Alibaba (BABA) Stock Fell Despite No Meaningful News

Artisan Partners, an investment management company, released its “Artisan Select Equity Fund” first quarter 2024 investor letter. A copy of the letter can be downloaded here. Its Investor Class: ARTNX returned 10.86%, Advisor Class:  APDNX returned 10.85%, and Institutional Class: APHNX returned 10.91% compared to a 10.56% return for the S&P 500 Index. The US market recorded gains in a quarter that nearly equated to a full year. Almost all the markets around the world did well in the quarter. In addition, you can check the top 5 holdings of the fund to know its best picks in 2024.

Artisan Select Equity Fund 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. The one-month return of Alibaba Group Holding Limited (NYSE:BABA) was -2.04%, and its shares lost 8.29% of their value over the last 52 weeks. On June 7, 2024, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $78.41 per share with a market capitalization of $190.987 billion.

Artisan Select Equity Fund stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its first quarter 2024 investor letter:

"Alibaba Group Holding Limited (NYSE:BABA) shares declined 7% during the quarter. There isn’t much new to say about Alibaba. There was no meaningful news that drove the share price decline. The earnings for the December quarter were fine, with revenues and profits both increasing 5%—not typically an exciting level of growth, but certainly enough to justify the company’s paltry valuation of 4X–5X EBIT. As we have written in recent letters, this is a valuation level that is normally reserved for a dying business, and Alibaba is not a dying business. Management continues to implement changes that are intended to increase shareholder value. Over the past year, they have changed management, adjusted the company structure, contemplated spinning off assets, made progress monetizing the balance sheet and have improved the capital allocation. All of these actions have yet to be reflected at all in the share price. This is a stock that could double and would still be cheap."

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 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 as promising as 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 Polen Emerging Markets Growth Strategy's views on the company. 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.