Activist investor Ryan Cohen has taken a stake in Alibaba Group Holding Ltd. and is advocating that the Chinese e-commerce company increase repurchases of its own shares.
(Bloomberg) — Activist investor Ryan Cohen has taken a stake in Alibaba Group Holding Ltd. and is advocating that the Chinese e-commerce company increase repurchases of its own shares.
Cohen, who enjoyed a wide following among meme stock investors and helped push up shares of companies like GameStop Corp., built up a stake worth hundreds of millions of dollars in the second half of last year, a person familiar with the matter said, asking not to be identified discussing private communications.
Cohen’s move is a rare instance of investor activism targeting a major Chinese corporation. The entrepreneur first contacted Alibaba’s board in August to make the case that its shares are undervalued, based on a view it can achieve double-digit sales growth and almost 20% growth in free cash flow over the next five years, the person said, confirming a report in the Wall Street Journal.
Alibaba, co-founded by billionaire Jack Ma, has been one of the highest-profile targets of Beijing’s crackdown on technology giants. Its shares plummeted over 2021, but have rallied and almost doubled from a low in October.
From Goldman Sachs Group Inc. to Morgan Stanley, a growing number of strategists have made bullish calls following Xi Jinping’s Covid Zero exit and vows to end a clampdown on the tech sector. The shifts have spurred a roughly 60% rally in the Hang Seng Tech Index since an October trough, a world-beating feat even though the gauge’s market value is still half of its February 2021 peak.
Cohen became an idol to amateur investors after he gained a seat on Gamestop’s board in January 2021. That appeal was cemented by tweets hitting back at critics, including a poop emoji with an image of a Blockbuster store (in response to comparisons of GameStop to the largely defunct movie rental franchise) and an apparent screenshot from a Pets.com television ad (a nod to those who compared Chewy to the failed pet goods retailer).
“Cohen’s entry can be broadly positive for Alibaba’s stock and given his wide following it should lift sentiment for Chinese tech generally,” said Jin Rui Oh, a director at Mariana UFP LLP in Singapore.
Read more: As China Tech Stocks Roar Back, a New Normal Will Test Upside
–With assistance from Jane Zhang, Edwin Chan and Abhishek Vishnoi.
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