My "China is Uninvest-able" mantra ended in January at levels 30% lower when I added BABA at $68 monthly support and IPO price.
I did a whole client video on it Jan 23rd - "The China Stimulus Floor" - same day I learned Jack Ma bought back $50M and Alibaba Chairman Joe Tsai bought more BABA stock at $152M.
It took a few months to digest/confirm. Typical with a bottom-fishing, trend-reversing sector & play. But I am nothing if not persistent.
Since then:
$BABA reports better numbers and as much buyback in a quarter as Apple has done in a year. And yet their cloud has huge market potential in China itself, where they are #1 vendor. @jakublolec
$BABA: DYSTOPIAN VALUATIONS$BABA far outperformed $AMZN in the last 10 yrs. $AMZN multiplied its sales by 7.5X. $BABA? 25.17X$AMZN NEVER had EBIT MARGINS ABOVE 6.7% in 10 yrs. $BABA NEVER BELOW 8.5% in 10 yrs.
Don't forget: BABA is tied at the hip with Alipay which has 1.5 billion clients and a 33% stake.
At some point, cheap becomes stupid cheap and a buy.
@TheLongInvest reminds what folks may have forgotten:
BABA IPO'd in 2014 with Revenue of $12.3 Billion and a share price of $90. Now, 2024 Revenue is $126 Billion and has a share price of $80. That's a 10 X increase in Revenue at a much lower share price.
Free Cash Flow also increased 5 X during this same 10 year period from $5 Billion to $24 Billion.
In a nutshell, BABA has executed much faster growth AND much better margins than AMZN, but the "China is Un-investable" mantra is still in the psyche of traders burned since the waterfall cascade of all-things Chinese ADRs in February 2021.
"Bitcoin Short, China Long?
My highest conviction chases Mon/Tues: semi bounces and China oversold plays.
BIDU was my highest conviction chase Mon. BABA is already a swing, and this morning KWEB is above the 200D.
That's where it needs to stay...
Rotation is in play.
Bonus: Geoffrey coined the term: Bitcoin Short, China Long. It's all about Capital Controls & Liquidity... let's see how it plays out.
Stimulus continues by PBOC. Check out yday's article. This already helped push KWEB push into that weekly trendline and BABA above its daily trendline.
BIDU, JD, etc will all rise up as well.
As posted Tuesday morning, April 30th:
China plays are getting accumulated.
Via TheMarketEar:
Chinese stocks delivered the best weekly returns last week since Dec 2022, with MSCI China rallying 8%, led by Tech (HSTECH +13%). From the trough in late January, China offshore equities have rebounded 19%, outperforming both DM and EM benchmarks.
Hedge Funds have been buying H shares all year and the trend is accelerating. However, Hedge funds' net allocations in China are still close to 5-year lows, while their allocation in other EM markets reached the historical high.
As posted Thursday morning, May 2nd:
CHINA long/BITCOIN short - still working great. BABA, JD, BIDU, KWEB, FXI Still like boring utilities and gold/silver miners long. Still like volatile semis/tech short - but give them room Best China chases: NIO, LI, XPEV - likely turn bottom fishing swings!
USDJPY forming a bearish engulfing on the weekly, putting a strong bid in yen. Long FXY as way to play until USDJPY tags 152 where it likely digests/bounces. The advantage of falling USDJPY is actually potentially bullish stocks if it results in pushing back down our 10Y yield.
This is one way the BOJ/MOF intervention will help us get to that QQQ/SPX gap fill targets above: 445/5200
BABA is testing its 200D ~ $80. FXI into monthly trendline resistance at $27. I expect some volatile digestion here because the crowd is chasing upside call optionality here - as per GS (see chart).
And the HSTECH index is up 30% off the January lows and quite overbought - short-term.
But US equity market is till bullish. China's economy is recovering and they continue to stimulate.
It's a #BTD sector rotation that can go awhile if patient and positioned to preserve gains. Now’s the time.
