In the span of a single trading day, BABA shares rose 9%, following news that legendary value investor Charlie Munger had doubled down on the stock.
In a recent 13-F filing, the Daily Journal revealed that it had nearly doubled its position in Alibaba.
Munger, who manages investments for the Daily Journal, was thought to have been responsible for the decision. For years, Munger has been touting the inherent value in Chinese stocks. These stocks, he claims, are growing faster than U.S. stocks while also being cheaper. For a value investor, it’s a winning formula, and Munger is putting his money where his mouth is.
Why Munger likes BABA
Charlie Munger hasn’t offered a whole lot of commentary on why he likes BABA specifically. However, he has said why he liked Chinese stocks in general. Specifically, he has said that it’s because:
“They’re cheaper, they’re growing faster.”
– Charlie Munger
What Munger is saying here is pretty much that Chinese stocks are solid “growth at a reasonable price” (GARP) investments right now. GARP is an investment philosophy that combines the best of value and growth investing. It says, basically, to buy stocks when the growth prospects are strong and the multiples are low.作者: sec2100 時間: 2021-10-10 09:01
Does this philosophy explain Munger’s attraction to BABA?
Yes, it does. If you look at BABA’s trailing 12-month period, we see metrics like:
A 17 P/E ratio.
A 2.9 price to book ratio.
40% revenue growth.
29% operating income growth.
Put simply, we’ve got growth and value in one package. A classic “GARP” play that Munger clearly loves.作者: sec2100 時間: 2021-10-11 09:02
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