Saturday, November 23, 2024

Is Alibaba Group Holding Limited (BABA) the Best Growth Stock To Buy According To George Soros?

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We recently compiled a list of the 10 Best Growth Stocks To Buy According To George Soros. In this article, we will look at where Alibaba Group Holding Limited (NYSE:BABA) ranks among the 10 best growth stocks to buy according to George Soros.

The Man Who Broke the Bank of England

George Soros, the owner of Soros Fund Management, is known as one of the most controversial investors in the history of investing. The now 94-year-old, “broke the Bank of England” after he reportedly made $1 billion from shorting the British pound in 1992. As of September 19, Soros has a net worth of $7.2 billion. He managed client money in New York from 1969 to 2011.

Soros Fund Management was founded in 1970 and manages almost $28 billion in net assets at the moment. The fund is the principal asset manager for Soros’ philanthropic venture, the Open Society Foundations (OSF). So far he has given away more than $32 billion of his fortune to the OSF. Last year, Soros handed over the fund to his eldest son, Alexander Soros, who now aims to take his philanthropic endeavors to another level.

George Soros’ Investment Philosophy

Soros is known for being ahead of the market. Historically, he has made financial decisions after gauging market feedback and predicting market activities, that have returned or saved him millions, if not billions. This is what he calls the “reflexivity” theory. By applying this theory to finance and investments, Soros values assets based on market feedback, predicts market bubbles, and exploits market opportunities. A recent example of this was when Soros pulled out a staggering $73 million from two major technology players right before the tech downturn in mid-July.

Soros also uses another method, which he calls the Soros’ Method, to forecast events in the financial markets using current data. He then tests his theories on small investments and if the theory seems to be working out, he expands his position or size of his investment. This, however, does not mean that Soros has never failed or encountered risk during his time as an investor. He has made multiple expensive decisions from which he learned lessons and has even quoted them in his books. Here is an excerpt of what he said in his book, Soros on Soros: Staying Ahead of the Curve:

“The prevailing wisdom is that markets are always right. I take the opposition position. I assume that markets are always wrong. Even if my assumption is occasionally wrong, I use it as a working hypothesis. It does not follow that one should always go against the prevailing trend. On the contrary, most of the time the trend prevails; only occasionally are the errors corrected. It is only on those occasions that one should go against the trend. This line of reasoning leads me to look for the flaw in every investment thesis. … I am ahead of the curve. I watch out for telltale signs that a trend may be exhausted. Then I disengage from the herd and look for a different investment thesis. Or, if I think the trend has been carried to excess, I may probe going against it. Most of the time we are punished if we go against the trend. Only at an inflection point are we rewarded.”

One can say that Soros’ degree in philosophy helped him carve his way into the financial markets. Now that we have studied Soros’ investment philosophy, let’s take a look at the 10 best growth stocks according to George Soros.

Our Methodology

To come up with the 10 best growth stocks according to George Soros, we examined his 13F portfolio and selected his top 10 growth stock picks, as of Q2 2024.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Alibaba Group Holding Ltd (NYSE:BABA), Logo, big sign, People taking photos, offering, ipo, group, stock

Alibaba Group Holding Ltd (NYSE:BABA), Logo, big sign, People taking photos, offering, ipo, group, stock

Alibaba Group Holding Limited (NYSE:BABA)

Soros Fund Management’s Stake Value: $73.80 Million

Number of Hedge Fund Holders: 91

Alibaba Group (NYSE:BABA) is a technology and internet retail company that operates e-commerce sites that serve both consumers and small business owners. In addition to e-commerce, Alibaba Group (NYSE:BABA) is also involved in cloud computing, logistics, digital media, and entertainment.

Merchants and small business owners use Alibaba.com to buy products such as clothing items, accessories, and shoes for reselling. AliExpress, on the other hand, is a retail site for mass consumers who can purchase all sorts of items such as appliances, office equipment, home improvement, and sports equipment, to name a few. It has over 150 million users and is present in 190 countries.

Alibaba Group (NYSE:BABA) is among the best growth stocks and we say that because its platforms are used by more than 800 million people worldwide. It has a 40% share in the Chinese e-commerce market, as per estimates by the DBS Bank in Hong Kong. In the fiscal first quarter of 2025, the group reported revenue worth $34.4 billion, up 4% year-over-year.

One may ask how Alibaba Group is managing to increase order volumes amid fierce market competition. The answer is simple, providing premium customer shopping experiences at the lowest price possible. AliExpress allows shoppers to source products directly from factories, shrinking the supply chain.

Despite macro headwinds and geopolitical turmoil in the country, analysts are bullish on the stock, and their 1-year median price target of $111.39 points to a 26% upside from current levels. Overall, BABA was held by 91 hedge funds at the close of Q2 2024 with total stakes amounting to $3.81  billion. As of June 30, Appaloosa Management LP was the largest shareholder with a position worth $756 million.

O’keefe Stevens Advisory stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its Q2 2024 investor letter:

“We initiated two new positions during the quarter: Alibaba Group Holding Limited (NYSE:BABA) and Perrigo (PRGO). Both have seen their stocks decline over 70%+ from their all-time highs.”

Overall BABA ranks 4th on our list of the best growth stocks to buy according to George Soros. While we acknowledge the potential of BABA as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BABA but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

Disclosure: None. This article was originally published on Insider Monkey.

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