Investor Ryan Cohen bought up hundreds of millions of dollars worth of Alibaba shares and demanded to speed up the buyback by increasing its volume, The Wall Street Journal found out. Cohen previously invested in GameStop and Bed Bath & Beyond meme stocks.
Photo: Ilya Pitalev / RIA Novosti
Activist investor Ryan Cohen has bought hundreds of millions of dollars worth of Alibaba shares and is pushing the Chinese online giant to speed up and expand its share buyback program by another $20 billion. reported publication of The Wall Street Journal, citing sources. Bloomberg and Reuters also announced Cohen’s purchase of a stake in Alibaba, citing informed sources.
Cohen is known as “the king of meme stocks” due to the fact that he contributed to an explosive rally in the papers of GameStop and other stock market memes, writes WSJ. He increased his investment in Alibaba in the second half of last year, sources said. And although its share is small compared to the total market
capitalization
Alibaba is in the region of $300 billion, Cohen has a strong backing among private investors who often follow suit.
In August, in a message to Alibaba’s board of directors, Cohen said he believes the company can achieve double-digit sales and growth.
free cash flow
in the next five years by about 20%, sources said. Cohen believed that the company’s stock was undervalued at the time.
After that, in November, Alibaba announced that the board of directors approved the expansion of the company’s share repurchase program by $15 billion to $40 billion, as well as extending it until March 2025. As of Nov. 16, the company has repurchased approximately $18 billion worth of its shares as part of its existing buyback plan. Cohen told Alibaba’s board of directors that the share buyback plan could be increased by another $20 billion, to about $60 billion.
“Cohen’s purchase of a stake in Alibaba will be positive for the stock as it will help boost confidence, especially among Western investors who are skeptical of China,” said Bloomberg Union Bancaire Privee Managing Director Wei-Sern Ling. “It helps highlight how undervalued the stock is, and if he encourages more buybacks, that also helps shareholders make a profit.” Jin Rui Oh, director of Mariana UFP LLP, also believes that Cohen’s purchase could be broadly positive for Alibaba stock, and given his popularity, it should lift the mood for Chinese tech in general.
Although Ryan Cohen is a powerful investor and the news is positive for Alibaba, Grow Investment economist Hao Hong said he is unlikely to have much influence on the board of directors, given that the Chinese authorities own a “golden share” that allows the government to appoint directors or influence important company decisions.
Alibaba shares are up about 67% from a multi-year low hit in October last year.
ADR
closed at $117 on Friday, January 13th. Since the start of 2023, the stock is up about 33%.
According to the WSJ, Ryan Cohen is worth more than $2.5 billion. Cohen founded the online pet food store Chewy in 2011, and in 2018 sold it to PetSmart for $3.4 billion. In September 2020, he made his first investment in the shares of the network for the sale of game consoles, computer games and game accessories GameStop, later becoming one of the largest shareholders and chairman of the board of directors of the company. In addition, he owns a portfolio of shares in companies such as Apple, Wells Fargo and Citigroup.
In March 2022, it became known that Cohen collected almost 10% stake in the Bed Bath & Beyond home goods retail chain through its investment company RC Ventures LLC. He criticized the company for an “over-ambitious” strategy, overpaying top executives, and failing to cut back on loss of market share. He insisted that the retailer should explore strategic alternatives that included a complete sale of the company. In August 2022 Cohen sold his entire stake in Bed Bath & Beyond, the proceeds from the sale exceeded $58 million.
Free cash flow. Funds left by a company after all operating expenses have been paid.
The company’s market value, calculated from the number of company shares multiplied by their current price. Capitalization of the stock market – the total value of securities circulating in this market.
A security tied to the shares of a particular company and issued by a bank (depository bank). The main opportunity that a depositary receipt gives an investor is the opportunity to practically own shares of a foreign company, but at the same time remain within the framework of the legislation of the depositary bank. For example, an American Depository Receipt (ADR) for the shares of a Russian company is, on the one hand, an American security, the trade of which is regulated by American law, on the other hand, it gives the right to a share of profits and the right to vote at a meeting of shareholders of a Russian company
