Corner of Berkshire & Fairfax Message Board

General Category => Investment Ideas => Topic started by: Liberty on April 20, 2014, 07:42:48 PM

Title: BABA - Alibaba
Post by: Liberty on April 20, 2014, 07:42:48 PM
http://oraclefromomaha.wordpress.com/2014/04/20/whats-alibaba-really-worth-2/

Good read. I'm not even looking into the company as I don't know enough about China, but I thought it was very instructive to look at these other similar business and see how even if you discount back to the IPO, you could have paid very high multiples and still have done well. Reminds me of a recent post by @Jesse_Livermore where he did a similar thing with Wal-Mart and other companies:

http://philosophicaleconomics.wordpress.com/2014/03/22/wmt/
Title: Re: Alibaba
Post by: PatientCheetah on April 20, 2014, 07:58:29 PM
The power of secular trend on your back - China transforming into a consumer economy!
Title: Re: Alibaba
Post by: wbr on April 21, 2014, 02:54:40 AM
I think these great businesses that do not rely on superior capital allocation but benefit from the fact that they are low capex, platform businesses usually related to virtual services with extremely strong moats due to network effects are still very much underappreciated.

There might be value where most people arent looking for it. Among typical value investments I have also owned Baidu since it went below $100 at the end of 2012 and I am certainly looking at Alibaba which could be a great valueplay. Though I agree with the author of the article that buying Yahoo for Alibaba might not be a good idea. And of course it doesnt mean you should pay any price but I am hopeful that the IPO price might suffer if the current tech market environment continues to be cautious.
Title: Re: Alibaba
Post by: yadayada on April 21, 2014, 07:58:08 AM
there are other companies that own large stakes in alibaba. I remember reading a write up on it a while ago. Cannot remember where tho :(
Title: Re: Alibaba
Post by: rykelsap on April 21, 2014, 08:05:28 AM
The write-up you are thinking about is likely a VIC write-up on SoftBank. The link to the VIC write-up is below:

http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/114243 (http://www.valueinvestorsclub.com/value2/Idea/ViewIdea/114243)
Title: Re: Alibaba
Post by: ajc on April 21, 2014, 09:31:46 AM
This article optimistically pegs Yahoo's core business at a negative $10 billion dollar valuation due to Alibaba - http://www.theatlantic.com/business/archive/2014/04/the-peculiar-worthlessness-of-yahoo/360851/?utm_content=bufferdc957&utm_source=twitter.com (http://www.theatlantic.com/business/archive/2014/04/the-peculiar-worthlessness-of-yahoo/360851/?utm_content=bufferdc957&utm_source=twitter.com)

Also, according to a Seeking Alpha commenter (http://seekingalpha.com/article/2098753-how-to-play-the-alibaba-ipo-yahoo-vs-softbank-vs-others (http://seekingalpha.com/article/2098753-how-to-play-the-alibaba-ipo-yahoo-vs-softbank-vs-others)), 0.3% of Alibaba is owned by China Dongxiang (HK:3818) which apparently amounts to 63 Hong Kong cents per share.
I've not looked into it yet, but the stock currently trades at HK$ 1.52 per share.

Somehow though, I'd be surprised if the market isn't mispricing things somewhere between Softbank, Yahoo and China Dongxiang. How much of that is simply my enthusiasm talking though, I can't really be sure.


Title: Re: Alibaba
Post by: fareastwarriors on April 21, 2014, 01:17:41 PM
Alibaba’s worth is flotation teaser


http://www.ft.com/intl/cms/s/0/8f5e50dc-c5fd-11e3-9839-00144feabdc0.html#slide0 (http://www.ft.com/intl/cms/s/0/8f5e50dc-c5fd-11e3-9839-00144feabdc0.html#slide0)
Title: Re: 1688:HK - Alibaba
Post by: SpecOps on April 22, 2014, 12:54:08 AM
I got interested in it after reading the article. The internet seems to gravitate naturally towards monopolies which creates very strong moats for the likes of FB, GOOG and Amazon. If Alibaba trades below forward PE 20 I will most likely take a punt at it.
Title: Re: 1688:HK - Alibaba
Post by: jouni1 on April 22, 2014, 02:29:28 AM
what's the HK ticker for? i thought it was going to list in new york?
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 22, 2014, 05:52:44 AM
what's the HK ticker for? i thought it was going to list in new york?

There is no HK ticker. Alibaba decides to list in NY because HK will not accommodate its ownership structure and among other reasons.
Title: Re: 1688:HK - Alibaba
Post by: hillfronter83 on April 22, 2014, 06:35:14 AM
what's the HK ticker for? i thought it was going to list in new york?

There is no HK ticker. Alibaba decides to list in NY because HK will not accommodate its ownership structure and among other reasons.

Alibaba e-commerce site (part of Alibaba Group) was listed in Hong Kong. It was taken private by Alibaba group in 2012.

Another interesting thing I found was that a similar stake as Dongxing holds (part of Yunfeng fund) transacted early this year that valued Alibaba at $129 billion.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 22, 2014, 02:57:26 PM
is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$.

Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap.

If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat.

sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube?

And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings?

Anyone have an opinion on Sina?
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 22, 2014, 04:58:20 PM
Ok so Sina holds 56% of weibo, which did an IPO and is the twitter of China apparantly?  Currently Weibo stands at 4.63 billion, so that is 2.6 billion$ for Sina. They have about a billion $ in net cash.

So that is 2.6 billion + 1 billion + 100 million for the youku thing. And add about 1.2 billion for the alibaba stake? That is 4.8 billion $ in net assets. Or maybe a bit less I dont know.

And since weibo is still losing money, their underlying business earns about 45 million$ in 2013 on top of that, and there seems to be some leverage there. So another 450 million? They have a market cap of 3.72 billion. So if we assume roughly 5 billion that is 34% upside.

But it can change wildly. If you think alibaba will do 5 billion and deserves a 35x multiple that is 1.75b$ for sina + 1bn$ in net cash + 2.6 billion$ in weibo + 100 million in youku stock + 15x multiple for their business which earns 45 million = 675 = 6.1 billion$. which implies 64% upside.

Seems worth digging into.
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 22, 2014, 05:14:18 PM
Ok so Sina holds 56% of weibo, which did an IPO and is the twitter of China apparantly?  Currently Weibo stands at 4.63 billion, so that is 2.6 billion$ for Sina. They have about a billion $ in net cash. This does not add in the 563 million Alibaba bought tho. This happened april 9th. im not sure if the 56% is before or after april 9th? Lets assume its not included.

So that is 2.6 billion + 1 billion + 100 million for the youku thing. And add about 1.2 billion for the alibaba stake? That is 4.8 billion $ in net assets. Or maybe a bit less I dont know.

And since weibo is still losing money, their underlying business earns about 45 million$ in 2013 on top of that, and there seems to be some leverage there. So another 450 million? They have a market cap of 3.72 billion. So if we assume roughly 5 billion that is 34% upside.

But it can change wildly. If you think alibaba will do 5 billion and deserves a 35x multiple that is 1.75b$ for sina + 563m$ in cash that is not included in their latest 6k, + 1bn$ in net cash + 2.6 billion$ in weibo + 100 million in youku stock + 15x multiple for their business which earns 45 million = 675 = 6.7 billion$. which implies 80% upside.

Seems worth digging into.

Didn't realize how much hidden assets Sina has. RENN is another hidden asset play, a $3.4 stock with ~$2.8 in net cash but its business is losing money. Not sure if the option value on the business taking off or getting acquired is worth 60+ cents.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 22, 2014, 05:45:17 PM
http://techcrunch.com/2014/01/07/weibo-payment/

This is interesting, alibaba clearly is interested in weibo. I think they want to set up a payment system through weibo? And with Sina holding 56% now, that could be interesting, what is insider ownership for Sina like?
Title: Re: 1688:HK - Alibaba
Post by: hillfronter83 on April 22, 2014, 06:20:50 PM
is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$.

Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap.

If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat.

sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube?

And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings?

Anyone have an opinion on Sina?

If SINA bought the stake in 2011, it's probably worth closer to $200million than $1billion. See this link: http://www.reuters.com/article/2014/02/12/us-alibaba-valuation-idUSBREA1B0E320140212
Looks like Alibaba sold these stakes in 2011 in $50million blocks.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 22, 2014, 06:53:45 PM
that is weird, it was publicly traded in october 2011? 50 million would have bought you a 0.83% stake at worst back then? Why buy a stake at a 300% premium?

Hmm i guess that is only the alibaba website?
Title: Re: 1688:HK - Alibaba
Post by: hillfronter83 on April 22, 2014, 07:22:54 PM
that is weird, it was publicly traded in october 2011? 50 million would have bought you a 0.83% stake at worst back then? Why buy a stake at a 300% premium?

Hmm i guess that is only the alibaba website?

Yada,

The public traded company in Hong Kong exchange was Alibaba.com, the e-commerce site, which is only part of Alibaba Group. The Alibaba group is much bigger, including taobao.com, tmall.com, Alipay, etc.
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 22, 2014, 07:32:36 PM
So the $50 stake is valued closer to $250 mil? The value assigned to Weibo looks high and is probably justified using a per user value argument. It obviously has strategic value to Alibaba, the cash flow rich white knight. So Weibo's private market value shouldn't be too far off from its current market value, at most 20-30% discount.
Title: Re: 1688:HK - Alibaba
Post by: ZenaidaMacroura on April 22, 2014, 08:44:59 PM
Maybe I lack imagination, but I don't see this IPOing under 150b?  At least not for investors without access to the IPO.  Would go allin at 80b and just sit pretty for a decade...
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 23, 2014, 04:24:59 AM
yeah if there is so much growth this will become the largest company in the world p retty quickly. For over a trillion $. Isn't that a bit rich?

Also, how do they pay shareholders outside china, since they make money in renminbi? Arent there some complications?
Title: Re: 1688:HK - Alibaba
Post by: Liberty on April 23, 2014, 08:24:04 AM
Here's part 2 of the post that made me start this thread:

https://oraclefromomaha.wordpress.com/2014/04/23/alibaba-part-2-an-overview/
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 23, 2014, 07:01:59 PM
Here's part 2 of the post that made me start this thread:

https://oraclefromomaha.wordpress.com/2014/04/23/alibaba-part-2-an-overview/

After reading the post, the key question is to whether to overpay with the full knowledge that fundamental will catch up given enough time or potentially lose out an opportunity of a lifetime. In a sadistic sense, I wish we can have another recessions and get the chance to buy another "priceline."
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 24, 2014, 04:52:30 AM
arent there capital restrictions in china in regard to paying out $ to foreign shareholders if they make money in renminbi? How does that work here?
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 24, 2014, 06:42:49 AM
arent there capital restrictions in china in regard to paying out $ to foreign shareholders if they make money in renminbi? How does that work here?

They get around the restriction through share buyback. We are unlikely to see any dividend in the near future. Actually I am not really sure. I used to own SNP. It's a state owned oil refiner. They make their money in renminbi. I got my dividend payment.
Title: Re: 1688:HK - Alibaba
Post by: hillfronter83 on April 24, 2014, 06:57:02 AM
arent there capital restrictions in china in regard to paying out $ to foreign shareholders if they make money in renminbi? How does that work here?

I'm not aware of any regulation that requires different treatment for foreign or domestic shareholders. There are many chinese companies on NYSE that pay regular dividends. I wouldn't think this is a much different situation than Apple's Chinese subsidary that needs to send back its profits.
Title: Re: 1688:HK - Alibaba
Post by: bmichaud on April 24, 2014, 07:13:43 AM
May have already been posted, but good article on Alibaba:

http://oraclefromomaha.wordpress.com/2014/04/20/whats-alibaba-really-worth-2/

Title: Re: 1688:HK - Alibaba
Post by: hillfronter83 on April 24, 2014, 07:44:30 AM
is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$.

Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap.

If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat.

sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube?

And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings?

Anyone have an opinion on Sina?

Where did you find information about Sina's equity holding in other public trade securities? Sina down over 5% due to government investigation about porngraphy. Current market value is about sum of cash and Weibo stake.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 24, 2014, 07:46:53 AM
that oracle of omaha guy probably has gotten some new regular readers because of that post.

And if you google you see they got about 56% i think of weibo after the IPO and selling off a stake to alibaba. And 200 million$ worth of alibaba, and 100 million$ worth of youku toudu or something. But I doubt the chinese youtube will make money anytime soon. Im not even sure if our youtube makes money.
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 24, 2014, 08:47:06 AM
that oracle of omaha guy probably has gotten some new regular readers because of that post.

And if you google you see they got about 56% i think of weibo after the IPO and selling off a stake to alibaba. And 200 million$ worth of alibaba, and 100 million$ worth of youku toudu or something. But I doubt the chinese youtube will make money anytime soon. Im not even sure if our youtube makes money.

Our youtube makes 3-4 bil in net income. With 30-40% growth, the right valuation is somewhere between a Twitter and a Facebook.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 24, 2014, 09:21:36 AM
How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits.

Another interesting note is that Weibo was actually already making a profit in Q4 last year.
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 24, 2014, 03:29:51 PM
How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits.

Another interesting note is that Weibo was actually already making a profit in Q4 last year.

Watch the latest episode of "this week in startups" on youtube
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 24, 2014, 06:54:06 PM
is there any % of income from alibaba reflected in softbank's figures? They will do 4-6 billion$ in income this year (alibaba). I dont think a 35x multiple is unreasonable for the ipo here. a 33% stake would imply roughly 57 billion$.

Softbank did 3 billion $ in net income, so you pay about 33 billion for the remaining business. Which seems pretty cheap.

If you value softbank at 15x earnings, then your getting alibaba for between 22-33x earnings. Which seems really cheap for a business like that (or at least 22x earnings is). You have serious growth prospects, really high return on capital and a big moat.

sina holds a 1% stake. Ticker is SINA. They bought 50 million$ in octobre 2011. So i assume that is 1%? so that is worth north of 1 billion. They also hold 100 million $ worth of Youku Tudou shares, apparantly the chinese youtube?

And they did 45 million in net income in 2013, and are growing. revenue grew 25% YoY, but gross profit grew 40%. and there seems to be some leverage there. So you could argue that their core business is worth more then 10x earnings?

Anyone have an opinion on Sina?

