Paulson took a new position in hedge fund favorite Alibaba Group Holding Ltd. (BABA) in the quarter ended on September 30. The position accounts for 0.70% of the fund’s 3Q14 portfolio.
Third Point Partners, Soros Fund Management, and Viking Global, among others have added stakes in Alibaba, which saw its trading debut in September.
Overview of Alibaba
Alibaba is a Chinese e-commerce player. According to the company’s latest F-1 filings, as of 2013, it’s the largest online and mobile commerce company in the world in terms of gross merchandise volumes. Alibaba’s September initial public offering, or IPO, saw an overwhelming response. The stock ended the first day of trading at $93.89—up 38% from the $68 price initially set by the e-commerce giant.
These are some of its major businesses:
- Taobao Marketplace – China’s largest online shopping destination
- Alitrip – a leading online travel booking platform
- Alibaba.com – China’s largest global online wholesale platform for small businesses
- Alibaba Cloud Computing – a provider of cloud computing services to businesses and entrepreneurs
- Ant Financial Services Group – a related company of Alibaba Group that operates Alipay, provides payment or escrow services on its marketplaces through contractual arrangements
- China Smart Logistics, or Zhejiang Cainiao Supply Chain Management Co., Ltd. – a 48%-owned affiliate that operates a central logistics information system that connects a network of express delivery companies in China
Alibaba sees intense competition on its home turf in China from Tencent Holdings ADR (TCEHY).
Alibaba buys stake in Beijing Shiji Information Technology
In September, Alibaba bought a 15% stake in Chinese hospitality technology provider Beijing Shiji Information Technology Co. Ltd. for $458.66 million. Alibaba plans to use Shiji’s systems to complement its Taobao travel business and strengthen its position in the travel-booking space.
Shares surge on Singles Day sales figures
Shares of China’s e-commerce giant rose recently after the company said Chinese consumers spent $9.3 billion shopping online on the Singles Day holiday, November 11. Reports also cited Alibaba founder and executive chairman, Jack Ma, who said that Alibaba’s financial services arm, Alipay, “will definitely go public,” and could see a Chinese listing. The company said that during peak Singles Day activity, 2.85 million transactions were processed each minute by Alipay.
China retail marketplaces gross merchandise volume (or GMV)
For the second quarter of fiscal 2015, Alibaba’s results beat estimates. The company said GMV in its China retail marketplaces increased 49% for the quarter. Also, annual active buyers increased 52% year-over-year. Alibaba saw 217 million monthly active users on its mobile commerce apps in September and $95 billion in mobile GMV for the twelve months ended September 2014.
Revenue grows but margins impacted
Revenue grew 53.7% to $2.74 billion during 2Q15. Net income, however, fell 39% to $494 million, due to share-based compensation charges and increased amortization expenses.
The company’s non-GAAP EBITDA (earnings before interest, taxes, depreciation, and amortization) margin fell to 50.5%, down from 54.4% the previous quarter. The decline was attributed to the consolidation of newly acquired businesses UCWeb and AutoNavi, planned investments in new business initiatives, and increased tactical marketing spending during the September quarter.
Diluted earnings per share were $0.20, while non-GAAP (generally accepted accounting principles) diluted earnings per share were $0.45.
Alibaba reportedly sold $8 billion worth bonds
Recent news reports said Alibaba saw high demand for its $8 billion debt offering. It earlier said it plans to use the net proceeds from the offering primarily to refinance its existing credit facilities. Bloomberg reported Alibaba has seen $57 billion in orders for the offering.
Source: Yahoo Finance
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