is one of the highest return businesses in the world. The company’s core ecommerce operation dominates China’s retail industry. That business continues growing at a low-teens rate and operates with an incredible 62% profit margin. The company also operates several promising new businesses which have been a drag on the bottom line, though the company overall remains highly profitable and cash flow generative. The market cap today is about $440 billion. The company has large investments in cloud, financial services and other businesses worth an estimated $100 billion, leaving the core operations valued at $340 billion. Core operations over the last 12 months generated about $27 billion of after-tax profits, resulting in a trailing P/E of 12.5X. Alibaba certainly faces increased competition and a marginal increase in regulation. As a result, we expect modest growth in earnings over the next few years. However, a company with Alibaba’s operating and financial strength should trade at a premium, rather than a significantly discounted valuation.”