Where did you find information about Sina's equity holding in other public trade securities? Sina down over 5% due to government investigation about porngraphy. Current market value is about sum of cash and Weibo stake.

The danger is Weibo stake not worth its valuation. Maybe a safer way to own Sina and short Weibo. I can't find borrows from my broker. Anyone see glaring flaw in the idea?
Title: Re: 1688:HK - Alibaba
Post by: Stevieoopsie on April 25, 2014, 05:36:45 AM
If you are looking for Chinese internet sum-of-parts ideas, SOHU is much cheaper than SINA.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 25, 2014, 05:47:17 AM
How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits.

Another interesting note is that Weibo was actually already making a profit in Q4 last year.

Watch the latest episode of "this week in startups" on youtube

wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now.
Title: Re: 1688:HK - Alibaba
Post by: wbr on April 25, 2014, 06:16:13 AM
How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits.

Another interesting note is that Weibo was actually already making a profit in Q4 last year.

Watch the latest episode of "this week in startups" on youtube

wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now.

Youtube is the clear leader in a market with winner-takes-all characteristics and that makes it a great asset. Facebook is successful and Twitter will be successful because they are the first movers with no clear competition. In China those services are copied by entrepreneurs and then you usually end up with a bunch of competitiors instaed of a clear leader. Different platforms are competing for the market and in the end one winner will emerge and the other companies are going to vanish.
I'd rather own Baidu or Tencent who have deep pockets to support their platforms and make them come out on top in the different markets against Yoku Todou, Renren and even Weibo (they would be better off if Alibaba owned 100%). It isnt a coincidence that Youtube became the leader and not some independent video platform.
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 25, 2014, 06:25:23 AM
How do you know that? I googled and looked in their 10k but couldnt find anything about youtube profits.

Another interesting note is that Weibo was actually already making a profit in Q4 last year.

Watch the latest episode of "this week in startups" on youtube

wouldnt it be smart then to own the chinese youtube? I mean china is much larger, so 6-7 billion in net income might not be crazy 6-7 years from now? That would make it like a 15-20 bagger over that time? They are only valued at 5 billion$ now.

Youtube is the clear leader in a market with winner-takes-all characteristics and that makes it a great asset. Facebook is successful and Twitter will be successful because they are the first movers with no clear competition. In China those services are copied by entrepreneurs and then you usually end up with a bunch of competitiors instaed of a clear leader. Different platforms are competing for the market and in the end one winner will emerge and the other companies are going to vanish.
I'd rather own Baidu or Tencent who have deep pockets to support their platforms and make them come out on top in the different markets against Yoku Todou, Renren and even Weibo (they would be better off if Alibaba owned 100%). It isnt a coincidence that Youtube became the leader and not some independent video platform.

The more I researched the more I became convinced that Weibo is now a #2. WeChat has come a long way and is now becoming the dominating platform of everything - it took all the best ideas from the U.S. - uber, facebook, twitter, etc.
Title: Re: 1688:HK - Alibaba
Post by: Stevieoopsie on April 25, 2014, 07:08:37 AM
Yoku is not China's Youtube. The online video business in China is very fragmented and no player has nearly the same level of dominance that Youtube enjoys in the U.S.

The industry is viewed by many of the big internet conglomerates as one of the few areas on the internet where it's not yet too late to join the game given the fragmentation and companies are investing heavily in proprietary content to take market share away from Yoku. SOHU's video business, for example, is no.2 in China and that business has sunk hundreds of $millions in high quality content.

Consumer behavior in video content distribution in China is different too. People value high-quality, programmed content a lot more highly than the stuff on Youtube so the network effect on these video platforms is not that strong.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 25, 2014, 07:20:48 AM
Youku tudou is a clear leader in user uploaded video's right? And they have the rights for a lot of popular mainstream american shows. So it seems like apples and oranges?
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on April 25, 2014, 07:58:56 AM
Not comparable, youtube splits 45/55 with content owners - charge expensive toll without having to put down anything for the content. Youku is more comparable to netflix, not a FCF machine - only makes sense from a M&A angle.
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on April 28, 2014, 11:49:35 AM
Knockoffs Thrive on Alibaba's Taobao

Critics Say Chinese E-Commerce Giant Needs to Do More About Counterfeit Goods




http://online.wsj.com/news/articles/SB10001424052702304049904579517642158573008?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth&mg=reno64-wsj (http://online.wsj.com/news/articles/SB10001424052702304049904579517642158573008?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth&mg=reno64-wsj)
Title: Re: 1688:HK - Alibaba
Post by: wbr on April 28, 2014, 01:10:35 PM
The value venture analysis states the following:

"The company also has a zero tolerance policy toward counterfeit products, and does a very effective job regulating vendors. Alibaba’s platforms all require vendors to deposit a large amount of cash upfront; customers can send complaints to the company when they receive counterfeit products and when verified, Alibaba charges the vendor a hefty penalty fee on its deposit."

Why - according to the WSJ article - would this system fail or not be effective enough? (I can't read the article :S)
Title: Re: 1688:HK - Alibaba
Post by: yadayada on April 28, 2014, 02:36:32 PM
search the title, and go through google that way you an read it.
title:
Knockoffs Thrive on Alibaba's Taobao
Title: Re: 1688:HK - Alibaba
Post by: beerbaron on April 28, 2014, 05:02:33 PM
The value venture analysis states the following:

"The company also has a zero tolerance policy toward counterfeit products, and does a very effective job regulating vendors. Alibaba’s platforms all require vendors to deposit a large amount of cash upfront; customers can send complaints to the company when they receive counterfeit products and when verified, Alibaba charges the vendor a hefty penalty fee on its deposit."

Why - according to the WSJ article - would this system fail or not be effective enough? (I can't read the article :S)

Go on Aliexpress an search for NHL hockey jerseys it is obvious Alibaba does not care about copyrights.

The hockey jerseys are great tough! Just like the real thing, it even says "made in Canada"

BeerBaron
Title: Re: 1688:HK - Alibaba
Post by: Liberty on May 01, 2014, 11:24:36 AM
http://www.nytimes.com/2014/05/01/technology/after-alibaba-ipo-us-web-giants-may-stop-ignoring-chinese-rivals.html
Title: Re: 1688:HK - Alibaba
Post by: wbr on May 02, 2014, 05:35:48 AM
I like Alibaba's core business, but it worries me that they start throwing money around. Their cashflow is so strong (with minimal growth capex) it seems they dont even need the money from the IPO. The main reason for the IPO is the ability for the big shareholders to sell parts of their equity stakes over the coming years.

When they grow more in the next years and take in $20 billion from the IPO there is a lot of potential for bad investment decisions.

http://www.reuters.com/article/2014/04/28/us-youku-tudou-alibaba-group-idUSBREA3R0MG20140428 (http://www.reuters.com/article/2014/04/28/us-youku-tudou-alibaba-group-idUSBREA3R0MG20140428)

I dont mind the latest investments too much. I think placing a lot of small bets is a decent strategy that worked for Google and Amazon, but once they have the IPO money in their pockets they can make a big bet and potentially waste a lot of money.
I'm still not convinced that the Whatsapp acquisition was bad, because it depends on what they make out of it, but it definitely comes to mind when I think about things I wouldnt want Alibaba to do.
Title: Re: 1688:HK - Alibaba
Post by: frommi on May 03, 2014, 11:26:44 PM
Thanks for posting this idea. Reading the articles i am under the impression that the US internet giants have huge problems in china and their growth probably comes to an end soon. The IPO of Alibaba will probably leech a lot of money out of the US tech stocks just because of supply and demand. Perhaps its a better idea to short AMZN instead of going long Alibaba.
Title: Re: 1688:HK - Alibaba
Post by: Liberty on May 06, 2014, 01:56:16 PM
http://dealbook.nytimes.com/2014/05/06/alibaba-files-to-go-public-in-the-u-s/

http://projects.wsj.com/alibaba/
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 06, 2014, 05:59:08 PM
Alibaba and VIEs: A Primer

http://blogs.wsj.com/moneybeat/2014/05/06/alibaba-and-vies-a-primer/?mod=WSJBlog&mod=MarketsMain (http://blogs.wsj.com/moneybeat/2014/05/06/alibaba-and-vies-a-primer/?mod=WSJBlog&mod=MarketsMain)
Title: Re: 1688:HK - Alibaba
Post by: Patmo on May 06, 2014, 07:14:22 PM
Don't forget (almost) any investment in Chinese companies has 100% potential downside from multiple angles, so be smarter than I have been and use the dropper if you're going to take a position.
Title: Re: 1688:HK - Alibaba
Post by: Phaceliacapital on May 07, 2014, 02:08:39 AM
http://www.zerohedge.com/news/2014-05-06/alibaba-files-ipo
Title: Re: 1688:HK - Alibaba
Post by: bmichaud on May 07, 2014, 08:15:55 AM
Here's the F-1 if it hasn't already been posted.

http://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm#toc709111_12
Title: Re: 1688:HK - Alibaba
Post by: yadayada on May 07, 2014, 08:32:09 AM
So they made like 2.1 billion in 2013 before that yahoo payment. They had 41% profit margins in 2013, but this expanded like crazy over the years as well.

If you divide all the costs from 2012, by 2011, I get these multiples:
1.5
1.32
1.2
1.28

Or total costs of about 4.4 billion$ in 2014. If they grow revenue 80% that would be about 5.5 billion$ in income. Or about 5 billion in net income. If they only grow 60%, that is still 4.4 billion$. After tax about 4 billion$ or so. So it seems anything below 100 billion$ will be cheap probably. .
Title: Re: 1688:HK - Alibaba
Post by: ScottHall on May 07, 2014, 10:48:34 AM
So they made like 2.1 billion in 2013 before that yahoo payment. They had 41% profit margins in 2013, but this expanded like crazy over the years as well.

If you divide all the costs from 2012, by 2011, I get these multiples:
1.5
1.32
1.2
1.28

Or total costs of about 4.4 billion$ in 2014. If they grow revenue 80% that would be about 5.5 billion$ in income. Or about 5 billion in net income. If they only grow 60%, that is still 4.4 billion$. After tax about 4 billion$ or so. So it seems anything below 100 billion$ will be cheap probably. .

This business could be cheap at well north of $100 billion, depending how long it grows at rates similar to what it has recently.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on May 07, 2014, 11:49:50 AM
yeah i guess, there are some risks with CHina tho, and that their CEO seems kinda shady. And some risks FCF is being wasted. Also a bias that I have is that if it really is a multibagger far above a 100 billion$, that would make them worth well over a trillion$. Making them by far the most valuable company on earth. But I guess that is just a stupid bias of me, that i think that somehow cannot happen so easily.

To be more clear, amazon and ebay are like 200 billion$ total.  So to think alibaba could be worth over a trillion feels a bit weird. GDP of china is still lower then in the US. Hard to fanthom that alibaba could be worth like 5 times as much 10 years from now then ebay and amazon.
Title: Re: 1688:HK - Alibaba
Post by: yadayada on May 07, 2014, 01:52:43 PM
To do some simple math. Consumer spending in the US is 10 trillion. Alibaba Amazon etc is basicly a toll road on this right? They take a % of this. Amazon and Ebay fair value in a few years according to morning star is about 300 billion together.

Population of Europe and the US is about 1 billion total. So maybe total consumer spending of the two combined is like 25 trillion$? (cant find Europe consumer spending.)

According to this article in the economist
http://www.economist.com/news/briefing/21595019-market-growing-furiously-getting-tougher-foreign-firms-doing-it-their-way

Consumer spending is just 3 trillion$ in China. The blog article says that there is a huge runawy because of their population.

Now to make this a nice long term investment at a IPO valuation of 175 billion$, let's say 7 years down the line they have a 1 trilion$ valuation. That would get you a 30% annual return in the upside case. This would mean 50 billion$ of net income with a 20x multiple!

Amazon and ebay together do probablyl like less then half that. So on a population of 1.4 billion, and much less disposable income, they do way better then on a population of 1 billion that is much richer and has way more disposable income. Also a large part of China consists of farmers, will they really have that much disposable income 5-7 years down the line? It basicly has to grow from 3 trillion to close to 30 trillion$ in that period, which doesn't seem credible to me.

What am I missing here?

Also revenue of amazon and ebay together are now like 90 billion$. Divide that by 25000 billion$, that is about 0.04% Funny enough, divide Alibaba's potential 2014 revenue of 11 billion$ by 3000 billion$ and you get the same % lol.

It seems costs are lower, and by 2022 consumer spending probably more then doubles to like 7 trillion$. But even if more items are bought online by chinese people, that is still not nearly enough to warrant a 1 trillion $ valuation?
Title: Re: 1688:HK - Alibaba
Post by: saltybit on May 07, 2014, 07:13:19 PM
I don't know about 1 trillion, but Alibaba has some advantages over Amazon and ebay.

