Shares of Chinese e-commerce giant Alibaba Group Holding Ltd. (BABA, Financial)(HKSE:09988, Financial), a major holding of Charlie Munger (Trades, Portfolio)’s Daily Journal Corp. (DJCO, Financial), surged on Wednesday on the back of the company launching a new server chip and reports that its founder Jack Ma was seen in Spain for an environmental tour.
Shares surge on reports that Founder Jack Ma was in Spain for an environmental study tour
Earlier this week, two Asian-based publications reported that Alibaba Founder Jack Ma traveled to Spain over the weekend, with one source mentioning that the founder “did an agriculture and technology study tour related to environmental issues.”
Tariq Dennison, wealth manager at Hong Kong-based GFM Asset Management, told CNBC that Ma’s whereabouts, one of several uncertainties investors have had about the stock, can impact Alibaba’s share price by as much as 10%. Investors were concerned that Ma's disappearance from the public eye could spell trouble for his company.
Company launches new in-house processor and server
Alibaba Cloud announced on Tuesday a new in-house server chip called Yitian 710, which is set to power the company’s new server called Panjiu. On Wednesday, the company announced two new data centers in South Korea and Thailand to further bolster its cloud computing services across Asia.
The company said in August that June-quarter revenues for its cloud computing business totaled 16.051 billion yuan ($2.486 billion), up 29% year over year.
Valuation
Hong Kong-based shares of Alibaba (HKSE:09988, Financial) closed on Wednesday at 175.80 Hong Kong dollars ($22.61), up 6.67% from Tuesday’s close of HK$164.80 . Despite this, the stock is significantly undervalued based on Wednesday’s price-to-GF-Value ratio of 0.48.
Alibaba’s American depository receipt shares (BABA, Financial) opened at $180.95, up 2.23% from the previous close of $177.
GuruFocus ranks the e-commerce giant’s profitability 8 out of 10 on several positive investing signs, which include a three-star business predictability rank and profit margins and returns outperforming more than 80% of global competitors.
Munger’s Daily Journal owns 302,060 shares of Alibaba, giving the position 19.86% equity portfolio weight.
Other gurus cheering on Alibaba’s new chip announcement include Mohnish Pabrai (Trades, Portfolio) and Robert Karr (Trades, Portfolio). Pabrai Funds and Joho Capital have equity portfolio weights of 21.13% and 18.39%, respectively, in Alibaba.
