Thursday, January 13, 2022

Charlie Munger double down on Alibaba again?

Charlie Munger and his Alibaba
Happy new year! Time flies, we are in 2022 now. I hope this new year can bring everyone great returns but more importantly great health. I expect the volatility to continue in this new year and this could cause a big challenge for long term investor. (tweet it) However, it has been a great pleasure to see that Mr. Charlie Munger, a great value investor continues to double down in his position
on Alibaba (NASDAQ: BABA). Not only he has continued to add onto the position, it has now become the third largest position in his heavily concentrated portfolio under Daily Journal Corp; valued at approximately USD $71 million as shown below.

Charlie Munger and his Daily Journal Corp

This is undoubtedly a strong vote of confidence from one of the world's well respected investors for Alibaba and we can see that the market has welcomed it too with the recent uptick on Alibaba share price. However, I think it is important to note that this position is still a small percentage of his overall billion dollars net worth and hence we should not be blindly following his move. 

This is critical as one should expect that he may sell off his position in the future without the need of informing anyone in advanced (I doubt he will sell off in the near future but there's always a possibility). Hence, I think it is important to ask ourselves why are we buying into Alibaba in the first place? Will we sell off the position as well if someone as highly regarded as him sold his position? And if the answer is yes, then I think we should really revisit our investment thesis on the company; in this case, Alibaba.

For me, it does not make much difference whether Mr. Charlie Munger has bought or sold his position on Alibaba as long as the business fundamental continues to be intact and so far, I still believe it is pretty much intact. Thanks for reading and please follow my blog if you enjoy this article.

Disclosure: I own shares of Alibaba as of this writing.

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