I compare this to Apples massive drops in 2016 and last year. Great, massive super profitable business that is nearly unstoppable goes on a sale for a few months. I typically lean more towards small cap, extreme undervaluation but this is too good to pass up. And I expect the correction back upwards in stock price will be swift and drastic!
That's a good comparison. There's a lot of worry and commentary on topics other than the quality of the underlying business. I don't know when BABA will go back up, but I'm confident it will!
@@cjwilso Yes, although I do personally think the window here for buying will be short, it doesn't really matter. Either way money to be made buying at these prices :)
Hi CJ, your thoughts on their accounting standards? I mean, write-ups of private assets which no-one knows what is actually worth, to improve the profit calculations? What if you leave those out of the picture, what is the intrinsic value?
Good question, Lasse. I’m still working through the accusations of accounting shenanigans. I’m mostly concerned with the true profitability of Taobao, Tmall, Cainiao, and Alibaba Cloud. However I would be concerned if management is playing accounting games. A lot of it is a black box unfortunately, but the core businesses are key. Have you looked into this at all?
@@cjwilso haha I agree! But after loading up on so much that I am practically all in, it’s nice to get a positive signal from the market finally... I think it’s about 30% of my portfolio atm and I have 20% more in Tencent (they largely move together so pain was felt during the downtrend)
We are starting to see a lot of call options momentum and leveraging around the stock so this could possibly shoot up quite a bit, doesn’t mean much for a long term holder like myself but it’s about time to reverse this negative trend
Hi CJ, found you from Frank. Roughly how much reading and research have you done to understand Alibaba to this level? I thought your explanation is really great!
Thanks, Ken! I have done probably close to 25 hours or so of research through various write ups, podcasts, articles, and books. That’s just a rough guess though. I still think there’s a lot left to learn! Especially regarding competition
@@cjwilso It really shows! Best explanation of their business I've seen. I've been checking the podcast you recommended and your other videos on Alibaba. Some may call it excessive, I think it's essential to understand a business we invest in at this level. Especially for me because I don't understand Chinese businesses as well as I may understand USA businesses and only know the very basics of Chinese culture and consumer tendencies.
@@helloken thanks again. If we’re thinking like owners of the business, we should want to know everything we can about it! Competitive dynamics, business segments, management behavior, etc. I’m not Jack Ma, but I want to know the business at least a fraction as well as he does. And you’re definitely right the business and consumers behave quite differently in China than what I’m used to studying in US companies.
Everyday I have to stop myself from liquidating positions to buy more. One of those rare opportunities with limited downside, strong moat and a decent runway.
Honestly it’s pretty hard to tell. My take is that BABA seems to be a golden goose of China, so barring some sort of major conflict, I would think that it’s not in the best interest of the CCP to disrupt BABA. It’s an international business and has to behave as such compared to some other Chinese counterparts. It all boils down to incentives for the CCP. They have shown they are in control with the anti-monopoly fine. But as I said earlier it’s hard to tell!
@@cjwilso I agree with you that China doesn't want to ruin its golden goose. However, my take is that they might take actions that they think are correct, but they're not and could ultimately disrupt BABA because of that. At the moment, though, it does seem like a solid investment, not sure if it will be time to exit already by the next five years (instead of 10-20). See in general this interesting perspective on China's future from the standpoint of professor of the Uni of Zurich: www.igier.unibocconi.it/files/ChinaPE_paper.pdf
@@AngeloSorbello true and what I think is a rational move for the CCP may not be in line with what they actually think is rational. Thanks for the resources. I’ll check it out
Nobody's really worried about BABA's numbers. Everyone's just worried about CCP and their actions and their cooperation with the US. Everyone's also worried about the VIE structure that basically let's them do anything anytime😅😅
Do you think Alibaba is undervalued or appropriately priced?
Undervalued. I am IN, with my friends Alexander, Pabrai, Munger and Tepper XD
@@JuanBattaglia45 they’re the best kind of friends to have 😁
Slightly undervalued but a great GARP stock to own for the next decade. I think it will ultimately grow to be larger than Amazon.