1. http://www.adexchanger.com/data-exchanges/a-peek-inside-alibabas-ad-business-courtesy-of-its-ipo-filing/
2. http://bluekai.com/data-management-platform.php
3. http://www.emarketer.com/Article/US-Stays-Atop-Global-Ad-Market-Others-Rank-Higher-per-Capita/1010248
4. http://online.wsj.com/news/articles/SB10001424052702303678404579534103980875462
5. http://www.businessinsider.com/alipay-overtakes-paypal-as-the-largest-mobile-payments-platform-in-the-world-2014-2#!KIE6J
6. http://online.wsj.com/news/articles/SB10001424052702303678404579535840686151748
7. https://www.paypal-media.com/about (see 2013 FULL-YEAR FINANCIAL METRICS at bottom)
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on May 07, 2014, 09:01:55 PM
http://online.wsj.com/public/resources/documents/AlibabaF1050614.pdf (http://online.wsj.com/public/resources/documents/AlibabaF1050614.pdf)

Prospectus is out
Title: Re: 1688:HK - Alibaba
Post by: yadayada on May 08, 2014, 12:50:02 AM
I don't know about 1 trillion, but Alibaba has some advantages over Amazon and ebay.
  • less competition with pre-existing retailers (no Walmart, Staples, Macy's, Costco, etc.) I think their F-1 has an infographic about existing retail space per capita in various countries. This means there are less harder "buying habits" to break.
  • Alibaba has a strong foothold in B2B market. This makes it less dependent on consumer spending.
  • Alibaba is more than retail. (more so than Amazon,  which does have AWS) They have stakes in Weibo, Youku, Autonavi, and others.
  • bigger potential for grabbing big share of non-search internet advertising market (high-margin business) [1]
      Alibaba not only collects advertising revenue from its commerce sites, but also partly owns other sites like Youku, AutoNavi maps, weibo etc. which they can monetize and collect user data for advertising. They already have an RTB (real time bidding) service and a DMP (data management platform, used by marketers to slice and segment internet users[2]) As internet advertising becomes bigger in China (they are #23 right now per capita, ~13% of US internet ad spending per capita [3]), Alibaba is poised to get a huge share of the market because they arguably have the best targeting data for marketers, including purchase/shopping data.) In the markets where Amazon and eBay are active, the advertising market is pretty much dominated by Google and Facebook. (search, display, video, social) You can argue that Amazon has the same data, but there are more restrictions in North America and EU about purchase data being used for advertising.
  • China is probably more amenable to monopolies (if Amazon gets too big, there might be antitrust issues in the future in the US)
  • Alipay vs Paypal (While Alipay is not officially part of the Alibaba group, it is controlled by Alibaba execs, and Alibaba is looking to reclaim a stake[4])
       - Alipay has more penetration into the Chinese market than Paypal with NA, and payments is a "network effects" industry.
       - Alipay is larger than Paypal already
           - 2013 mobile transactions - 150B vs 27B[5]
           - 2013 overall - 519B[6] vs 180B[7]

1. http://www.adexchanger.com/data-exchanges/a-peek-inside-alibabas-ad-business-courtesy-of-its-ipo-filing/
2. http://bluekai.com/data-management-platform.php
3. http://www.emarketer.com/Article/US-Stays-Atop-Global-Ad-Market-Others-Rank-Higher-per-Capita/1010248
4. http://online.wsj.com/news/articles/SB10001424052702303678404579534103980875462
5. http://www.businessinsider.com/alipay-overtakes-paypal-as-the-largest-mobile-payments-platform-in-the-world-2014-2#!KIE6J
6. http://online.wsj.com/news/articles/SB10001424052702303678404579535840686151748
7. https://www.paypal-media.com/about (see 2013 FULL-YEAR FINANCIAL METRICS at bottom)
yeah 1st is true, it seems they get much more of that consumer spending. Also has to do with lower delivery costs it seems, so you can order low cost items cheaply. But how sustainable is that?

Is this alibaba.com? Or also a chinese site, because foreign market seems pretty small and not growing as explosively as the rest.

I dont know about autonavi, but the rest of those total market values arent worth much. And Weibo is v dependent on alibaba for income. Youku and weibo maybe worth 50 billion both? And that would make buying stock in either one ofthem just as attractive as in alibaba (because much higher then market currently).

Can you reallly make that much money advertising on shopping websites?

that is a good point about monopolies

this thing about not being part of group, but is controlled, who owns it exactly? And doesnt tencent have a v large stake of the market as well with their payment processor?

I don't get the 500 billion number. Isnt ecommerce consumer spending like 250-300 billion$ in china in 2013? I can't find exact numbers, but it was like 250 in 2012. And doesn't tencent have a decent market share in this? Also if it is 500 billion, it is larger then paypal. And paypal made like 1.6 billion$ last year? why did alipay get seperated, and who owns it?
Title: Re: 1688:HK - Alibaba
Post by: hellsten on May 08, 2014, 11:51:37 PM
http://qz.com/206283/all-the-western-companies-youd-have-to-combine-to-get-something-like-alibaba/

(http://qzprod.files.wordpress.com/2014/05/alibaba-comparison.png?w=1024&h=1261)
Title: Re: 1688:HK - Alibaba
Post by: saltybit on May 09, 2014, 01:26:20 PM
Can you reallly make that much money advertising on shopping websites?

Actually this will be possible to do also on 3rd party sites, not just on Alibaba controlled sites.
Alibaba can match ids/cookies in their backend at ad serving time, via ad servers or publishers embedding pixels from alibaba, or doing some id matching between ad exchanges to alibaba.

Amazon is also doing this. See: http://www.amazon.com/b/ref=az_adv_ln_dads_aa?&node=6246114011
Quote
Reach Amazon customers on Amazon owned and operated sites and on other high quality websites with Amazon Advertising Platform.

But they might be more limited in the way they use customer info, due to US/CA/EU's more stringent privacy laws: http://www.businessinsider.com/heres-a-glimpse-inside-amazons-secretive-800-million-ad-business-2013-10
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on May 09, 2014, 02:00:40 PM
The consensus IPO mark cap is in the 180 bil range. I ran a few different scenarios. It's very hard to lose money on it if your investment horizon is at least 3 years. Let's hope the past few months have dampened investor enthusiasm so the stock doesn't pop 50%-100% on the first day. The risk/reward doesn't make sense to me if Alibaba's market cap goes to $300+ bil range.
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 09, 2014, 02:17:14 PM
http://qz.com/206283/all-the-western-companies-youd-have-to-combine-to-get-something-like-alibaba/

(http://qzprod.files.wordpress.com/2014/05/alibaba-comparison.png?w=1024&h=1261)


lol wow... Alibaba does everything!
Title: Re: 1688:HK - Alibaba
Post by: yadayada on May 11, 2014, 11:31:09 AM
The consensus IPO mark cap is in the 180 bil range. I ran a few different scenarios. It's very hard to lose money on it if your investment horizon is at least 3 years. Let's hope the past few months have dampened investor enthusiasm so the stock doesn't pop 50%-100% on the first day. The risk/reward doesn't make sense to me if Alibaba's market cap goes to $300+ bil range.
your buying through softbank? That one seems to make the most sense to me now. If you think about 200-300bn$ valuations then you almost get the other business for free (or alibaba depending how you look on it).
Title: Re: 1688:HK - Alibaba
Post by: ajc on May 11, 2014, 11:55:29 AM
Aswath Damodaran's recent blog posts on:

 - Alibaba (http://aswathdamodaran.blogspot.co.uk/2014/05/alibaba-china-story-with-profitable.html (http://aswathdamodaran.blogspot.co.uk/2014/05/alibaba-china-story-with-profitable.html)),

and

 - Yahoo (http://aswathdamodaran.blogspot.co.uk/2014/05/yahoo-puzzle-mystery-and-enigma.html (http://aswathdamodaran.blogspot.co.uk/2014/05/yahoo-puzzle-mystery-and-enigma.html))

Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 12, 2014, 10:17:29 AM
Alibaba’s Ma urges climate change in war against Tencent penguin


http://www.ft.com/intl/cms/s/0/32e882ec-d69b-11e3-b251-00144feabdc0.html?siteedition=intl#axzz31WOPftFb (http://www.ft.com/intl/cms/s/0/32e882ec-d69b-11e3-b251-00144feabdc0.html?siteedition=intl#axzz31WOPftFb)
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 13, 2014, 02:41:08 PM
Is anyone looking at JD.com? 


FORM F-1

http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm (http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm)
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on May 13, 2014, 03:47:21 PM
Is anyone looking at JD.com? 


FORM F-1

http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm (http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm)

Too bad that we can't short an new ipo. Alibaba will probably buy it for pennies on the dollar once its VC funding/IPO proceed runs out. Without a cash cow sugar daddy, e-commerce in China is extremely competitive.
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 13, 2014, 04:00:15 PM
Is anyone looking at JD.com? 


FORM F-1

http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm (http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm)

Too bad that we can't short an new ipo. Alibaba will probably buy it for pennies on the dollar once its VC funding runs out. Without a cash cow sugar daddy, e-commerce in China is extremely competitive.

Maybe a Tencent buys it to bulk up to fend off Alibaba?
Title: Re: 1688:HK - Alibaba
Post by: PatientCheetah on May 13, 2014, 04:07:40 PM
Is anyone looking at JD.com? 


FORM F-1

http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm (http://www.sec.gov/Archives/edgar/data/1549802/000104746914000443/a2218025zf-1.htm)

Too bad that we can't short an new ipo. Alibaba will probably buy it for pennies on the dollar once its VC funding runs out. Without a cash cow sugar daddy, e-commerce in China is extremely competitive.

Maybe a Tencent buys it to bulk up to fend off Alibaba?

Amazon feels like the exception to the rules. It was at the right place at the right time and reached scale to fend off everybody else. A lot Chinese e commerce sites have rich backer so it would be prohibitively expensive to win a price war and the industry would likely to stay fragmented. Both Alibaba and Tencent are toll collectors, not sure what the incentives would be for them to get into a value destructive business.

Quote
The online retail industry in China is intensely competitive. Our current or potential competitors include (i) major online retailers in China that offer a wide range of general merchandise product categories, such as Alibaba Group, which operates taobao.com and tmall.com, and Amazon China, which operates amazon.cn, (ii) major traditional retailers in China that are moving into online retailing, such as Suning Appliance Company Limited, which operates suning.com, Walmart, which holds a majority interest in yihaodian.com, and Gome Electrical Appliances, which operates gome.com.cn, and (iii) major internet companies that have commenced online retail business, such as Tencent Holdings Limited, which operates yixun.com. We also face competition from online retail companies in China focused on specific product categories and from physical retail stores, including big-box stores like RT-Mart that also aim to offer a one-stop shopping experience.

Why would anyone want to go against this group of competitors without any disruptive technology?
Title: Re: 1688:HK - Alibaba
Post by: wbr on May 15, 2014, 08:24:00 AM
Btw I think it hasnt been mentioned yet, but VIP Shop (www.vip.com (http://www.vip.com)) is a Chinese ecommerce company that has been public for a while now and just keeps beating expectations in terms of revenue growth and profitability. They had 8.2 million customers last quarter which is still pretty much nothing.

Somehow I tend to find a smaller company more attractive than the big Alibaba which is limited by the growth of the overall market. Competition might be an issue (and then you would want to own the dominant player for the scale advantage), but only when the market growth slows down. At this point the pie is so huge and growing fast that none of these companies will not grow by a massive amount and as long as demand outweighs supply pricing will be "collaborative" and profitability will be stellar.

Title: Re: 1688:HK - Alibaba
Post by: saltybit on May 28, 2014, 08:01:54 AM
Alibaba invests in SingPost (Singapore’s national postal service provider)
http://www.forbes.com/sites/hengshao/2014/05/28/alibaba-to-buy-249-mil-stake-in-singapore-post-to-step-up-intl-presence/

Looks like they might be looking to expand to SE Asia, especially targeting the overseas Chinese in those countries.
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on May 29, 2014, 03:00:28 PM
China Online Spending Power Unmasked



http://www.bloomberg.com/news/2014-05-27/china-online-spending-power-unmasked.html (http://www.bloomberg.com/news/2014-05-27/china-online-spending-power-unmasked.html)
Title: Alibaba
Post by: fareastwarriors on September 06, 2014, 12:03:03 PM
The Jack Ma Way.

http://www.nytimes.com/2014/09/07/business/international/at-alibaba-the-founder-is-squarely-in-charge.html?ref=business (http://www.nytimes.com/2014/09/07/business/international/at-alibaba-the-founder-is-squarely-in-charge.html?ref=business)
Title: Re: 1688:HK - Alibaba
Post by: txlaw on September 06, 2014, 12:19:44 PM
Jack Ma Letter:
http://www.forbes.com/sites/ryanmac/2014/09/05/as-alibabas-ipo-approaches-founder-jack-ma-pens-letter-to-potential-investors/
Title: Re: 1688:HK - Alibaba
Post by: bobozou on September 07, 2014, 07:14:31 PM
does anyone know publicly traded companies that own alibaba, besides the typical 'yahoo' or 'softbank'?

http://www.sec.gov/Archives/edgar/data/1577552/000119312514333674/d709111df1a.htm#toc709111_19

pg 250 has a list of large selling shareholders... but there's still around 10% shares not on that list, and I'm almost certain some of those shares are in other (perhaps non-us-listed) companies
Title: Re: 1688:HK - Alibaba
Post by: simplefocus on September 07, 2014, 08:51:42 PM
If I want to play Alibaba by buying Softbank stocks, would you buy Softbank traded in Tokyo or US OTC?  If OTC, there are two OTC stocks (SFTBY and SFTBF) for Softbank, which one would you buy? 

Thanks.
Title: Re: 1688:HK - Alibaba
Post by: leeway on September 08, 2014, 12:34:04 PM
I bought SFTBY because it is more liquid. SFTBF is 2x of price of SFTBY (which seems representing half of the share traded in Tokyo), but I am not sure what other differences. I think reading somewhere that SFTBF might incur high commission.
Title: Re: 1688:HK - Alibaba
Post by: simplefocus on September 08, 2014, 10:54:23 PM
Thanks.  I loaded up on SFTBY today.  There's a lot of interest in BABA and I won't be surprised if the market cap goes up to 200 bil the first day.
Title: Re: 1688:HK - Alibaba
Post by: moneystockholder on September 09, 2014, 08:09:27 AM
I'm not sure if this has been brought up yet, but just as an aside, if anyone is interested in how Alibaba started and learning a little bit more on Jack Ma, the documentary "Crocodile in the Yangtze" is worth watching. I saw it this weekend and it blew my mind.

http://www.crocodileintheyangtze.com
Title: Re: 1688:HK - Alibaba
Post by: txlaw on September 09, 2014, 08:38:56 AM
I'm not sure if this has been brought up yet, but just as an aside, if anyone is interested in how Alibaba started and learning a little bit more on Jack Ma, the documentary "Crocodile in the Yangtze" is worth watching. I saw it this weekend and it blew my mind.

http://www.crocodileintheyangtze.com

+1 on this documentary.

