Here we are, and nearly 10 years after going public, Alibaba’s stock today was for a short time under its IPO price... This isn’t the first time it dipped below $68.... It did so in 2015, 2016 and again in 2022, and then today. Today’s action was no doubt tied to news of China’s slumping economy... and a reminder that all booms are generally followed by busts, or a reasonable facsimile.
"Alibaba is just too darn complicated, starting with the footnotes." - that's the key, complexity is a big red flag. Alibaba was not alone in the too-complex-to-invest-in camp - e.g., GE.
Excellent work. As usual there are bulls everywhere and a just a few bears that do homework. The market is full of chart watchers and momentum players who have little idea of fundamentals or valuation. CEO's are geniuses until their stock goes down. Of course the compensation of management and the bulls that hold the security have a vested interest in touting.
As an American investor, why would anyone care about investing in a Chinese company? We have the greatest companies in the world. I can think of seven off the top of my head that will never face the issues Alibaba has.
Thanks Herb - great write up.. One thing I have wondered on BABA is why Charlie Munger (RIP) was a bull and owned a chunk - why didn’t this fall into his too complicated box or outside his circle of competence? Was it Li Lu’s influence? Tbh, I hadn’t followed the complexity of it, but when Ma went missing, that was the sign that either the company isn’t right or the Chinese gov is saying they’ve got too big for their boots... which was then reiterated by the ‘tax bills’ that Tencent had to pay..
"Alibaba is just too darn complicated, starting with the footnotes." - that's the key, complexity is a big red flag. Alibaba was not alone in the too-complex-to-invest-in camp - e.g., GE.
I have a saying, "Too complicated for comfort." Sometimes complicated for a reason.
Excellent work. As usual there are bulls everywhere and a just a few bears that do homework. The market is full of chart watchers and momentum players who have little idea of fundamentals or valuation. CEO's are geniuses until their stock goes down. Of course the compensation of management and the bulls that hold the security have a vested interest in touting.
Excellent points, RJ.
Maybe this case study supports the idea that China is uninvestible for most U.S. investors.
China bears would certainly agree!
Not just from the U.S.!
enjoyed the summary and thoughtful example to guide how to look at the next miracle company.
Cheers
Thanks, Steve!
Thanks Herb. Your article made me realize my golf swing is complicated and therefore should probably be abandoned.
No brainer! 🤣
As an American investor, why would anyone care about investing in a Chinese company? We have the greatest companies in the world. I can think of seven off the top of my head that will never face the issues Alibaba has.
To be fair, at the time China was booming - everybody wanted a piece of it. The herd followed.
You're like the genie from the "good djinn"
Yes Herb indeed. China has developed its own form of business speak that tries to paper over important investment issues.
They're not alone!
When Jack Ma disappeared I thought maybe he became like the doodah man or Sweet Jane living on reds, vitamin C and cocaine. Ain't it a shame.
....What a LONG, strange trip it's been!
Thanks Herb - great write up.. One thing I have wondered on BABA is why Charlie Munger (RIP) was a bull and owned a chunk - why didn’t this fall into his too complicated box or outside his circle of competence? Was it Li Lu’s influence? Tbh, I hadn’t followed the complexity of it, but when Ma went missing, that was the sign that either the company isn’t right or the Chinese gov is saying they’ve got too big for their boots... which was then reiterated by the ‘tax bills’ that Tencent had to pay..
As I recall he was a big bull on China, but in one of his recent interviews I think he said he sold Baba... or most of it.