Oakmark Funds, advised by Harris Associates, released its “Oakmark Global Select Fund” second quarter 2023 investor letter. A copy of the same can be downloaded here. The fund generated a 5.7% return in the second quarter underperforming the MSCI World Index’s 6.8% return. Year-to-date, the fund returned 15.3% compared to a 15.1% return for the benchmark. In addition, you can check the top 5 holdings of the fund to know its best picks in 2023.
Oakmark Global Select Fund highlighted stocks like Alibaba Group Holding Limited (NYSE:BABA) in the second quarter 2023 investor letter. Headquartered in Hangzhou, the People’s Republic of China, Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach. On July 10, 2023, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $90.56 per share. One-month return of Alibaba Group Holding Limited (NYSE:BABA) was 3.49%, and its shares lost 17.08% of their value over the last 52 weeks. Alibaba Group Holding Limited (NYSE:BABA) has a market capitalization of $232.06 billion.
Oakmark Global Select Fund made the following comment about Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2023 investor letter:
“Alibaba Group Holding Limited (NYSE:BABA) (China) was the top detractor for the quarter. Sentiment in Chinese equities has degraded after the initial excitement from China’s reopening earlier in the year. Incremental macroeconomic data coming out of China indicates that the Covid-19 re-opening bounce is fading, and the economy is struggling to sustain healthy growth. Political tensions between the U.S. and China are also further weighing on investor sentiment. As the largest e-commerce platform in China, Alibaba’s share price has been caught up in this storm. The company has also continued to face intense competition from the likes of short video players and traditional e-commerce companies. Indeed, Alibaba has lost market share, which we expect will continue. But despite these negative factors, it remains an extremely important platform in China and continues to generate significant free cash flow. In the most recent completed fiscal year, the company generated $25B of free cash flow, which is 12% of the current market capitalization. Today, its core commerce business trades at approximately 5x EBITA, a valuation we deem much too cheap, even with the headwinds noted above. But valuation alone is often not enough to unlock value. Alibaba’s management team is proactively working for minority shareholders. The company has been aggressive with share repurchases and with the recent formation of a capital management committee. Our conversations with the company indicate there is a high probability that more shareholder returns will be coming. In addition, the company recently announced a major restructuring that will effectively break up the company and separately list various businesses within Alibaba. Today, the market is assigning little to no value to these businesses and having a market quote may force investors to give Alibaba value for these assets. Whether or not the restructuring works, we appreciate management’s efforts to help unlock value in what is clearly an undervalued stock.”
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Alibaba Group Holding Limited (NYSE:BABA) is in 14th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 128 hedge fund portfolios held Alibaba Group Holding Limited (NYSE:BABA) at the end of first quarter which was 113 in the previous quarter.
We discussed Alibaba Group Holding Limited (NYSE:BABA) in another article and shared the list of AI stocks billionaires are loading up on. In addition, please check out our hedge fund investor letters Q2 2023 page for more investor letters from hedge funds and other leading investors.
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Disclosure: None. This article is originally published at Insider Monkey.