You can rent it on Vimeo.
Title: Re: 1688:HK - Alibaba
Post by: Liberty on September 10, 2014, 08:04:11 AM
http://aswathdamodaran.blogspot.com/2014/09/alibabas-coming-out-party-valued-right.html
Title: Re: 1688:HK - Alibaba
Post by: Ghost on September 16, 2014, 05:57:03 AM
When it comes to Alibaba I am pretty much a novice. 
I thought this video summed it up fairly quickly.  It is the worlds largest 3D printer

http://www.businessweek.com/articles/2014-09-16/what-is-alibaba-one-man-s-path-to-custom-made-bright-colored-pants#r=hp-lst
Title: Re: 1688:HK - Alibaba
Post by: moneystockholder on September 16, 2014, 07:19:25 AM
When it comes to Alibaba I am pretty much a novice. 
I thought this video summed it up fairly quickly.  It is the worlds largest 3D printer

http://www.businessweek.com/articles/2014-09-16/what-is-alibaba-one-man-s-path-to-custom-made-bright-colored-pants#r=hp-lst

Though unlike other 3D printers, this one has a virtual monopoly in the largest country in the world by population and the perfect market for eCommerce.
Title: Alibaba
Post by: fareastwarriors on September 16, 2014, 07:52:45 AM
Anyone planning to buy some post-IPO?
Title: Re: 1688:HK - Alibaba
Post by: yadayada on September 16, 2014, 07:56:28 AM
Im going to wait for the China correction. It will probably get cheap then.
Title: Re: 1688:HK - Alibaba
Post by: LesPaul on September 16, 2014, 02:03:35 PM
I'd like to start a position Friday, but I have a feeling we'll see the valuation get to $220B (or ~$90 per share, I believe) which just feels too high for me.

Perhaps when the mania subsides (if media hype is indicative of what we'll see Friday) - I'll reexamine things and look to get in.

Reason for edit: 'evaluation' became 'valuation'
Title: Re: 1688:HK - Alibaba
Post by: fareastwarriors on September 16, 2014, 02:16:10 PM
Hopefully there will be a Facebook event.
Title: Re: 1688:HK - Alibaba
Post by: rpadebet on September 16, 2014, 02:57:53 PM
I am hoping for Softbank to spin this off to me on a tax free basis :P. Once can hope right!
Title: Re: Alibaba
Post by: TeddyLampert on September 18, 2014, 03:40:31 AM

Somehow though, I'd be surprised if the market isn't mispricing things somewhere between Softbank, Yahoo and China Dongxiang. How much of that is simply my enthusiasm talking though, I can't really be sure.


Hey all, as it turns out, there's a VIC article posted today about China Dongxiang. It's a special situation investment that allows you to buy Alibaba at a big discount to its IPO price. Looks really interesting and very timely.

Title: Re: 1688:HK - Alibaba
Post by: bobozou on September 18, 2014, 04:38:37 AM
My 5-10 minute analysis seemed to show that Dongxiang is not that cheap at all...

the WSJ article from a month ago seems to double count short-term investments and Dongxiang's investment in Alibaba...

It appears to just be a chinese company that is overcapitalized, which owns a well-known sporting clothes brand (Kappa) that is bleeding sales at a rapid pace... and fairly value to boot (even before taking into account potential taxes on the sale of Alibaba shares)
Title: Re: 1688:HK - Alibaba
Post by: Wilson-TPC on September 18, 2014, 04:45:45 AM
My 5-10 minute analysis seemed to show that Dongxiang is not that cheap at all...

the WSJ article from a month ago seems to double count short-term investments and Dongxiang's investment in Alibaba...

It appears to just be a chinese company that is overcapitalized, which owns a well-known sporting clothes brand (Kappa) that is bleeding sales at a rapid pace... and fairly value to boot (even before taking into account potential taxes on the sale of Alibaba shares)

Care to breakout your math?
Title: Re: 1688:HK - Alibaba
Post by: bobozou on September 18, 2014, 05:16:06 AM
http://investing.businessweek.com/research/stocks/financials/financials.asp?ticker=3818:HK&dataset=balanceSheet&period=Q&currency=native

4,649 Cash/ST ($600M)
3,250 LT Investments ($420M)

http://file.irasia.com/listco/hk/chinadongxiang/interim/2014/intrep.pdf (pg 23)

As at 30 June 2014, the investment was stated at fair value of approximately USD398 million (equivalent to
approximately RMB2,448 million)

My interpretation is that the $400M of the Cash/ST/LT Investments already counts toward Alibaba

http://online.wsj.com/articles/alibaba-investors-find-cheap-entry-through-dongxiang-heard-on-the-street-1408428237

The WSJ article suggests the stake is worth $600M at a $200B valuation for Alibaba, and that the OpCo is worth $200M

Sum of Parts:

1) $200M for OpCo
3) $600M for alibaba
4) $620M for cash/ST/LT investments (ex Alibaba stake)

Roughly $1.4B value, with current marketcap at $1.2B... that would also be excluding any potential taxes from sale of Alibaba stake...

It doesn't look that attractive (unless you're betting on Alibaba post-IPO pop).  Even if you were betting on pop, YHOO might be better way to do it, since its value seems more levered to Alibaba.
Title: Re: 1688:HK - Alibaba
Post by: bobozou on September 18, 2014, 05:23:49 AM
Actually, I realized my own mistake... I was converting HKD instead of RMB

4,649 Cash/ST ($757M)
3,250 LT Investments ($529M)

Sum of Parts:

1) $200M for OpCo
3) $600M for alibaba
4) $900M for cash/ST/LT investments (ex Alibaba stake)

Roughly $1.7B value, with current marketcap at $1.2B... that would also be excluding any potential taxes from sale of Alibaba stake...
Title: Re: 1688:HK - Alibaba
Post by: yadayada on September 18, 2014, 06:46:34 AM
softbank has a similar upside? Looks like a better bet to me.
Title: Re: 1688:HK - Alibaba
Post by: TeddyLampert on September 18, 2014, 06:53:43 AM
Yadayada,

What is the discount to the IPO price (assuming no "pop") for SoftBank?
Title: Re: 1688:HK - Alibaba
Post by: TeddyLampert on September 18, 2014, 07:13:33 AM
Actually, I realized my own mistake... I was converting HKD instead of RMB

4,649 Cash/ST ($757M)
3,250 LT Investments ($529M)

Sum of Parts:

1) $200M for OpCo
3) $600M for alibaba
4) $900M for cash/ST/LT investments (ex Alibaba stake)

Roughly $1.7B value, with current marketcap at $1.2B... that would also be excluding any potential taxes from sale of Alibaba stake...


I've seen even the most sophisticated funds sometimes make that error of switching RMB and HKD, so nothing to be ashamed of!

The discussion so far has given me some possible insight into why this opportunity exists. Among investors, there's still that tendency to dismiss out of hand Chinese companies ("just a chinese company...that is bleeding sales"). The VIC write up does a pretty decent job illustrating that the whole situation, including the opco, isn't fairly valued. I would use the sum-of-the-parts model there and play around with it because it is pretty clearly laid out. For example, one thing they did was adjust for the partial sale of China Dongxiang's stake and then some dilution following the IPO. This is a special situation where a quick back of the envelope doesn't really cut it and probably contributes to why the opportunity exists.

As for the taxes, the WSJ also spun it as a throwaway "risk" without really doing any quantifying. It's probably worth doing digging into this rather than dismiss out of hand, because it smells like a red herring. I asked a friend whose family runs a public company in Hong Kong, and he says that HK listed companies might be liable for a 16.5% tax on investment gains, but he doesn't know the situation with China Dongxiang specifically and notes that it is a Cayman corporation, and the fund is also likely to be structured to minimize taxes. In other words, worse case scenario, 16.5% of the gains is leaked at the HK corporate level. Even without running a model, my mental math suggests there's still a big NAV discount
Title: Re: 1688:HK - Alibaba
Post by: TeddyLampert on September 18, 2014, 07:17:48 AM
softbank has a similar upside? Looks like a better bet to me.

Yadayada,

What is the discount to the IPO price for SoftBank (assuming no "pop")?
Title: Re: 1688:HK - Alibaba
Post by: yadayada on September 18, 2014, 09:39:40 AM
It is a large conglomerate. So obviously you need to have an opinion on sprint, on yahoo japan (i think nr 1 market share in search market in japan?) Willcom etc. But I think it looks reasonable that there is 40-50 % upside at least. And they will not sell their alibaba stake btw. I haven't invested so not done a lot of work on it. Read various write ups and some annual reports, and it looks somewhat complex to value.
Title: Re: 1688:HK - Alibaba
Post by: Wilson-TPC on September 18, 2014, 12:50:25 PM
Actually, I realized my own mistake... I was converting HKD instead of RMB

4,649 Cash/ST ($757M)
3,250 LT Investments ($529M)

Sum of Parts:

1) $200M for OpCo
3) $600M for alibaba
4) $900M for cash/ST/LT investments (ex Alibaba stake)

Roughly $1.7B value, with current marketcap at $1.2B... that would also be excluding any potential taxes from sale of Alibaba stake...

No cap gains in Hong Kong. Anything else?
Title: Alibaba
Post by: fareastwarriors on September 18, 2014, 02:48:42 PM
Alibaba's IPO Priced at $68 a Share

The $21.8 Billion Offering by the Chinese E-Commerce Giant Is Among the Biggest Ever



http://online.wsj.com/articles/alibabas-ipo-priced-at-68-a-share-1411075675?mod=WSJ_hpp_LEFTTopStories (http://online.wsj.com/articles/alibabas-ipo-priced-at-68-a-share-1411075675?mod=WSJ_hpp_LEFTTopStories)
Title: Re: 1688:HK - Alibaba
Post by: brker_guy on September 18, 2014, 03:40:51 PM
Money grows on trees for these guys…

http://www.businessinsider.com/alibaba-is-giving-employees-tons-of-money-in-stock-2014-9
Title: Re: BABA - Alibaba
Post by: fareastwarriors on September 19, 2014, 08:54:31 AM
Alibaba Indicated to Open Higher After Record U.S. IPO



http://www.bloomberg.com/news/2014-09-18/alibaba-group-said-to-raise-21-8-billion-in-record-u-s-ipo.html (http://www.bloomberg.com/news/2014-09-18/alibaba-group-said-to-raise-21-8-billion-in-record-u-s-ipo.html)
Title: Re: BABA - Alibaba
Post by: fareastwarriors on September 19, 2014, 09:03:02 AM
looking at $94...nice pop.

Title: Re: BABA - Alibaba
Post by: txlaw on September 19, 2014, 09:03:15 AM
Priced at $68.  Opens at $90+.

Wow.
Title: Re: BABA - Alibaba
Post by: JBird on September 19, 2014, 09:15:26 AM
50 million shares traded hands in the first minute. 2.5 billion shares outstanding. I think we're going to see 1/3 of the company trade hands today. This is fun to watch from the sidelines.
Title: Re: BABA - Alibaba
Post by: saltybit on September 19, 2014, 10:25:25 AM
Yahoo and Softbank fell in comparison. I guess a lot of holders tried to jump to Alibaba instead or got impatient... if the Alibaba price holds >75, these 2 are trading at quite a big discount. (even at $68, Yahoo and Softbank are still undervalued on a SOTP basis, but not quite as compelling for me)
Title: Re: BABA - Alibaba
Post by: leeway on September 19, 2014, 12:58:38 PM
I also  think so, but curious how should the tax effect be accounted for in SOTP analysis? doubt that we will get tax free spinoff  in BABA tracking shares from Softbank, so should BABA's value be discounted by 30% ~ 35% for the tax?

Today's selling is prob just profit taking for those playing the BABA IPOs through softbank and yahoo.
Title: Re: BABA - Alibaba
Post by: Andy Dufresne on September 19, 2014, 02:31:50 PM
Taxes would be different in Yahoo and Softbank - each is domiciled in a different country ... also, Yahoo sold all of the shares on which it had to pay full tax in the US, the rest are held in HK so there is a chance they will not face US taxes ... Ken Goldman has made some statements to this effect but nobody knows ATM. In any case, if BABA or Softbank buy Yahoo, there might be no corporate taxes ...
Title: Re: BABA - Alibaba
Post by: opihiman2 on September 22, 2014, 11:29:58 AM
Interesting:

http://www.npr.org/player/v2/mediaPlayer.html?action=1&t=1&islist=false&id=348010275&m=348010279

I'm pretty sure Alibaba wouldn't screw over their US holdings shares at some point, but this is good to know
Title: Re: BABA - Alibaba
Post by: fareastwarriors on September 22, 2014, 02:52:34 PM
Jack Ma on Alibaba, Entrepreneurs and the Role of Handstands



http://dealbook.nytimes.com/2014/09/22/jack-ma-on-alibaba-entrepreneurs-and-the-role-of-handstands/?ref=technology (http://dealbook.nytimes.com/2014/09/22/jack-ma-on-alibaba-entrepreneurs-and-the-role-of-handstands/?ref=technology)
Title: Re: BABA - Alibaba
Post by: dolce far niente on September 22, 2014, 11:49:37 PM
Rather good talk by Jack Ma at Stanford.
More on his personal thought than business.
http://youtu.be/euxJhgYZXL8

For his thought on business:
http://youtu.be/ZH9-_GLqGC4
Title: Re: BABA - Alibaba
Post by: fareastwarriors on November 10, 2014, 09:41:28 AM
Alibaba Buffs a Key Business Metric

Chinese E-Commerce Urges Discounts to Drive Sales on ‘Singles’ Day’


http://online.wsj.com/articles/crucial-alibaba-business-day-looms-1415559294?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth (http://online.wsj.com/articles/crucial-alibaba-business-day-looms-1415559294?mod=WSJ_hpp_MIDDLENexttoWhatsNewsFifth)
Title: Re: BABA - Alibaba
Post by: fareastwarriors on November 10, 2014, 12:47:03 PM
Alibaba's Jack Ma Has: $30 Billion, an Odd Relationship With Investors and No Coding Skills


http://www.bloomberg.com/news/2014-11-09/ma-says-alibaba-shareholders-should-feel-love-not-no-3.html (http://www.bloomberg.com/news/2014-11-09/ma-says-alibaba-shareholders-should-feel-love-not-no-3.html)
Title: Re: BABA - Alibaba
Post by: fareastwarriors on November 11, 2014, 10:28:40 AM
Alibaba to target ‘antiquated’ state-dominated sectors





 
Alibaba is looking to transform state-dominated sectors such as financial services and healthcare, a senior executive said on Tuesday, as Chinese consumers set a new record for online sales on Singles’ Day.
 
Joe Tsai, executive vice-chairman of Alibaba, told the Financial Times that financial services and healthcare were large but “very antiquated” industries where ecommerce could “roll out to reform the current system”.


 
Alibaba executives used Singles’ Day, the company’s biggest event since its landmark initial public offering in September, to lay out its next steps. “Aside from ecommerce in goods we’re also looking at ecommerce in services, in entertainment, in different types of content over the internet,” said Mr Tsai.
 
