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Start 'Nibbling' On Baidu And Alibaba, Says Dan Niles

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Start 'Nibbling' On Baidu And Alibaba, Says Dan Niles

Shares of Chinese Internet stocks Alibaba Group Holding Ltd (NYSE: BABA) and Baidu Inc (ADR) (NASDAQ: BIDU) are down significantly since last year and recently slumped heavily when the companies reported their respective last-quarter earnings.

According to Daniel Niles, senior portfolio manager at AlphaOne Capital Partners, this is the right time to start "nibbling" on these stocks. Niles was on CNBC recently to explain why.

Search Is Still Growing

"We have been nibbling on Baidu after they reported. We have been nibbling on Alibaba after they reported," Niles began. "Because, if you look at it, search is still going to grow a lot in China, right? There's still a lot more people that are going to come on to the Internet. And so, it's kind of where Google was a decade ago, let's say."

Related Link: Alibaba Q2 Sales Miss Expectations, Shares Tumble

So Is Commerce

He continued, "And you look at commerce as well with somebody like an Alibaba: Yes, they are having problems right now, but the monetization is improving, mobile is continuing to grow and so, we think, they are getting to levels where it's interesting to start taking a very small position. And I think they may go lower in the summer."

Summer Will Present Better Opportunities

"We are actually down a little bit on our Baidu position, and that's what we are looking to do, is to add. But we think there will be better opportunities again deeper into the summer because, again, the stocks got crushed because business wasn't good. So, that's what you need to focus on," Niles concluded.

Image Credit: Public Domain

Posted-In: AlphaOne Capital Partners CNBC Daniel NilesAnalyst Color Emerging Markets Markets Media Trading Ideas

 

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