@@GrindThisGame I agree. It already destroys Amazon’s GMV, and cloud is just beginning!
I think it's easily worth about a trillion dollars rn. I genuinely believe it's about half price right now.
Thanks for having me CJ! Pleasure doing business.. more collabs coming soon.
The pleasure is all mine! Thanks for a great analysis. We’ll do it again soon.
Of all the youtube videos on BABA I've seen, this might be the best so far. Finally an investor who tries to understand the business.
Thank you! That means a lot. I hope you found the video helpful
Love this collaboration you guys need to do more like this
Thanks, Gary! There may or may not be another collaboration in the works...
Thanks for the analysis! That was a really good video! Contribution from Frank was awesome as well
Thanks, David! Frank always provides good insight.
Found you through @investing with frank
Welcome! Thanks for watching. Best of luck with your channel :)
Subscribed. Great video
Thank you, Ernesto! I appreciate that
Very hood inaights CJ.. Thank you for sharing this.. 😁
Thanks, Evan! My pleasure
Good job CJ and Frank!
Thanks for watching!
thanks ! Baba is my biggest position now
Glad to hear it! I hope it works out well for you
Very good, thanks Frank!!!
Thanks for watching, Anette!
@@cjwilso I heard Monish say In an interview, that he does not want to discuss Alibaba as he is still adding to the position 😄😄👍🏻👍🏻!!
Yes that’s exciting news for sure
Amazing breakdown nice job. Hard company to understand and you make it simple.
Thank you! I appreciate that.
Frank's the man
Indeed he is!
Great content guys!
Thank you, Andrew!
I compare this to Apples massive drops in 2016 and last year. Great, massive super profitable business that is nearly unstoppable goes on a sale for a few months. I typically lean more towards small cap, extreme undervaluation but this is too good to pass up. And I expect the correction back upwards in stock price will be swift and drastic!
That's a good comparison. There's a lot of worry and commentary on topics other than the quality of the underlying business. I don't know when BABA will go back up, but I'm confident it will!
@@cjwilso Yes, although I do personally think the window here for buying will be short, it doesn't really matter. Either way money to be made buying at these prices :)
Could you provide a link to the spreadsheet? Didn't find it in the description. Thanks.
Also subscribed to Frank. Great analysis!
Checking with Frank about the spreadsheet. Thanks for subscribing to him. His videos are great
EV/ FCF my favorite
Yeah that’s a good metric to look at. Thanks!
outstanding job
Thanks, Ricardo!
I like that youre such a bull on BABA, I just started puting out a 6 part series on BABA.
Thanks for watching! I’ll check out your series on BABA :)
@@cjwilso Thank you!
Awesome vid, CJ!
Thank you, Christopher!
Heh CJ, which camera do you use to record with? Great overview of BABA. Thanks!
Thanks! I use a Sony A6600 with a Sigma 16mm f 1.4 lens
Frank is great ! Good work for putting this type of comparative analysis together. Very helpful information.
Thanks, Howard! I’m definitely enjoying Frank’s insights
Hi CJ, your thoughts on their accounting standards? I mean, write-ups of private assets which no-one knows what is actually worth, to improve the profit calculations? What if you leave those out of the picture, what is the intrinsic value?
Good question, Lasse. I’m still working through the accusations of accounting shenanigans. I’m mostly concerned with the true profitability of Taobao, Tmall, Cainiao, and Alibaba Cloud. However I would be concerned if management is playing accounting games. A lot of it is a black box unfortunately, but the core businesses are key. Have you looked into this at all?
What will be the target price in next 10 years you are expecting.
I’m expecting a triple in 10 years, but I could be way wrong!
Hey CJ finally BABA is getting some love from the market! 💪🏼
I like it when it goes up, but I love it when it goes down! Bring me more sub $210!
