BABA : Added 2 positions summing upto about 1.25% of the capital
Updated
Fundamentals:
The stock appears deeply undervalued, with promising growth prospects driven by a substantial population of middle-aged individuals in China who could potentially become Alibaba's customer base. Notably, within China, Alibaba enjoys a monopoly, and although there is a decline in revenue, the increasing cash flow is viewed as a positive sign. This positive trend in cash flow, as opposed to declining revenue, is reassuring.
While trade tensions between the US and China persist, particularly given global circumstances, the expectation is that these tensions will gradually settle. It's crucial to note that Alibaba's primary focus is on the Chinese market rather than the rest of the world. Notably, the involvement of notable investors such as Michael Burry and Charlie Munger adds credibility to the stock's potential.
Charlie Munger, despite acknowledging a relatively high purchase price, believes that the risk is justified by the potential reward, especially if acquired at a fair valuation. Presently, the stock price is significantly lower than when Charlie initiated his positions. Despite risks associated with geopolitical tensions, issues involving Jack Ma and the Chinese Communist Party, and the potential for delisting, the overall upward potential, both fundamentally and technically, is deemed to outweigh the risks.
Technicals:
Having made two entries at various levels, the total position size currently represents approximately 1.25% of the total capital. There's a consideration to increase the position if the price falls to the all-time low levels indicated within the chart. Anticipating a minimum upward movement of about 60% from the current average levels, the technical analysis supports a favorable outlook for the stock.
The stock appears deeply undervalued, with promising growth prospects driven by a substantial population of middle-aged individuals in China who could potentially become Alibaba's customer base. Notably, within China, Alibaba enjoys a monopoly, and although there is a decline in revenue, the increasing cash flow is viewed as a positive sign. This positive trend in cash flow, as opposed to declining revenue, is reassuring.
While trade tensions between the US and China persist, particularly given global circumstances, the expectation is that these tensions will gradually settle. It's crucial to note that Alibaba's primary focus is on the Chinese market rather than the rest of the world. Notably, the involvement of notable investors such as Michael Burry and Charlie Munger adds credibility to the stock's potential.
Charlie Munger, despite acknowledging a relatively high purchase price, believes that the risk is justified by the potential reward, especially if acquired at a fair valuation. Presently, the stock price is significantly lower than when Charlie initiated his positions. Despite risks associated with geopolitical tensions, issues involving Jack Ma and the Chinese Communist Party, and the potential for delisting, the overall upward potential, both fundamentally and technically, is deemed to outweigh the risks.
Technicals:
Having made two entries at various levels, the total position size currently represents approximately 1.25% of the total capital. There's a consideration to increase the position if the price falls to the all-time low levels indicated within the chart. Anticipating a minimum upward movement of about 60% from the current average levels, the technical analysis supports a favorable outlook for the stock.
Trade closed manually
Closed the position @85.03 levels.Booked a profit of about 13.16% on the invested capital.
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