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Alibaba’s market value is under $300 billion, against about $1.5 trillion for its U.S. counterpart, Amazon.com.
Qilai Shen/Bloomberg
Alibaba Group Holding
is probably “the cheapest company in the world” outside of Russia as investors put a high China risk premium on the e-commerce giant, according to Daniel O’Keefe, a managing director and portfolio manager at Artisan Partners.
Speaking at a roundtable group discussion Tuesday with other value-oriented portfolio managers, O’Keefe said that Alibaba (ticker: BABA) is “one of the cheapest stocks I’ve ever seen, especially for a business of that quality with that financial strength.”
The discussion, called Invaluable Insights, was sponsored by Ariel Investments and included John Rogers of Ariel, Bill Miller of Miller Value Partners, David Herro of Oakmark Funds, and Barron’s Roundtable member Mario Gabelli.
Alibaba shares are down 55% in the past year to $102 and trade for a third of their 2020 high. Their value began tumbling after the Chinese government cracked down on a company they viewed as too dominant. Alibaba’s current market value is under $300 billion, against about $1.5 trillion for its U.S. counterpart,
Amazon.com
(AMZN).
Said O’Keefe: “Alibaba trades for a single-digit multiple of free cash flow and three or four times EBIT [earnings before interest and taxes]. So, you know, it’s the largest e-commerce company in the world that is levered to digitization and the expansion of the increasing wealth of the consumer and middle class in China.”
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