Alibaba Group Holding (BABA)

(Past Top Pick Aug. 22, 2018, Down 17%) He'd still buy it. Their topline revenues is growing 62% and accelerating and doubling his expecations. True, the stock is down 30% YTD. These things happen in tech stocks which will have structural pullbacks. Look at Apple in 2006.

He sees it at $4.50 earnings per share – trading at 27 times earnings. It has traded back to $156, his target, and would see it as a buy. (Analysts’ price target is $220)

Chinese economy has slowed down. Chinese techs have fallen because of valuations, momentum fell off, and earnings. Use a gambling strategy, when you double your money, take half off the table. Always think about this for companies that don’t pay dividends. BABA is still a concept stock. They’ve gone too far, too fast.

Stock has come off when CEO Jack Ma left. A big issue is how they grow outside China--can they do it? Valuation isn't cheap, but they are strong in China along with a growing middle class. They will do well long-term there.

The last quarterly earnings report was a bit of a miss. He is concerned about the flow of liquidity on this one as there is a bit of a leap of faith on this. This is a huge momentum name and now that investors may be getting a little nervous there is risk of this falling further.

All tech stocks have come off, Alibaba's valuation was always excessive, and Jack Ma has stepped down so who will step in? She's looking at other tech stocks that have better fundamentals.

You'd think this would be a great story in a growth economy, but there's a lot of conflict in the US-China trade talks,
especially in tech. Also, their accounting is mystery. What is their cash generation? Maybe it's accurate, but he can't get comfortable with this.

He would be careful investing in any Chinese domiciled company. Just for the transparency. Tough enough to make good decisions in the market with audited financial statements with very strict regulations on reporting. There has been a lot of frauds and problems. Doesn’t have the visibility that makes him comfortable.

He's amazed that tech stocks are off this year. Long-term, BABA has been a great story, but there's been a slowdown in China where the government is tightening lending conditions and only recently is starting to ease this.

The recent fall is due to China-US trade war, but it's also the reality of doing business in China. Jack Ma has done an amazing job. He still believes in this. Chinese e-commerce is very good. It's trading 30x forward PE, but he thinks that's decreased to 24x.

They're not really the Amazon of China, because they're more B2B. They've dropped a lot, dragged down by tariff talks. Many Chinese tech stocks have fallen off, too. He respects Jack Ma. Alibaba meets his criteria on equity metrics, but what will happen between the US and China? Hold and maybe add at current levels.