Alibaba (BABA) the Chinese internet retailer and logistics company is a long-term holding in the LakeView Asset Management Growth Portfolios. I have followed this company’s stock since its IPO date, just about four years ago today on September 18, 2014.
Recently the stock has come under pressure, begging the question in my mind: What do I do next? There are some pros and cons to the Alibaba Conundrum.
Cons: a) the stock has corrected over 20% from its 52-week high and nearly 4.5% so far in 2018; b) Co-Founder and CEO Jack Ma recently announced his retirement from the company. While I did not see this coming, as Ma is only 54, perhaps I should have gotten a clue when Ma recently purchased the largest property in the Adirondack Park. (welcome neighbor); and, c) The Chinese economy and market have been beating a hasty retreat this year.
Pros: a) BABA has all the ingredients to become as important to China as Amazon (AMZN) is the US. With a market capitalization of $425 billion, its market cap per Chinese citizen is much less than AMZN is to the average US citizen; b) once China and the US patch up their trade squabble, the Chinese economy and stock market should rebound, with BABA being a leader along the way.
I decided, especially for portfolios built for the long-term that the Pros outweigh the Cons when it comes to BABA. So, I will not be taking profits in BABA, rather I would be inclined to add to current positions. However, I am in no rush to do so. When and If I do, I will let my readers know.
Furthermore, while I continue to have a strong conviction when it comes to Apple and I like the company’s recent new product announcements, positions in the Growth Portfolio accounts have simply gotten too large and, I must act prudently as a matter of good risk management. After all, the stock, which is our largest holding, is up nearly 32% this year. Hence, between now and the end of the quarter, I am going to shave off about 10% (give or take) of AAPL growth positions.
Otherwise, there is no important earnings or news on the calendar this week. The most significant event is Yom Kippur which begins Tuesday night. Best wishes for an easy fast to all who will be celebrating the Day of Atonement. Speaking of which, if I have harmed or offended anyone, knowingly or unknowingly, in this past year, please accept my apologies and I ask for your forgiveness.
Disclosure: At the time of this commentary Scott Rothbort, his family and/or clients of LakeView AssetManagement, LLC was long AAPL & BABA although positions can change at any time.
Scott Rothbort is the President & Founder of LakeView Asset Management, LLC, a registered investment advisor specializing in high net worth private wealth management. For more information on investing with LakeView Asset Management, LLC call us at 888-9LAKEVIEW or request more information by clicking on the contact button on the top right hand corner of the website. LakeView Management, LLC is a Nevada LLC, with its principal office located in Henderson, NV and branch office located in Millburn, NJ
Scott Rothbort is also the publisher of the LakeView Restaurant & Food Chain Report, a newsletter focusing in on food, restaurant, beverage, and agricultural stocks. An individual subscription to the newsletter can be ordered at www.restaurantstox.com Furthermore; Scott is a professor at the Seton Hall Stillman School of Business in South Orange, NJ.
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