Activist investor Ryan Cohen has reportedly acquired a stake in Chinese e-commerce giant Alibaba Group Holding Ltd. BABA worth hundreds of millions of dollars and is privately nudging the company to hasten its share-repurchase program.
Cohen and others built the stake during the second half of last year, reported the Wall Street Journal, citing sources.
He first contacted Alibaba’s board in August to express his view that the company’s shares are deeply undervalued based on his belief that it can achieve double-digit sales and nearly 20% free-cash-flow growth over the next five years, the report said.
Hong Kong-listed shares of Alibaba have lost over 11% in the last year but have soared over 27% since the beginning of 2023.
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Buyback Boost: Cohen has told Alibaba’s board the share-repurchase plan could be boosted by another $20 billion, to roughly $60 billion, the report said.
The activist investor has also noted his admiration for management’s ability to get earnings growth while assembling quality assets, the report added. Cohen intends to have a collaborative, long-term relationship with the e-commerce giant, it added.
Cohen has also highlighted his belief that Apple Inc AAPL, in which he owns more than $800 million, could provide a road map for Alibaba, the report said. It is noteworthy that since 2012, Apple has repurchased hundreds of billions of dollars of its shares and the stock price has surged.
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