The raw power of ecommerce to change China was on display on Tuesday as an auditorium-sized billboard at Alibaba headquarters blinked massive sales totals for the day. The company – now almost $40bn larger than Walmart by market capitalisation – said a record $8bn worth of goods had been sold via its services, up from $5.8bn last year.
 
The Singles’ Day holiday, when unattached adults buy gifts for themselves, was created by students in 1993, but Alibaba has turned it into a festival of conspicuous consumption that has surpassed shopping records elsewhere in the world.

“You’re seeing the unleashing of the power of the Chinese consumer,” said Mr Tsai. “The Chinese economy was traditionally based on exports. Now we’re witnessing the shift of the economy from [one] driven by [the] state sector to one focused on the consumer, on everyone on the street.”
 
But Mr Tsai acknowledged that Alibaba’s moves into state-dominated industries have not gone as smoothly as it would have liked.
 
He admitted that the group’s plans for rolling into financial services, such as online money market fund Yu’e Bao, had been dealt “a setback” by the Central Bank’s decision to block plans for a virtual credit card last spring. Internet competition would have hurt Union Pay, the state credit card monopoly.
 
“The central bank obviously said, ‘Let’s slow things down a bit. Let’s understand what these innovations are really about and let’s bring reform rather than disruption’,” said Mr Tsai.
 
He added that plans to list Alipay, Alibaba’s PayPal-like payments service, would focus on an IPO in China due to government regulations limiting foreign ownership in banking. Alibaba has not announced the timing of such a listing.
 
Mr Tsai said that Alibaba’s financial services plans built on its advantage in big data and in its massive distribution ability. He mentioned mutual funds, insurance products and assets that can be packaged or securitised, such as small business loans.
 
“The potential there is great because the average person in China has very few investment options. If they have a lot of savings they don’t have a lot of choice,” he said.
 
Asked what the company would do with the $25bn it raised in the largest listing ever, he said the funds were “not earmarked for anything” and Alibaba was planning to use them to “act strategically when the opportunity arises”.
 
“We don't have a cap, but we also don’t have a certain budget that we have to spend. We don’t want to feel like we have cash burning a hole in our pocket, because that’s when we start to make mistakes,” he said.
 
Mr Tsai identified rural China, where 9 per cent of the population buys online compared with 30 per cent in the cities, as a priority. “When we see the rural opportunity we get very excited,” he said.
 
Singles’ Day also highlighted Alibaba’s aspirations beyond its home market. “This is the first year we want to change Singles’ Day from a China consumers’ day to a global consumers’ day,” said Daniel Zhang, chief operating officer. However, he added, “numbers could be quite small because we are in the beginning stage”.
 
The largest orders generated outside mainland China came from Hong Kong, the US and Taiwan respectively.
 
Mr Zhang said 35,000 merchants participated in the sales both in China and abroad.

Alibaba shares were down 3 per cent in lunchtime trading in New York.



http://www.ft.com/intl/cms/s/0/c24e1540-69b8-11e4-8f4f-00144feabdc0.html#axzz3IhMpFalI (http://www.ft.com/intl/cms/s/0/c24e1540-69b8-11e4-8f4f-00144feabdc0.html#axzz3IhMpFalI)
Title: Re: BABA - Alibaba
Post by: innerscorecard on January 29, 2015, 12:42:23 AM
Interesting how much media is openly covering the spate between Liu Hongguang (who comes off as a real asshole) and Alibaba:

http://tech.caijing.com.cn/20150129/3810646.shtml
Title: Re: BABA - Alibaba
Post by: merkhet on June 22, 2015, 05:19:49 PM
I'm curious what people think the long-term margins might be for a company like BABA. Can they maintain 35%+ operating margins for the long-term?
Title: Re: BABA - Alibaba
Post by: ZenaidaMacroura on September 08, 2015, 03:27:53 PM
http://blogs.barrons.com/asiastocks/2015/09/08/alibaba-declines-on-warning-of-china-economic-impact-summit-cuts-target-to-81/?mod=yahoobarrons&ru=yahoo

Down quite a bit today, trading in the low $60s.

I remember when people were estimating the IPO price to be 80-150b and I was skeptical the company open anywhere near that price, which turned out to be correct. 
Title: Re: BABA - Alibaba
Post by: no_free_lunch on September 16, 2015, 07:03:50 PM
Good and very thorough article by Bronte Capital on BABA.

Quote
I also indicated that the questions would be along the lines of "how interesting is this" and "how much bigger can it get". The rule of thumb of course is that if an internet company can grow 500% from here you probably should own the stock. However if it is near the end of its growth period you should not own the stock - because it will derate.
..
So there was 278 million deliveries for a total prospective 650 million users. In one day! The question is how much bigger can this get and what drives it to be bigger?

I then pointed them to official numbers that said that Amazon (worldwide) had 244 million users. That was 244 million separate accounts made at least one order in the past twelve months. The Amazon numbers are here.

Alibaba delivered more parcels in a single day than Amazon had users in a whole year.
..
To truly deliver at a larger intensity than Amazon Alibaba and its outsource network would need more staff or capital (or both) than Amazon and UPS combined.
..

We can do a comparison to Visa. Visa overbuilds capacity - they have built capacity to 56 thousand messages per second. We know from another press release that was about 4 times the actual peak in 2013. So the 2013 peak was 14,000 transactions per second - which is 840 thousand per minute.

Visa's peak transaction volume globally is only about 30 percent of Alipay's peak minute. This suggests a level of shopping in China that puts the US, Europe and most of Asia to shame.
..
There is no evidence that in any way the capital equipment at Alibaba and its distribution partnership comes close in scale and quality to the infrastructure of (say) UPS. However the delivery volumes are larger than UPS and Fedex combined and the employment levels are similar (in aggregate).
..
At this point I know the numbers are wonky - but working out whether this is material or not (or how material) will require some fine measurement techniques.

http://brontecapital.blogspot.com.au/2015/09/job-interview-questions-size-and-scope.html
Title: Re: BABA - Alibaba
Post by: ZenaidaMacroura on September 16, 2015, 07:32:18 PM
Quote
If ali is a cross between Amazon and eBay then there is a part (eBay) that doesn't need warehousing and logistics as it is done by the seller. It depends how big the eBay part is to judge the numbers.

I think that answers a lot of the concern.  Taoboa is almost all seller-handled shipping logistics? 

My chinese co-worker tells me that  he remembers it was much cheaper to ship gifts to his GF across China than it is to ship her similar items now that they are both stateside (From Texas to California).  I imagine this has something to do with the route/package density?

http://postandparcel.info/65217/news/china-claims-to-be-worlds-biggest-express-delivery-market/
Title: Re: BABA - Alibaba
Post by: karthikpm on September 16, 2015, 07:35:11 PM
Barron's on BABA

http://www.barrons.com/articles/alibaba-why-it-could-fall-50-further-1442036618?mod=BOL_hp_highlight_1?mod=BOL_hp_highlight_1&cb=logged0.6035561966254128

Alibaba's response

http://www.alizila.com/alibaba-responds-barrons-story
Title: Re: BABA - Alibaba
Post by: Picasso on September 16, 2015, 07:49:30 PM
Funny to see Bronte go full conspiracy theorist. 

Does anyone have any AUM or performance figures from the fund? It seems like the guy has lost his marbles at times chasing down weird rabbit holes.

I think the candidates who didn't get hired avoided wasting years of their life.
Title: Re: BABA - Alibaba
Post by: JBTC on September 19, 2015, 12:59:41 AM
Funny to see Bronte go full conspiracy theorist. 

Does anyone have any AUM or performance figures from the fund? It seems like the guy has lost his marbles at times chasing down weird rabbit holes.

I think the candidates who didn't get hired avoided wasting years of their life.

He does seem to enjoy a bit of controversy.

The fund however is doing fine. Up 27% in the past 12 months and compounded 20% since inception.

Title: Re: BABA - Alibaba
Post by: Patmo on September 19, 2015, 04:03:45 AM
Funny to see Bronte go full conspiracy theorist. 

Does anyone have any AUM or performance figures from the fund? It seems like the guy has lost his marbles at times chasing down weird rabbit holes.

I think the candidates who didn't get hired avoided wasting years of their life.

Yeah well when you're looking at a chinese VIE with a history of foreign investor mistreatment, it's hardly unwarranted to scrutinize the numbers with an atomic microscope. Not that it prevents the highly probable end-game of fighting in chinese courts over claim on assets, mind you...
Title: Re: BABA - Alibaba
Post by: Picasso on September 19, 2015, 07:32:53 AM
Funny to see Bronte go full conspiracy theorist. 

Does anyone have any AUM or performance figures from the fund? It seems like the guy has lost his marbles at times chasing down weird rabbit holes.

I think the candidates who didn't get hired avoided wasting years of their life.

He does seem to enjoy a bit of controversy.

The fund however is doing fine. Up 27% in the past 12 months and compounded 20% since inception.

Is there a source on this?
Title: Re: BABA - Alibaba
Post by: JBTC on September 19, 2015, 06:30:26 PM
Funny to see Bronte go full conspiracy theorist. 

Does anyone have any AUM or performance figures from the fund? It seems like the guy has lost his marbles at times chasing down weird rabbit holes.

I think the candidates who didn't get hired avoided wasting years of their life.

He does seem to enjoy a bit of controversy.

The fund however is doing fine. Up 27% in the past 12 months and compounded 20% since inception.

Is there a source on this?

http://www.brontecapital.com/amalthea_letters.html

Note that it may be a bit tough to judge him based on his individual shorts. He mostly shorts frauds and the short book has dozens of positions, each very small.

Title: Re: BABA - Alibaba
Post by: Picasso on September 20, 2015, 10:36:05 AM
That track record only goes back to 2013.  Wasn't he shorting Fairfax back in 2003 in collusion with other large hedge funds?  Also any idea in terms of AUM?  I saw something online around $100 million but couldn't quite get an idea if that's accurate.

Like Ackman said a year or so ago, guys like Hempton and Chapman cling onto the other side of controversial stocks because it increases their media exposure and maybe helps their careers.  I just don't know if Hempton also falls within that category but it certainly appears that way.
Title: Re: BABA - Alibaba
Post by: doughishere on September 20, 2015, 06:14:30 PM
That track record only goes back to 2013.  Wasn't he shorting Fairfax back in 2003 in collusion with other large hedge funds?  Also any idea in terms of AUM?  I saw something online around $100 million but couldn't quite get an idea if that's accurate.

Like Ackman said a year or so ago, guys like Hempton and Chapman cling onto the other side of controversial stocks because it increases their media exposure and maybe helps their careers.  I just don't know if Hempton also falls within that category but it certainly appears that way.


When did bill say that?
Title: Re: BABA - Alibaba
Post by: ccplz on September 20, 2015, 06:46:19 PM
The ABB blogpost was an interesting read, but the arguments are without merit in my opinion. The blog post was an interesting read, but the arguments are without merit in my opinion. It's pretty obvious to anyone who has lived in China that e-commerce there is on a whole different level compared to e-commerce anywhere else. Taobao/T-Mall have become ubiquitous and integrated within Chinese society, and Alipay is used to pay for everything from bus tickets, to music concerts, to groceries. Thus Alibaba and Amazon/Ebay or Alipay and Paypal/Visa aren't really comparable companies.
Title: Re: BABA - Alibaba
Post by: JBTC on September 20, 2015, 07:40:44 PM
That track record only goes back to 2013.  Wasn't he shorting Fairfax back in 2003 in collusion with other large hedge funds?  Also any idea in terms of AUM?  I saw something online around $100 million but couldn't quite get an idea if that's accurate.

Like Ackman said a year or so ago, guys like Hempton and Chapman cling onto the other side of controversial stocks because it increases their media exposure and maybe helps their careers.  I just don't know if Hempton also falls within that category but it certainly appears that way.

My understanding is he had a fund consisted of US investors in the beginning which was later closed.

The AUM is likely below 100mn although AUM is a poor indicator for either long-run performance or idea quality. What's most frustrating in the investing world is there are numerous people running large AUMs who aren't good and don't have the performance.

I personally don't like managers who like to be involved in controversies and that is part of the reason I didn't invest in his fund a few years back. And I am poorer for my bias  :(

Title: Re: BABA - Alibaba
Post by: Picasso on September 21, 2015, 06:48:10 AM
That track record only goes back to 2013.  Wasn't he shorting Fairfax back in 2003 in collusion with other large hedge funds?  Also any idea in terms of AUM?  I saw something online around $100 million but couldn't quite get an idea if that's accurate.

Like Ackman said a year or so ago, guys like Hempton and Chapman cling onto the other side of controversial stocks because it increases their media exposure and maybe helps their careers.  I just don't know if Hempton also falls within that category but it certainly appears that way.

Early 2013 a few minutes before the famous CNBC fight with Icahn.  I can't find the video anymore.

When did bill say that?
Title: Re: BABA - Alibaba
Post by: doughishere on September 21, 2015, 07:48:55 AM
Bonte Capitals post does highlight a larger problem with companies in China. One that is no secret.....You just dont know if you can trust the numbers.
Title: Re: BABA - Alibaba
Post by: JBTC on September 21, 2015, 06:57:57 PM
Bonte Capitals post does highlight a larger problem with companies in China. One that is no secret.....You just dont know if you can trust the numbers.

What's interesting is that even though one might be aware that he cannot trust the numbers, given the numbers are there, the result is people base their decisions on the numbers. Some may discount them more, some less.

Which is why China continues to publish its GDP at 7.0 for 1Q and 2Q each. No matter how skeptical the economists are, they start by tweaking the 7.0 to get to their own estimates.
Title: Re: BABA - Alibaba
Post by: fareastwarriors on November 09, 2015, 09:23:28 AM
Why Alibaba's Massive Counterfeit Problem Will Never Be Solved

http://www.forbes.com/sites/michaelschuman/2015/11/04/alibaba-and-the-40000-thieves/ (http://www.forbes.com/sites/michaelschuman/2015/11/04/alibaba-and-the-40000-thieves/)
Title: Re: BABA - Alibaba
Post by: fareastwarriors on November 18, 2015, 07:37:30 PM
Why Alibaba’s Shopping Spree Makes Sense

Chinese e-commerce firm uses deals to match up with Xiaomi, JD.com, Tencent


http://www.wsj.com/articles/why-alibabas-shopping-spree-makes-sense-1447878600 (http://www.wsj.com/articles/why-alibabas-shopping-spree-makes-sense-1447878600)
Title: Re: BABA - Alibaba
Post by: ritrading on May 25, 2016, 11:22:41 PM
I really want to make a bearish bet on BABA. Here's what I'm seeing in the latest 20-F

- Interest and Investment Income makes up 65% of the pretax income, greatly shadowing what one would think is BABA's core business.
- The 52BN (RMB) of Interest and Investment income is primarily due to non-cash gains of revaluation of existing equity interests and deconsolidations of existing interests.
- 42BN (RMB) cash outflow for acquisitions of available for sale securities, held to maturity securities, and equity investees.

