Should You Consider Selling Alibaba Group Holding Limited (BABA)

Polen Capital, an investment management company, released its “Polen Emerging Markets Growth Strategy” first quarter 2024 investor letter. A copy of the letter can be downloaded here. The fund returned 1.48% gross and 1.25% net of fees in the quarter compared to 2.37% for the MSCI Emerging Markets Index. Emerging market securities rose in the quarter, carrying over the upward trend from the fourth quarter of 2023. Despite the strong returns of the asset class over the previous six months, emerging equities continued to underperform developed markets. In addition, please check the fund’s top five holdings to know its best picks in 2024.

Polen Emerging Markets Growth Strategy highlighted stocks like Alibaba Group Holding Limited (NYSE:BABA), in the first quarter 2024 investor letter. Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach. Alibaba Group Holding Limited's (NYSE:BABA) one-month return was 0.47%, and its shares lost 7.33% of their value over the last 52 weeks. On June 5, 2024, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $79.83 per share with a market capitalization of $193.044 billion.

Polen Emerging Markets Growth Strategy stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its first quarter 2024 investor letter:

"To fund these new trades, we sold out of e-commerce company Alibaba Group Holding Limited (NYSE:BABA), the dominant online automotive classifieds platform in China.

Although we believe there is a strong "value" case to be made for Alibaba shares given its large cash pile, ongoing buyback program, and significant value-unlocking opportunities in some of its noncore business units (e.g., Alipay), we believe that the return potential is even more significant in some of the high-quality compounder businesses that are currently on sale in China."

An e-commerce platform displaying a wide range of products to customers online.

Alibaba Group Holding Limited (NYSE:BABA) is in 23rd position on our list of 31 Most Popular Stocks Among Hedge Funds. As per our database, 103 hedge fund portfolios held Alibaba Group Holding Limited (NYSE:BABA) at the end of the first quarter which was 116 in the previous quarter. Alibaba's consolidated revenue for the quarter was RMB 221.9 billion, a 7% rise from previous year's same quarter. Consolidated adjusted EBITDA dropped by 5% to RMB 24 billion, while non-GAAP net income fell by 11% to RMB 24.4 billion during the quarter. Alibaba recently started investing in some AI initiatives aggressively but we don't think it is leading the pack. While we acknowledge the potential of Alibaba Group Holding Limited (NYSE:BABA) as an investment, our conviction lies in the belief that other AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Alibaba or NVIDIA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

In another article, we discussed Alibaba Group Holding Limited (NYSE:BABA) and shared the list of best AI stocks to buy for 2024 according to billionaire David Tepper. In addition, please check out our hedge fund investor letters Q1 2024 page for more investor letters from hedge funds and other leading investors.

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