As both CEO and CIO of ARK Invest, Cathie Wood has made quite the name for herself since the founding of her investment management firm in 2014. From her controversial stance on Tesla (TSLA) to her countless other bold claims about various companies and investments over the past seven years or so, Wood is viewed by many retail investors and traders as one of the most daring and original investors in the game.
As such, her investments can be looked at as a source of inspiration or an idea of what not to do, depending on your opinion of her and her firm ARK Invest.
With that being said, where do Wood and ARK Invest fall on Chinese multinational technology company Alibaba (BABA)? Why did Cathie Wood buy Alibaba, and what’s she doing with it now?
Does Cathie Wood Own Alibaba?
Over the past four years or so, Cathie Wood has racked up hundreds of thousands of Alibaba shares. Interestingly enough, though, Wood seems just as willing to sell off Alibaba shares. Every time Wood and ARK Invest buy up more Alibaba shares, the investment firm appears to turn around and sell those shares not long after.
This mimics the fortunes of Alibaba stock itself, which has gone through plenty of highs and lows over the past several years as the company and its relationship with the rest of the world has gone through all sorts of ups and downs.
In other words, Wood does own Alibaba stock, but it doesn’t seem to be something ARK Invest is interested in holding onto for the long run — if Alibaba’s price per share took a tumble, it wouldn’t be unreasonable to see Wood shed a bunch of Alibaba stock.
How Much Alibaba Does Cathie Wood Own?
Currently, Cathie Wood’s firm owns around 463 thousand shares in Alibaba.
It’s worth noting that this number continues to drop as of late, though: Just in the past couple of weeks alone, Wood and ARK Invest have consistently shed more and more Alibaba shares by the thousands. This is to be expected, as Alibaba’s price per share has been on a steady and dependable decline since October of 2020, with this decline accelerating drastically over the past couple of months especially.
If Wood saw a reason to believe Alibaba would be able to turn things around in the near future, you’d likely see her snatching up more shares while the company’s stock dipped instead of selling her shares. Her continued shedding of Alibaba seems quite telling.
What Did Cathie Wood Pay For Alibaba?
The last time Cathie Wood purchased a large amount of Alibaba shares, back in the first quarter of 2021, she and ARK Invest paid — on average — about $245 per Alibaba share.
Multiply this by the 53 thousand shares she purchased in Q1, and you end up with a price tag of nearly $13 million.
Wood picked up about 486 thousand shares of Alibaba between Q2 of 2020 and Q1 of 2021, but has since shed around 128 thousand (and dropping) since then.
With Alibaba currently trading for around $174 per share, Wood seems to have been correct to sell off hundreds of thousands of shares before the stock dropped any lower.
Why Did Cathie Wood Buy Alibaba Stock?
While she’s been selling off all sorts of Chinese tech stocks as of late, there was a point in the not so distant past where Wood and ARK Invest felt quite bullish on Chinese tech stocks.
These tech stocks performed exceptionally well and brought in quite a bit of profit for Wood and ARK Invest… until things took a turn for Chinese stocks.
You see, back in July, Wood disclosed that there had been a valuation reset of sorts in China and that stock valuations would be much lower for the foreseeable future.
She predicts to see Chinese stocks fall continually lower for a while, and her selling off of Alibaba stock definitely exemplifies this belief loudly and clearly.
Is Alibaba Stock A Good Investment?
At one time in the not so distant past, Alibaba stock would have been viewed as a solid investment decision — the company is one of the largest tech giants in the world, and its shares were a hot commodity for all sorts of investment firms, not just Wood’s ARK Invest.
However, this “China stocks valuation reset” is a very real thing that Wood has observed, and she seems to be correct in selling off her Alibaba shares as the company’s stock continues to fall.
If there was any sort of positive indication that things were going to change for Alibaba, you would likely see Wood buying up shares during the dip instead of selling them off.
From a pure quantitative standpoint, BABA shares seem underpriced. A discounted cash flow analysis forecast reveals a fair market value of $275 per share, representing 64% upside as of Sep 1 2021.
The Bottom Line: If Cathie Wood Bought Alibaba, Should You?
Wood and ARK Invest’s widespread shedding of Alibaba stock seems to be the smartest move as of late. However, if Wood suddenly starts snatching up Alibaba stock en masse, retail investors and traders might want to take this as a sign of more positive times to come for the Chinese tech giant.
Wood has been pretty spot-on about Alibaba stock in the past, so it’s not a bad idea to follow her lead when it comes to this particular company’s shares. There’s no telling when Wood predicts to see this valuation reset level off, but when it does, her buying habits will be the first indication.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.