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Alibaba was Horseman Capital’s only new position in 4Q14

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Jan. 29 2015, Updated 3:04 p.m. ET

Horseman and Alibaba

Horseman initiated a position in Alibaba Group Holding (BABA) during 4Q14. The position accounts for 1.09% of the fund’s 4Q14 portfolio.

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Overview of Alibaba

Alibaba is a Chinese e-commerce firm. Some of its major businesses include:

  • Taobao Marketplace: China’s largest online shopping destination. By September 2014, the group’s websites accounted for 80% of the country’s sales.
  • Alitrip: A leading online travel booking platform
  • Alibaba Cloud Computing: A provider of cloud computing services to businesses and entrepreneurs
  • Ant Financial Services Group: Ant operates Alipay, which provides payment and escrow services on its marketplaces through contractual arrangements
  • China Smart Logistics, or Zhejiang Cainiao Supply Chain Management: A 48%-owned affiliate that operates a central logistics information system, which connects a network of express delivery companies in China

Alibaba raised more than $25 billion in the initial public offering (or IPO) in September 2014, representing the largest IPO in stock market history.

Alibaba partners with Haier

In a recent press statement, Haier Group and Alibaba Group announced that together they would launch a line of television sets, enabling users to not only watch their favorite shows online, but also to play games, shop, and browse the web.

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Revenue grew, margins impacted

Revenue grew 53.7% year-over-year to $2.74 billion during 2Q15, driven by the rapid growth of China’s commerce retail business. However, net income fell 39% to $494 million, due to share-based compensation charges, increased amortization expenses, and an increase in the effective tax rate. Diluted earnings per share were $0.20, while non-GAAP diluted earnings per share were $0.45.

$8 billion bond offering

November 2014 reports noted that Alibaba saw a high demand for its $8 billion debt offering. The company plans to use the net proceeds primarily to refinance its existing credit facilities.

Horseman’s key positions in 4Q14

Horseman Capital added a new position in Alibaba (BABA). The fund increased its stake in TJX Companies (TJX), Vipshop Holdings (VIPS), BNY Mellon (BK), Wells Fargo (WFC), and Goldman Sachs (GS). The fund sold its positions in Comerica (CMA), Barrick Gold (ABX), IAMGOLD (IAG), and Harmony Gold Mining (HMY). The fund reduced its stake in Newmont Mining (NEM).

In the next part of the series, we’ll discuss Horseman’s position change in The TJX Cos Inc.

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