This sounds like the basic scheme that Enron was using. Revaluing existing assets higher, claiming positive Cash From Operating Activities with simulatenously large Cash Outflows for Investing Activities. There's no real accumulation of any of the earnings that they claim to have. I'm trying to figure out the catalyst. Enron's catalyst was when they were finding harder to get new loans to let them fabricate more revenues. Loans were collateralized with their stock, so a drop in their stock price stopped them from getting new loans. (If I remember correctly in the Enron book "Smartest Guys In The Room")

I'm looking to purchase very out of the money puts, and I'm looking for a way to reduce my loss to time value. Any ideas of what might hint at a catalyst?
Title: Re: BABA - Alibaba
Post by: prevalou on May 26, 2016, 12:35:44 AM
I really want to make a bearish bet on BABA. Here's what I'm seeing in the latest 20-F

- Interest and Investment Income makes up 65% of the pretax income, greatly shadowing what one would think is BABA's core business.
- The 52BN (RMB) of Interest and Investment income is primarily due to non-cash gains of revaluation of existing equity interests and deconsolidations of existing interests.
- 42BN (RMB) cash outflow for acquisitions of available for sale securities, held to maturity securities, and equity investees.

This sounds like the basic scheme that Enron was using. Revaluing existing assets higher, claiming positive Cash From Operating Activities with simulatenously large Cash Outflows for Investing Activities. There's no real accumulation of any of the earnings that they claim to have. I'm trying to figure out the catalyst. Enron's catalyst was when they were finding harder to get new loans to let them fabricate more revenues. Loans were collateralized with their stock, so a drop in their stock price stopped them from getting new loans. (If I remember correctly in the Enron book "Smartest Guys In The Room")

I'm looking to purchase very out of the money puts, and I'm looking for a way to reduce my loss to time value. Any ideas of what might hint at a catalyst?

other points to look at:
-deferred revenue increasing sharply
-share based compensation expense (impact of marked to market)
-free cash flow
-monetization rate
-Ant Financial fresh funding round
Title: Re: BABA - Alibaba
Post by: ritrading on October 11, 2016, 10:20:39 AM
I just started looking at BABA again. The "monetization rate" - have they started charging a commission on vendor sales?
Title: Re: BABA - Alibaba
Post by: PatientCheetah on October 11, 2016, 01:28:49 PM
Why are you looking at it now? I am selling down my shares - story hasn't changed much expect there are less China fear.
Title: Re: BABA - Alibaba
Post by: ritrading on October 12, 2016, 10:42:02 AM
Why are you looking at it now? I am selling down my shares - story hasn't changed much expect there are less China fear.

I've had my eye on it for a while, for shorting. Now that it has gone up about 50% from when I last researched, it's looking like a more attractive short. Nothing much has changed aside from my risk going down.
Title: Re: BABA - Alibaba
Post by: abyli on October 12, 2016, 11:35:04 AM
Why are you looking at it now? I am selling down my shares - story hasn't changed much expect there are less China fear.

I've had my eye on it for a while, for shorting. Now that it has gone up about 50% from when I last researched, it's looking like a more attractive short. Nothing much has changed aside from my risk going down.

Can you explain a little bit why you short Baba? Thanks.
Title: Re: BABA - Alibaba
Post by: Jurgis on November 12, 2016, 03:30:16 PM
If anyone's interested "Alibaba: The House That Jack Ma Built" http://a.co/dr2UNuE on sale for $1.99. Haven't read it yet, reviews are so so.
Title: Re: BABA - Alibaba
Post by: wolverine890 on November 13, 2017, 09:31:18 AM
I think one of the most interesting things about BABA is that they have a very different e-commerce model than AMZN. As any follower of BABA knows, yesterday was the ‘Single Sticks’ holiday; a mega-shopping day dedicated to proud lonely hearts. The headline number for gross merchandise value (GMV) sold on this day was RMB 168.2B ($25.3B). Yet, total retail commerce revenue for the quarter is estimated to be between $9B and $10B. How could this be? Anyone familiar with AMZN’s accounting might be confused by this. AMZN considers both first and third party sales as part of their revenue, so it would make sense that BABA would also. Right? Wrong. BABA generates all its revenue from the transactions on its website. It sells very little, if anything at all. Which is why BABA’s revenue is lower, margins are hire and they won’t need much debt to fund future growth.

I haven’t posted much. Hopefully you guys don’t mind the prose. For those who follow BABA this is pretty basic. For those that don’t, give this consideration. I think it’s a very strong competitive advantage in a global context; not mention how this business model synergizes cloud computing with retailers much better than AWS.
 

Title: Re: BABA - Alibaba
Post by: Liberty on November 22, 2017, 04:50:09 PM
Ok, this is funny:

https://twitter.com/shanghaiist/status/932667859343470592
Title: Re: BABA - Alibaba
Post by: stahleyp on November 22, 2017, 06:03:22 PM
I have no comment or opinion on this but those you are invested might find it of interest:

https://www.barrons.com/articles/alibabas-fake-metrics-blasted-by-muddy-waters-1511222841
Title: Re: BABA - Alibaba
Post by: SlowAppreciation on November 23, 2017, 08:05:56 AM
https://deep-throat-ipo.blogspot.com
Title: Re: BABA - Alibaba
Post by: Liberty on January 19, 2018, 06:59:54 AM
https://www.economist.com/news/business/21735043-alibaba-aims-matching-or-surpassing-amazon-web-services-2019-chinese-tech-companies-plan
Title: Re: BABA - Alibaba
Post by: CorpRaider on March 05, 2018, 07:16:50 AM
The world is overweight BABA:  https://ftalphaville.ft.com/2018/03/05/1520247093000/The-world-is-overweight-Baba/

They are also underweight AAPL. 
Title: Re: BABA - Alibaba
Post by: Jerry Capital on March 15, 2018, 06:00:22 AM
China Tech Titan Alibaba Plans Stock-Market Homecoming

Technology giant Alibaba Group Holding Ltd. is working on a plan to list on a stock exchange in its home market, China, according to people familiar with the matter, more than three years after its blockbuster initial public offering in New York.

Decent little pop on this this morning

https://www.wsj.com/articles/china-tech-titan-alibaba-plans-stock-market-homecoming-1521116131
Title: Re: BABA - Alibaba
Post by: Shooter MacGavin on April 10, 2018, 01:18:56 PM
How do you guys get comfortable investing in BABA or Tencent or others given the legally unenforceable rights to assets?  I'm not asking as a bear or short or anything.  I'd love to own these companies but I just worry about this. 

I remember when Jack Ma sort of seized Alipay from Yahoo! and they were basically helpless.  In fact I had a conversation with CFO at the time about this. And that has kind of been seared in my mind.  Also all these stories from Bill Browder with his experience in Russia and whatever (although a very different govt and situation, but still lack of enforceable rights for foreigners). What gives you comfort or how do you think about the risk?

 

 

 
Title: Re: BABA - Alibaba
Post by: Jurgis on April 10, 2018, 01:43:50 PM
How do you guys get comfortable investing in BABA or Tencent or others given the legally unenforceable rights to assets?  I'm not asking as a bear or short or anything.  I'd love to own these companies but I just worry about this. 

I remember when Jack Ma sort of seized Alipay from Yahoo! and they were basically helpless.  In fact I had a conversation with CFO at the time about this. And that has kind of been seared in my mind.  Also all these stories from Bill Browder with his experience in Russia and whatever (although a very different govt and situation, but still lack of enforceable rights for foreigners). What gives you comfort or how do you think about the risk?

I think this is a good and relevant question. I have asked this in the past and I continue to have this in mind. The short answer is that this is a risk and I would never put more than couple % of my money into these stocks.

The longer answer is that it's likely neither management nor the government will screw you... but if they wanted to, they could, and you'd have no recourse pretty much. I don't know China as well as I know Russia. I think that large-well-known-tech Chinese companies are likely (much) more shareholder friendly than various Russian entities. OTOH I've had bad experiences with Chinese fraudulent reverse mergers. And there are examples (that did not blow up yet) where government told CHL to invest its cash into some crappy bank(s), etc. And there is example of AliPay - although some people would argue that if Jack Ma kept AliPay within BABA, government would have killed it as "foreign-controlled" financial firm.

On yet another hand, if I had held when I first bought Tencent ages ago, I'd be way rich(er) - and nothing bad happened in these 10+ years while the stock went up 100x or so.

Maybe someone should ask Warren and Charlie how can they be comfortable investing and holding BYD...  8)

Good luck  8)
Title: Re: BABA - Alibaba
Post by: Shooter MacGavin on April 10, 2018, 04:39:38 PM
Fair points.

BYD is a different animal though.  As far as I know, BYD, listed in Hong Kong, can be owned locally by Chinese citizens and foreigners.  In other words, I believe Berkshire would have the same ownership rights as a Chinese citizen of BYD.

In China, Internet stocks are specifically prohibited from foreign ownership, so what you own in BABA are basically shares in a Cayman Island VIE that contracts with Jack Ma to provide profit share in exchange for the IPO capital. It was specifically designed to skirt Chinese foreign ownership laws while listing outside of China.

So in the first, the China's government recognizes the foreign legal ownership as pari passu with that of local owners.

 But in the second, the instruments were actually designed by lawyers, and they have not officially had the blessing of the Chinese government. 

I worry if Trump keeps agitating China (whether he should or not is a different debate), that the Chinese govt could in theory nullify US/Foreign ownership in these companies.

Anyway, I guess the answer is don't bet with too much.
Title: Re: BABA - Alibaba
Post by: Jurgis on April 11, 2018, 08:30:08 AM
Yes, right VIEs and contractual rights and all that. I am aware. But Chinese government could kick BYDs ass if they wanted to too. For example if they decided that "Great Wall" or some other car company should be preferred vendor in China or if they decided that BYD CEO is corrupt and should be jailed. And "the same ownership rights as a Chinese citizen" would be worth zilch. But, yeah, VIEs and contractual rights might be more risky.
Title: Re: BABA - Alibaba
Post by: cmlber on April 11, 2018, 12:32:50 PM
I worry if Trump keeps agitating China (whether he should or not is a different debate), that the Chinese govt could in theory nullify US/Foreign ownership in these companies.

Does China have any incentive to nullify foreign ownership in these companies?

First, doing so would permanently impair Chinese access to foreign capital markets.

Second, how do you think any President, let alone Donald Trump, would react to the Chinese government effectively stealing hundreds of billions of dollars in value from American investors?  China holds $1 trillion in treasury securities...  If they want to steal property from American investors, what's to stop Trump retaliating by voiding debt?  That sort of retaliation may be a little extreme, but you could certainly imagine this starting a massive trade war.

Third, the Chinese government has had a draft ruling open for comment for a couple years now that would legitimize the VIE structure so long as the company is controlled by a Chinese national.  If that is passed, it would effectively give you the same legal rights as a shareholder in FB or GOOG; legitimate property rights but a founder controlled business where the founder can theoretically take advantage of you or poorly allocate capital and you have to judge whether or not you think that's likely.
Title: Re: BABA - Alibaba
Post by: Jerry Capital on April 12, 2018, 09:27:33 AM
Firstly, limit size where where a 100% loss would still be manageable.

Secondly, require a higher "margin of safety"... whatever that term means to you... For me it means only buying Alibaba when it trades at a significant discount to similar US based companies. All else equal you should vastly prefer to own Google, Amazon, and/or Facebook if the valuation gap can't be eyeballed as egregiously large.

Thirdly, be less inclined to let Alibaba run up in portfolio weight and be OK trimming. For domestic companies I never trim, hate paying capital gains taxes and don't believe in "trading around a core position", I have no limit on market value position size just average cost position size. However, with Alibaba if it becomes your largest position don't be afraid to trim a little in order to not violate rule #1.

These thoughts are inspired by Seth Karmans June 1996 Baupost Letter to Shareholders where he was purchasing Russian ADRs:

"The Fund also initiated positions in the U.S.-listed ADR's of three Russian companies (two in the oil and gas business and one electric utility). Baupost has been following the nascent Russian stock market for three years, and we are excited that the Fund now has the ability to participate in this dramatically undervalued part of the world.  Of course, because of the higher risk involved, we are limiting our overall exposure in Russia to a level where even a total loss would still be manageable."
Title: Re: BABA - Alibaba
Post by: walkie518 on April 12, 2018, 10:03:49 AM
The VIEs are certainly troubling, but it's hard to get around it since there is no way to invest in Chinese companies otherwise. 

However, I am of the opinion that while rights may be in law unenforceable by the letter of the law, the spirit of the law, should there be an opportune or unfortunate event requiring litigation, would likely prevail. 

If it walks like a duck and quacks like a duck...
Title: Re: BABA - Alibaba
Post by: Jurgis on April 12, 2018, 11:15:53 AM
Or this could happen:

https://www.nytimes.com/2018/04/12/business/china-bytedance-duanzi-censor.html
Title: Re: BABA - Alibaba
Post by: Shooter MacGavin on April 12, 2018, 12:39:42 PM
Firstly, limit size where where a 100% loss would still be manageable.

Secondly, require a higher "margin of safety"... whatever that term means to you... For me it means only buying Alibaba when it trades at a significant discount to similar US based companies. All else equal you should vastly prefer to own Google, Amazon, and/or Facebook if the valuation gap can't be eyeballed as egregiously large.

Thirdly, be less inclined to let Alibaba run up in portfolio weight and be OK trimming. For domestic companies I never trim, hate paying capital gains taxes and don't believe in "trading around a core position", I have no limit on market value position size just average cost position size. However, with Alibaba if it becomes your largest position don't be afraid to trim a little in order to not violate rule #1.