@@cjwilso haha I agree! But after loading up on so much that I am practically all in, it’s nice to get a positive signal from the market finally... I think it’s about 30% of my portfolio atm and I have 20% more in Tencent (they largely move together so pain was felt during the downtrend)
We are starting to see a lot of call options momentum and leveraging around the stock so this could possibly shoot up quite a bit, doesn’t mean much for a long term holder like myself but it’s about time to reverse this negative trend
That’s the life of a concentrated investor :) truly hope there’s more to come with BABA. Looking into Tencent as well
What resources do you use to look at that information?
Hi CJ, found you from Frank. Roughly how much reading and research have you done to understand Alibaba to this level? I thought your explanation is really great!
Thanks, Ken! I have done probably close to 25 hours or so of research through various write ups, podcasts, articles, and books. That’s just a rough guess though. I still think there’s a lot left to learn! Especially regarding competition
@@cjwilso It really shows! Best explanation of their business I've seen. I've been checking the podcast you recommended and your other videos on Alibaba. Some may call it excessive, I think it's essential to understand a business we invest in at this level. Especially for me because I don't understand Chinese businesses as well as I may understand USA businesses and only know the very basics of Chinese culture and consumer tendencies.
@@helloken thanks again. If we’re thinking like owners of the business, we should want to know everything we can about it! Competitive dynamics, business segments, management behavior, etc. I’m not Jack Ma, but I want to know the business at least a fraction as well as he does. And you’re definitely right the business and consumers behave quite differently in China than what I’m used to studying in US companies.
@@cjwilso sheesh. Just 👀 the comments and responses. 📝 I also got a finance channel. Studying the greats.
Everyday I have to stop myself from liquidating positions to buy more. One of those rare opportunities with limited downside, strong moat and a decent runway.
Glad you have the conviction here with BABA, Adam. I wish opportunities like this came more often
i think their TTM FCF is around 30 bld
Yeah it’s around there
@@cjwilso -4 bld $ is nothing:))
It’s a rounding error to baba 😂. 164bn CNY is about 25bn USD. That number is from Morningstar for me
@@cjwilso Morningstar hasn't updated with q1 2021, for ttm
@@ims7865 gotcha thanks for pointing that out
love BABA just need investors to have more confidence with China and a conclusion to Ant
Yes I agree those are two of the major hurdles keeping BABA from reaching a more appropriate valuation
Cai Niao 菜鸟 is pronounced as Tsai Niao
Thank you, Tracy!
What is your take on Alibaba's long-term political risks?
Honestly it’s pretty hard to tell. My take is that BABA seems to be a golden goose of China, so barring some sort of major conflict, I would think that it’s not in the best interest of the CCP to disrupt BABA. It’s an international business and has to behave as such compared to some other Chinese counterparts. It all boils down to incentives for the CCP. They have shown they are in control with the anti-monopoly fine. But as I said earlier it’s hard to tell!
@@cjwilso I agree with you that China doesn't want to ruin its golden goose. However, my take is that they might take actions that they think are correct, but they're not and could ultimately disrupt BABA because of that. At the moment, though, it does seem like a solid investment, not sure if it will be time to exit already by the next five years (instead of 10-20).
See in general this interesting perspective on China's future from the standpoint of professor of the Uni of Zurich: www.igier.unibocconi.it/files/ChinaPE_paper.pdf
@@AngeloSorbello true and what I think is a rational move for the CCP may not be in line with what they actually think is rational. Thanks for the resources. I’ll check it out
Nice video! Btw Cainiao is pronounced as "Chi-niao" :)
Thanks for letting me know, Charles! Google translate has failed me 🤦♂️
@@cjwilso hey, it's my pleasure. These chinese names can be handful for us more used to western spelling/pronounciations!
It's more pronounced more like "Tsai-niao" 菜鸟
@@clayblythe thanks!
Nobody's really worried about BABA's numbers. Everyone's just worried about CCP and their actions and their cooperation with the US. Everyone's also worried about the VIE structure that basically let's them do anything anytime😅😅
Yeah a lot of potential problems for sure…
BABA for sale now! 😀
Certainly cheaper when this video was published!