One Of Warren Buffett's Favorite Fund Managers Exits Entire Alibaba Position

Zinger Key Points
  • After Charlie Munger's Daily Journal, hedge fund Conifer Management exited its entire Alibaba position in the first quarter
  • The fund is run by Gregory Alexander, who was once named by Warren Buffett as one of his three favorite investors

Alibaba Group Holding, Inc. BABA stock pulled back as low as $78.01 last week, a far cry from the $319.32 at which it was trading in late October 2020.

Despite the steep sell-off, sell-side has been backing the company to the hilt. All 18 analysts rating the Chinese ecommerce giant's stock have Buy ratings and the average price target is $173.34, according to TipRanks. Some big investors, however, are slowly losing their faith in the company.

What Happened: A hedge fund, run by a person whom billionaire investor Warren Buffett once commended as one of the three best investors, has liquidated its entire position in Alibaba.

The disclosure made in a 13F form, filed by New York-based hedge fund Conifer Management run by Gregory Alexander, showed the firm sold all of its 2,155,836 Alibaba shares  it held at the end of the fourth quarter. The stake was valued at $256.092 million at that time.

Incidentally, the firm maintained its holding in Alibaba's rival, Inc. JD unchanged.

The filing also revealed that Conifer held stakes in 13 companies at the end of the first quarter. Stellantis N.V. STLA was the biggest holding of the firm at 14.8 million shares.

Related Link: Norwegian Central Bank Substantially Reduces Stakes In Alibaba And This Chipmaker: Here's What Norges Bought Instead

Why It's Important: Daily Journal, the fund run by Charlie Munger, a close partner of Buffett, also exited its Alibaba position in the first quarter.

Investors began to read between the lines of the message relayed by the share sales of these famous investors. A Twitter handle that goes by the name @EnricoLaQuatra raised a question on whether Conifer's move has to do with tax loss harvesting or the intention to buy into Alibaba's Hong Kong-listed shares.

Alternatively, this could be due to a change of conviction, he guessed.

Alibaba is grappling with a slowdown in consumer spending that has come to hurt its core ecommerce business. The company is also bearing the brunt of competitive pressure.

Aside from the fundamental woes, the company is finding itself in the crossfires of regulators from both China and the U.S. The former is striving to keep Alibaba dominant market position in check and the latter has taken up cudgels against U.S.-listed Chinese companies for non-compliance with audit reviews.

More details on how the company performed amid the COVID lockdowns in China will emerge when it reports its March quarter results on May 26.

In premarket trading on Tuesday, Alibaba shares were rising 6.98% to $92.52, according to Benzinga Pro data.

Posted In: Charlie MungerGregory AlexanderWarren BuffettAsiaNewsMarkets