Alibaba a 'Favorite' at Patient Capital

Samantha McLemore also likes other big tech stocks including Alphabet, Facebook, and Amazon.
Anthony RussoJun 03,2021,16:56

Patient Capital Management founder Samantha McLemore sees great value in a few big tech stocks that have been volatile this year including Alibaba (NYSE: BABA; HKEX: 9988).

Since early November, when its fintech unit Ant Group had its massive IPO suspended over regulatory issues, Alibaba’s shares have been under pressure. Along with the IPO coming to a halt, Alibaba has faced volatility over Beijing’s fierce antitrust crackdown and its co-founder Jack Ma briefly disappearing from the public eye.

Amid the crackdown, Alibaba was fined at a record of 18.2 billion yuan ($2.8 billion) by Beijing for antitrust violations. That caused Alibaba to suffer its first net loss since 2012.

While the Chinese e-commerce giant comes with a lot of headaches, that didn’t stop McLemore from calling Alibaba one of her “favorite names,” in an interview posted by Barron’s today.

“Alibaba is trading at 21 times forward earnings, and growing even faster than other internet companies,” she said.

“The reasons for the decline include the regulatory and competitive pressures, which are well priced in. Regulators have moved on to other commerce players. I think it’s past the worst of it.”

At least investors will hope so. Intraday, Alibaba’s New York stock was trading 1% lower, at $217.05 per American depositary share. Since early November, shares in Alibaba have plunged 30%.

In addition to Alibaba, McLemore likes big tech stocks including Google parent Alphabet (Nasdaq: GOOGL), Facebook (Nasdaq: FB), and Amazon (Nasdaq: AMZN).

She says: “Given their valuation, growth, and cash generation—and their competitive advantages—you can hardly find better long-term values.”

She also noted that while there’s the risk of taxes increasing, they are already “priced in” at their current valuations.

McLemore, who founded Patient Capital last year, also co-manages Miller Opportunity Trust (Nasdaq: LMOPX), which is valued at $2.82 billion. On average, the fund has returned 24% annually for the past five years.

Topics:Alibaba, Google, Alphabet, Amazon, Facebook, Patient Capital Management, Miller Opportunity Trust.