Warren Buffett’s longtime business partner and vice chairman Berkshire Hathaway Charlie Munger named investments in a Chinese company Ali Baba his biggest investment mistake, writes edition of TheStreet. He announced this at the annual meeting of shareholders of the Daily Journal publishing company, which he has headed for 45 years. Charlie Munger, 99, answered shareholder questions for more than two hours.
“I think [вложения в] Alibaba is one of the biggest mistakes I have ever made,” Munger said. He said he was impressed with the company’s position on the Chinese Internet and the scale of Alibaba’s retail business. According to him, the long and sharp drop in the value of the shares of the tech giant was caused by the speech of Alibaba founder Jack Ma in October 2020. At the Shanghai summit, Ma criticized the tight regulation of the financial sector in China and spoke of the need to reform the system. According to Munger, this was an unwise act that hurt Alibaba. “It’s like poking a bear in the nose with a sharp stick,” he said.
Capitalization was negatively affected by the subsequent cancellation of the Ant Group fintech placement and the antimonopoly fine. In early November 2020, Alibaba’s subsidiary, Ant Group, planned to conduct an IPO on stock exchanges in Hong Kong and Shanghai. The placement of the fintech giant, which owns China’s largest payment service Alipay, could be the largest IPO in history: the company planned to raise more than $34 billion. However, two days before the Ant Group’s share offering reportedwhich received a message from China’s regulators about its suspension “due to significant issues.”
In December 2020, Chinese regulators launched an antitrust investigation regarding Alibaba. In April 2021, the regulator imposed a 18.22 billion yuan ($2.78 billion) fine on the company for violating antitrust laws.
Alibaba shares on the New York Stock Exchange fell from a high of $319.32 on October 27, 2020 to a low of $58.01 on October 24, 2022. As a result of the session on February 15, Alibaba ADRs closed at $103.08. Over the past 12 months, securities have fallen in price by 18.4%.
Alibaba founder and billionaire Jack Ma left China last year and lives in Japan. informed The Financial Times (FT), citing sources. According to the publication, he left the country amid “Beijing’s continued crackdown on the country’s technology sector and its most influential businessmen.”
Still Charlie Munger declaredthat China remains a top opportunity for investors despite geopolitical risks. The Berkshire Hathaway vice chairman has long been bullish on China, although the holding last quarter shortened multibillion-dollar stakes in two companies in the region: electric vehicle maker BYD and chip maker Taiwan Semiconductor (TSMC).
According to Munger, investors can buy better, stronger companies for less in China than in the US. Charlie Munger said the American manufacturer Tesla pales in comparison to BYD in China, and named paper of the Chinese electric car manufacturer their favorite stocks. BYD was a good bet for Berkshire, which first bought about 220 million shares in September 2008. Over the past ten years, BYD stock has jumped more than 600% amid a massive increase in demand for electric vehicles.
