Activist Cohen takes stake in Alibaba in push for buyback

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(Bloomberg) — Activist investor Ryan Cohen has taken a stake in Alibaba Group Holding Ltd. and calls for the Chinese e-commerce company to buy back more of its own shares.

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Cohen, who enjoyed a wide following among meme stock investors and helped buy shares of companies like GameStop Corp. up, built up stakes of hundreds of millions of dollars in the second half of last year, a person familiar with the matter said. unidentifiable when discussing private communications.

Cohen’s move is a rare example of investor activism targeting a major Chinese company. The entrepreneur first contacted Alibaba’s board in August to demonstrate that its stock is undervalued, on the assumption that it will see double-digit revenue growth over the next five years and nearly 20% growth in the free cash flow, the person said. a report in the Wall Street Journal.

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Alibaba, co-founded by billionaire Jack Ma, has been one of the most prominent targets of Beijing’s crackdown on technology giants. Shares plummeted in 2021 but bounced back to nearly double from their October lows.

From Goldman Sachs Group Inc. to Morgan Stanley, a growing number of strategists have been making bullish calls following Xi Jinping’s Covid Zero exit, promising to end the suppression of the technology sector. The shifts have led to a roughly 60% rally in the Hang Seng Tech Index since a low in October, a world-class performance even though the meter’s market value is still half its February 2021 peak.

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Cohen became an idol for amateur investors after being offered a seat on Gamestop’s board in January 2021. That call was bolstered by tweets that hit back at critics, including a poop emoji featuring an image of a Blockbuster store (in response to GameStop’s comparisons to the largely defunct movie rental franchise) and an apparent screenshot of a Pets TV ad. .com (a nod to those who compared Chewy to the failed pet supply store).

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“Cohen’s entry could be generally positive for Alibaba’s stock and given its broad following, it should increase sentiment for Chinese technology in general,” said Jin Rui Oh, a director at Mariana UFP LLP in Singapore.

Read more: As China Tech stocks roar, a new normal will test upside down

–With help from Jane Zhang, Edwin Chan and Abhishek Vishnoi.

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