These thoughts are inspired by Seth Karmans June 1996 Baupost Letter to Shareholders where he was purchasing Russian ADRs:

"The Fund also initiated positions in the U.S.-listed ADR's of three Russian companies (two in the oil and gas business and one electric utility). Baupost has been following the nascent Russian stock market for three years, and we are excited that the Fund now has the ability to participate in this dramatically undervalued part of the world.  Of course, because of the higher risk involved, we are limiting our overall exposure in Russia to a level where even a total loss would still be manageable."

Thanks

Do you know how they ended up doing in Russia?

The thing is, unless I can make it a meaningful position, I think why bother?  If I think BABA can compound at a mid 30's clip for the next 5 to 7 years, but then I make it a 2% position, I think why not just look somewhere else?  Unless there is another reason to get comfortable enough that i'm not understanding and then I can make it a 5-7-10% position.  But it seems like most people kinda approach it by "only dipping one toe in"
Title: Re: BABA - Alibaba
Post by: Shooter MacGavin on April 12, 2018, 12:41:44 PM
Or this could happen:

https://www.nytimes.com/2018/04/12/business/china-bytedance-duanzi-censor.html

funny and troubling article.  Yeesh.  thanks for sharing.
Title: Re: BABA - Alibaba
Post by: walkie518 on April 12, 2018, 08:47:42 PM
Or this could happen:

https://www.nytimes.com/2018/04/12/business/china-bytedance-duanzi-censor.html

funny and troubling article.  Yeesh.  thanks for sharing.

This is not a direct comparison except for the fact that Alibaba is a Chinese internet company. More than just a website but an infrastructure with global reach, not to mention ant.

If I'm missing something, can you spell it out for me?

Title: Re: BABA - Alibaba
Post by: Voodooking on May 18, 2018, 08:01:36 AM
https://www.economist.com/business/2018/01/18/chinese-tech-companies-plan-to-steal-american-cloud-firms-thunder

I've been hearing a lot recently about how Alibaba is planning to list on the main exchange in China this summer, by offering Chinese residents the opportunity to purchase stock (possibly by way of CDR's).

What do you guys think the result of this will be, do you think the stock will rise when the Chinese get a chance to buy something that until now they have not been able to own? I know that savings rates are very high in China, approx 50% by some reports. People with that much cash saved are capable of buying a lot of shares if there is indeed demand.

This article also suggests that BABA will compete or overtake Amazon Web Services in cloud offerings in the US...

I wish I could see the runway a bit more clearly on this one to anticipate growth in 20 or 30 years and whether it matches the rise in Chinese consumption.
Title: Re: BABA - Alibaba
Post by: jeffswaldron on May 23, 2018, 10:16:51 AM
It looks like Li lu / Himalaya Capital Management LLC has bought into this company.  Does that intrigue anyone to research this more and am I missing something?

https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0 (https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0)
Title: Re: BABA - Alibaba
Post by: mwtorock on May 23, 2018, 10:54:30 AM
It looks like Li lu / Himalaya Capital Management LLC has bought into this company.  Does that intrigue anyone to research this more and am I missing something?

https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0 (https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0)

i dont know if this is just a tracking position or not. For high conviction ideas, he usually bets a lot more than that. personally i would not read too much into it.
Title: Re: BABA - Alibaba
Post by: ajc on May 23, 2018, 11:08:06 AM


It looks like Li lu / Himalaya Capital Management LLC has bought into this company.  Does that intrigue anyone to research this more and am I missing something?

https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0 (https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0)



It's a sizeable position of mine via my Softbank holding and my FCSS.L stake. I don't think it's too complex of an idea.

- They're still growing at a very good clip with their core business.
- They own Lazada which is ASEAN's biggest e-commerce player and they've only recently started putting resources and effort into that. It's a market of more than 600 million people.
- They also own about half of Cainiao, which is China's biggest logistics company (like UPS and FedEx combined, I guess).
- Their Amazon Web Services-like platform, Aliyun, has a huge growth runway for at least a decade or two.
- There are other things to mention like their big PayTM stake, Ele.me, etc, but if you do some rough math on what the above businesses could be worth then that's a fair start.

In terms of near-term catalysts, there are a few:

- They own 33% of Ant Financial. It's due to IPO late this year or in 2019. I think it's currently valued at around $150B. Yu'e Bao is also part of Ant, and is the world's biggest money-market fund.
- Didi has also apparently hired banks for a 2019 IPO. $BABA owns about 15% of the company from my estimates. Roughly, they should get a market cap of around $120B, so that's worth $20B right there.
- There's also the listing of China's major tech companies on their home exchanges, including $BABA. Until now, local Chinese have been unable to own their own national champions. The government is fast-tracking this process. As catalysts go, I think it could potentially be a massive one.

There're other mentionables, like it's capital-light, the Chinese market is cheap, etc, but I think those are some reasonable ones that are worth taking into account.


Title: Re: BABA - Alibaba
Post by: ajc on May 23, 2018, 12:46:03 PM


It's a sizeable position of mine via my Softbank holding and my FCSS.L stake. I don't think it's too complex of an idea.

- They're still growing at a very good clip with their core business.
- They own Lazada which is ASEAN's biggest e-commerce player and they've only recently started putting resources and effort into that. It's a market of more than 600 million people.
- They also own about half of Cainiao, which is China's biggest logistics company (like UPS and FedEx combined, I guess).
- Their Amazon Web Services-like platform, Aliyun, has a huge growth runway for at least a decade or two.
- There are other things to mention like their big PayTM stake, Ele.me, etc, but if you do some rough math on what the above businesses could be worth then that's a fair start.

In terms of near-term catalysts, there are a few:

- They own 33% of Ant Financial. It's due to IPO late this year or in 2019. I think it's currently valued at around $150B. Yu'e Bao is also part of Ant, and is the world's biggest money-market fund.
- Didi has also apparently hired banks for a 2019 IPO. $BABA owns about 15% of the company from my estimates. Roughly, they should get a market cap of around $120B, so that's worth $20B right there.
- There's also the listing of China's major tech companies on their home exchanges, including $BABA. Until now, local Chinese have been unable to own their own national champions. The government is fast-tracking this process. As catalysts go, I think it could potentially be a massive one.

There're other mentionables, like it's capital-light, the Chinese market is cheap, etc, but I think those are some reasonable ones that are worth taking into account.



I'll add one final thing from a Connie Chan (a16z) presentation I watched yesterday.

The video is somewhere over ten minutes in total, and a fair amount of it sounds a bit Orwellian, but the part from 7m20s to 8m15s is really interesting from an Alibaba investment perspective.

The opportunity she discusses seems like a really substantial one, and that could potentially be another significant growth driver for them over time.

https://www.youtube.com/watch?v=iu5hTMlTU-U (https://www.youtube.com/watch?v=iu5hTMlTU-U)


Title: Re: BABA - Alibaba
Post by: Voodooking on June 08, 2018, 01:11:31 AM
Well, the China Securities Regulation Commission have yesterday approved the sale of CDR's for overseas-listed companies to offer a secondary listing in mainland China, with immediate effect.

I wonder how long it will take Alibaba to take advantage of this and offer CDR's for Chinese investors?

I'm also interested how this will alter any ownership stake that the American listed ADR's currently have. Will this dilute the ownership stake of the ADR's at all? Will the large numbers of Chinese purchasing Alibaba push the price of the stock up?

This is a long term holding for me. Another poster mentioned Li Lu and I think it is encouraging from a due diligence point of view, as he carries out incredibly in-depth research before he initiates a position, but I also remember that most of his portfolio will be in China, and the only reason we are seeing this as a large percentage of it is because it is one of 2 or 3 American listed stocks that are subject to 13F listing.

The fact that the following well respected investors all have significant holdings also gives me a fair degree of confidence in the stock, which has been called a "Toll road on the spending of emerging middle-class China". I think it has a nice runway.

Himalaya Capital (Li Lu): 56.9% of portfolio.
Joho Capital (Robert Karr): 40.62% of portfolio.
Tairen Capital (Larry Chen & Terry Zhang): 36.49% of portfolio.
Temasek Holdings Ltd (Lim Boon Heng): 35.83% of portfolio.
Northern Cross, Llc (Jean-Francois Ducrest): 13.87% of portfolio.
Platinum Asset Management (Kerr Neilson): 11.74% of portfolio.
Sands Capital Management, Llc (Frank Sands): 8.16% of portfolio.
Parus Finance (uk) Ltd (Fabrice Vecchioli & Edouard Vecchioli): 8.14% of portfolio.
Appaloosa Management LP (David Tepper): 7.65% of portfolio.
Duquesne Capital (Stanley Druckenmiller): 6.66% of portfolio.
Discovery Capital Management (Rob Citrone): 6.54% of portfolio.
Coatue Management (Philippe Laffont): 6.18% of portfolio.
Lone Pine Capital (Stephen Mandel): 5.56% of portfolio.
Third Point   (Daniel Loeb): 5.51% of portfolio.
Hillhouse Capital Management (Lei Zhang): 5.03% of portfolio.
Moore Global Investments (Louis Bacon): 5.03% of portfolio.
Title: Re: BABA - Alibaba
Post by: Liberty on June 08, 2018, 06:23:56 AM
More details on the ruling here, for those curious:

https://www.ft.com/content/7e243658-6a0c-11e8-8cf3-0c230fa67aec

Chinese direct link: http://www.csrc.gov.cn/pub/zjhpublic/zjh/201806/t20180606_339317.htm
Title: Re: BABA - Alibaba
Post by: walkie518 on June 08, 2018, 09:56:05 AM


It looks like Li lu / Himalaya Capital Management LLC has bought into this company.  Does that intrigue anyone to research this more and am I missing something?

https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0 (https://fintel.io/i13f/himalaya-capital-management/2018-03-31-0)



It's a sizeable position of mine via my Softbank holding and my FCSS.L stake. I don't think it's too complex of an idea.

- They're still growing at a very good clip with their core business.
- They own Lazada which is ASEAN's biggest e-commerce player and they've only recently started putting resources and effort into that. It's a market of more than 600 million people.
- They also own about half of Cainiao, which is China's biggest logistics company (like UPS and FedEx combined, I guess).
- Their Amazon Web Services-like platform, Aliyun, has a huge growth runway for at least a decade or two.
- There are other things to mention like their big PayTM stake, Ele.me, etc, but if you do some rough math on what the above businesses could be worth then that's a fair start.

In terms of near-term catalysts, there are a few:

- They own 33% of Ant Financial. It's due to IPO late this year or in 2019. I think it's currently valued at around $150B. Yu'e Bao is also part of Ant, and is the world's biggest money-market fund.
- Didi has also apparently hired banks for a 2019 IPO. $BABA owns about 15% of the company from my estimates. Roughly, they should get a market cap of around $120B, so that's worth $20B right there.
- There's also the listing of China's major tech companies on their home exchanges, including $BABA. Until now, local Chinese have been unable to own their own national champions. The government is fast-tracking this process. As catalysts go, I think it could potentially be a massive one.

There're other mentionables, like it's capital-light, the Chinese market is cheap, etc, but I think those are some reasonable ones that are worth taking into account.

ajc: how do you get to 15% of Didi? I see 6%? 
Title: Re: BABA - Alibaba
Post by: ajc on June 08, 2018, 12:47:52 PM


ajc: how do you get to 15% of Didi? I see 6%?



You're likely right. Sorry about that. Thinking about it, some of my $BABA notes need updating. My old ones were:

- Cainiao (logistics) 47% Alibaba and 8 biggest logistics companies in China all combined.
- Ant Financial (Alipay) 33% stake includes Yu'e Bao (100 billion dollars AUM), Alipay is biggest player in total market of $500 billion per quarter.
- Didi (guess at 15% stake). Tencent seemed to own about 20% of Didi Dache at 100 million dollar valuation early on, and has participated since.
- Lyft (7.5% appr.) Didi also a large shareholder.
- Lazada Group (controlling stake).
- Guangzhou Evergrande (soccer) 50%.
- Quantium Solutions (SingPost logistics) 34%. Oct 2016 Singapore logistics ops does business for Adidas, Canon, etc.
- Singapore Post (mail/parcel) 10%. Logistics interests in US with Adidas others.
- Also Sina Weibo (18%), Meizu (5% guess), and Magic Leap (10%).
- PayTM (Indian payments) 50% Alibaba owned, 20% Ant Financial owned.
- Aliyun (Chinese AWS) 100% owned.
- Kakao Pay (Korean payments) $200M in Feb 2017 for payments division of Kakao valued at $5B for whole company.
- AGTech (Chinese e-gambling) 60% of major Chinese online gambling company.
- Snapdeal and Snapchat (very minor stakes).

I see they did a Didi round with Ant in 2016 for $200M each, but eye-balling it I'd say the dilution since and lack of participation by $BABA makes your number far more accurate. I'd also think my Lyft, Magic Leap, and PayTM numbers from those notes, are all too high since they've been most active in raising new rounds. My screw-up.


Title: Re: BABA - Alibaba
Post by: ajc on June 08, 2018, 01:38:49 PM



ajc: how do you get to 15% of Didi? I see 6%?


You're likely right. Sorry about that. Thinking about it, some of my $BABA notes need updating. My old ones were:

- Cainiao (logistics) 47% Alibaba and 8 biggest logistics companies in China all combined.
- Ant Financial (Alipay) 33% stake includes Yu'e Bao (100 billion dollars AUM), Alipay is biggest player in total market of $500 billion per quarter.
- Didi (guess at 15% stake). Tencent seemed to own about 20% of Didi Dache at 100 million dollar valuation early on, and has participated since.
- Lyft (7.5% appr.) Didi also a large shareholder.
- Lazada Group (controlling stake).
- Guangzhou Evergrande (soccer) 50%.
- Quantium Solutions (SingPost logistics) 34%. Oct 2016 Singapore logistics ops does business for Adidas, Canon, etc.
- Singapore Post (mail/parcel) 10%. Logistics interests in US with Adidas others.
- Also Sina Weibo (18%), Meizu (5% guess), and Magic Leap (10%).
- PayTM (Indian payments) 50% Alibaba owned, 20% Ant Financial owned.
- Aliyun (Chinese AWS) 100% owned.
- Kakao Pay (Korean payments) $200M in Feb 2017 for payments division of Kakao valued at $5B for whole company.
- AGTech (Chinese e-gambling) 60% of major Chinese online gambling company.
- Snapdeal and Snapchat (very minor stakes).

I see they did a Didi round with Ant in 2016 for $200M each, but eye-balling it I'd say the dilution since and lack of participation by $BABA makes your number far more accurate. I'd also think my Lyft, Magic Leap, and PayTM numbers from those notes, are all too high since they've been most active in raising new rounds. My screw-up.



Speaking of my screw-ups... I've now owned SFTBY (which is how I own basically all my BABA) for three years and earned a massive 6% CAGR on it after averaging down.
However, I'm pretty darn sure the Vision Fund does own 20% of Didi, as well as 30%+ of Ola, 40%+ of Grab, and around 15% of Uber.
Time will tell if Softbank shares continue going nowhere, while Alibaba carries on steadily upward.

I've got a sense that between the Ant IPO and the local listing of Chinese tech stocks, Alibaba has some good upcoming catalysts to go along with their impressive growth.
At the same time, Softbank is trying for the TMUS/S merger, an IPO of their Japanese telecom, and they've got the Uber and Didi IPO's coming up which, all things being equal, will be great for the Vision Fund. If they can get 2 of the 4 done this year or early next, that might be very good for their stock. If they can get 3 done, it might be even better.

So I'm tempted to say SFTBY has more catalysts here than BABA this year but judging by my past 3 years owning the stock, it's fair to ask what the hell I know.


Title: Re: BABA - Alibaba
Post by: plato1976 on June 09, 2018, 10:33:49 AM
The fear about SoftBank is really the constant high debt load; they may delever with s merger and telecom IPO but they are talking about vision fund II so the leverage may go up when that happens. Tech is at a high point in general — obviously the market doesn’t like the idea to use leverage to acquire high risk tech assets at this point
Title: Re: BABA - Alibaba
Post by: cameronfen on June 09, 2018, 12:57:37 PM
The fear about SoftBank is really the constant high debt load; they may delever with s merger and telecom IPO but they are talking about vision fund II so the leverage may go up when that happens. Tech is at a high point in general — obviously the market doesn’t like the idea to use leverage to acquire high risk tech assets at this point

I don't have the numbers right on me but a telecom like softbank's japan assets can hold 4 or 5 turns of EBITDA.  After subtracting that out leverage is more than manageable.  I think asset managers can hold some leverage especially with SB cost plus management fee of 5% model.  And then you can hold some debt around equity positions, but that is more questionable in my mind but the remaining debt is not too high (or zero). 
Title: Re: BABA - Alibaba
Post by: ajc on June 10, 2018, 12:25:02 PM

The fear about SoftBank is really the constant high debt load; they may delever with s merger and telecom IPO but they are talking about vision fund II so the leverage may go up when that happens. Tech is at a high point in general — obviously the market doesn’t like the idea to use leverage to acquire high risk tech assets at this point


Not to take up too much of the Alibaba thread here, but in terms of perception I think that's directionally right. The S/TMUS deal looks like being the main anchor or the main catalyst, depending on what happens. After that, I'd say the home telecom IPO then the Didi and Uber events are probably the next biggest deals. In Softbank's favor, they've obviously been trying to get the stock re-rated for some time now (major buybacks when Arora was there & playing up the 'Berkshire of tech' tag in arguing for a stock premium). The first two moves seem to be in the works with exactly that highlighting in mind.

We'll have to agree to disagree on tech valuations generally. I see some expensive stuff, but also some growing cash flows at very reasonable prices. I also think cameronfen's comments about asset managers is accurate. Bloomberg did a short article on that a few weeks back (https://www.bloomberg.com/view/articles/2018-05-08/softbank-is-japan-s-hna-that-s-good). Since then, they did exit Flipkart, which was a concern raised in the article. They'll also get a public 'exit' when those two ride-sharing IPO's happen next year. Anyway... time will tell how well they execute and if other factors go in their favor, but it does look like they're doing what's needed to help close the substantial discount to fair value.


Title: Re: BABA - Alibaba
Post by: Spekulatius on August 24, 2018, 03:48:54 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
Title: Re: BABA - Alibaba
Post by: Liberty on September 07, 2018, 04:39:00 PM
https://www.nytimes.com/2018/09/07/technology/alibaba-jack-ma-retiring.html
Title: Re: BABA - Alibaba
Post by: mwtorock on September 07, 2018, 06:50:35 PM
https://www.nytimes.com/2018/09/07/technology/alibaba-jack-ma-retiring.html

why now? the timing is very very interesting... he is certain that BABA wins the war against JD?
Title: Re: BABA - Alibaba
Post by: Liberty on September 08, 2018, 12:16:02 PM
More detail:

http://www.scmp.com/business/companies/article/2163376/jack-ma-remain-alibabas-chairman-succession-plan-younger-talent
Title: Re: BABA - Alibaba
Post by: SmoothSailor on September 11, 2018, 09:07:46 AM
Daniel Zhang sounds like a really interesting guy, surprised no one here talked about him yet. He works til 11PM every night and networks on weekends. Hema, the high end grocery chain, was his pet project that he kept secret from Jack Ma for 2 years until he found the best operational model that suit the blending of offline and online retail in China. Tmall's Single Day event and its subsequent success was also his idea.
Title: Re: BABA - Alibaba
Post by: Value^2 on September 13, 2018, 06:02:06 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.
Title: Re: BABA - Alibaba
Post by: Foreign Tuffett on September 13, 2018, 07:59:28 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.
Title: Re: BABA - Alibaba
Post by: Spekulatius on September 14, 2018, 04:09:12 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

My notes from reading the 20-f:

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)
P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?
p.43 VIE structure, 3 layer of holding companies above the operating subs
P. 45 WASU related party transaction
P.137 $4.862B in investment and interest income, (counted as earnings )
F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)
Title: Re: BABA - Alibaba
Post by: Cameron on September 14, 2018, 07:57:41 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

My notes from reading the 20-f:

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)
P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?
p.43 VIE structure, 3 layer of holding companies above the operating subs
P. 45 WASU related party transaction
P.137 $4.862B in investment and interest income, (counted as earnings )
F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)
The VIE structure goes very deep,  I wish it was only 3 layers. Ma has some 41 connections to different companies based in the PRC. About 25 of which he owns a certain shareholder percentage, the rest he is on the board of. The response I got back from the BABA investor relations was that he was only a director at these 25 companies as well and not an investor. They told a flat out lie, I went to  http://www.gsxt.gov.cn/index.html
just to verify every company to make sure nothing changed. I've attached the excel file that was sent, if anyone was interested.
Title: Re: BABA - Alibaba
Post by: Spekulatius on September 14, 2018, 07:30:57 PM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.

The "deep-throat" guy is hyperbolic, but I've never seen any evidence that anyone really understands BABA's financials. So in that sense he's right.

Clearly BABA contains lots of extremely valuable businesses, but it's the ultimate too hard situation IMO.

My notes from reading the 20-f:

P. 4 what are the $3.262B in impairments on investments? ( mostly Alibaba pictures ?)
P.36 $13.7B senior notes and $4B 5 year loan fully drawn down, why?
p.43 VIE structure, 3 layer of holding companies above the operating subs
P. 45 WASU related party transaction
P.137 $4.862B in investment and interest income, (counted as earnings )
F-40 why change 37.5% of Alipay profit for a 33% stake? (This diluted shareholders)
The VIE structure goes very deep,  I wish it was only 3 layers. Ma has some 41 connections to different companies based in the PRC. About 25 of which he owns a certain shareholder percentage, the rest he is on the board of. The response I got back from the BABA investor relations was that he was only a director at these 25 companies as well and not an investor. They told a flat out lie, I went to  http://www.gsxt.gov.cn/index.html
just to verify every company to make sure nothing changed. I've attached the excel file that was sent, if anyone was interested.

Thanks for your detective work, I really didn’t go that far. I was interested in BABA for a long, but will pass. There simply is no way to rationally explain such a complex structure and the related party transactions which have been disclosed, that are positive for an investor.
Title: Re: BABA - Alibaba
Post by: pcm983 on September 18, 2018, 12:30:37 PM
anyone watch the investor day? strange they didnt give guidance
Title: Re: BABA - Alibaba
Post by: peterHK on September 18, 2018, 01:57:16 PM
I'm amazed so many HF's/institutions own this given it's effectively un-dilligenceable given the layers of subs and unclear personal/management holdings.

Regardless of how it turns out, it's one of the worst examples of corporate governance and disclosure I've ever seen.

At least with Tencent, 90% of the assets are owned by the listco. With BABA, you get nothing AND a management team with a history of screwing western shareholders.
Title: Re: BABA - Alibaba
Post by: Cameron on September 18, 2018, 02:11:51 PM
I'm amazed so many HF's/institutions own this given it's effectively un-dilligenceable given the layers of subs and unclear personal/management holdings.

Regardless of how it turns out, it's one of the worst examples of corporate governance and disclosure I've ever seen.

At least with Tencent, 90% of the assets are owned by the listco. With BABA, you get nothing AND a management team with a history of screwing western shareholders.

Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.
Title: Re: BABA - Alibaba
Post by: cmlber on September 18, 2018, 03:16:06 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

Title: Re: BABA - Alibaba
Post by: Cameron on September 18, 2018, 03:43:00 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html
Title: Re: BABA - Alibaba
Post by: cmlber on September 18, 2018, 04:11:59 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it? 
Title: Re: BABA - Alibaba
Post by: Cameron on September 18, 2018, 04:30:28 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?
Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.
You can thank Enron for changing how VIE's are consolidated as well.
Title: Re: BABA - Alibaba
Post by: cmlber on September 18, 2018, 05:01:55 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?
Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.
You can thank Enron for changing how VIE's are consolidated as well.

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)
Title: Re: BABA - Alibaba
Post by: Cameron on September 18, 2018, 05:06:19 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?
Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.
You can thank Enron for changing how VIE's are consolidated as well.

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)
Most other retail investors I've talked to have no idea about the VIE structure.
BABA investors own the shell company in Best Inc., Jack and Simon own 27% of the operating assets. That seems pretty material to me.
Title: Re: BABA - Alibaba
Post by: Spekulatius on September 18, 2018, 05:55:00 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?
Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.
You can thank Enron for changing how VIE's are consolidated as well.

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

It’s never irrelevant when you find a cockroach.
Title: Re: BABA - Alibaba
Post by: cmlber on September 18, 2018, 07:31:14 PM
Its possible to do due-diligence it just takes a ridiculous amount of time to get to the bottom of anything they own. I just have to assume that none of the hedge funds that own this have done any kind of work or have read a single line from an Alibaba annual report. Take for example their Best Inc. holdings, its held in Hangzhou Ali Venture Capital Co., Ltd which is owned 80% by Ma and 20% by Simon, not by the listco. They pledged their equity in the firm to one of the WFOE's so Hangzhou Ali Venture Capital Co is thus consolidated in the BABA annual report. That's not even disclosed in the BABA annual report, I ended up finding it in the Best Inc. reports.

Where are you seeing this in the Best annual report?  Under the Share Ownership footnotes the Best 20-F says Alibaba's stake is owned by Alibaba Investment Limited, which is wholly owned Alibaba Group Holding Limited, the ListCo...

The stock is a shell co., most of the business is run through its VIE.
https://www.qichacha.com/firm_ca73e5d4965cdf0c9c66938e38a3866c.html

Isn't this the case for all Chinese listed technology companies?  They all have the VIE structure, what's the difference?  Alibaba the ListCo owns Alibaba Investment Limited which owns shares in BSTI on the Nasdaq which are worth $500MM, so are you saying the public shareholders in BSTI own absolutely nothing but are paying $2.3Bn for it?
Welcome to Chinese ADR's you own an offshore shell company with contractual obligations not the actual Chinese operating assets.
You can thank Enron for changing how VIE's are consolidated as well.

Yes, but your original post implied BABA was trying to dupe the public markets through lack of disclosure that BABA owns 22% of Best Inc when really Jack Ma owns it.  There's no lack of disclosure, every investor in Chinese ADRs knows there is a VIE structure... 

The VIE structure is obviously a risk-factor, but your particular example of difficulty to understand BABA seems off, since a) in a paragraph or two we've determined pretty easily that BABA does in fact own 22% of BSTI but the VIE is controlled by a Ma entity... tomorrow BABA could sell it's BSTI stock and have $500MM in cash though... and b) this is so immaterial to the value of BABA that it's irrelevant.  (Note, I don't own BABA)

It’s never irrelevant when you find a cockroach.

What is the cockroach?  That a company controlled by Ma owns the operating assets and all that the BSTI shareholders own is a contractual right to the profits of those assets?There is nothing being hidden, everyone knows this and it's fully disclosed in every Chinese tech ADR.  Alibaba DOES own 22% of BTSI outright...  tomorrow, Alibaba could sell those shares and would have $500MM in cash.  What am I missing?
Title: Re: BABA - Alibaba
Post by: Liberty on September 19, 2018, 12:57:56 PM
https://www.cnbc.com/2018/09/19/jack-ma-alibaba-is-no-longer-planning-to-create-1-million-us-jobs.html

Quote
Jack Ma, founder of Chinese retail giant Alibaba, has recanted his promise to Donald Trump to create 1 million U.S. jobs.
Ma's statements come on the heels of a new round of tariffs from both the U.S. and China.

Experts have said that Ma's vow to create 1 million jobs linked to merchants selling their goods on the company's platform within five years was lofty to begin with.
Title: Re: BABA - Alibaba
Post by: Value^2 on October 31, 2018, 11:57:03 AM
What do people here make of BABA’s accounting. the article below, while biased, raised some valid point regarding BABA’s accounting. having a $1.2B company like Wazmu disappear from BABA’s annual report and balance sheet without a trace is done discomforting:
https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html (https://deep-throat-ipo.blogspot.com/2018/08/the-baba-20-ffinancial-comedy-gold.html)
I think they've closet full of skeletons and that's the real the reason behind Ma's retirement.


Kyle Bass just tweeted.

MUST WATCH - I interview a Chinese insider who predicts that Jack Ma will be in jail or even worse within the next year. Guo is a friend who many think is crazy. I think he is crazy smart...Xi has sent letters for his extradition https://rvtv.io/2OOXGya
(video seems to be behind paywall)

https://twitter.com/Jkylebass/status/1055886574318084097

Week ago @ CNBC https://www.youtube.com/watch?v=aCdDjXTrgTQ&feature=youtu.be&t=15m