I didn’t think there would be another blog post until the new year, but I did something that would have surprised me a few months ago.
I bought some Alibaba shares.
If you’re rubbing your eyes to read that again, I know how you feel.
However, if you’ve been following my YouTube channel, you would have heard me talking to myself about how Alibaba stock at HK$80 looks attractive even to value investors.
I just didn’t like the policy risks in China and I also didn’t like that they paid so little in dividends.
Well, I guess that’s better than no profits.
Alibaba is fully capable of paying a higher dividend given its healthy cash flow and balance sheet.
Instead they decided to buy back the shares, which of course increased the value of the outstanding shares.
Alibaba is not as terribly overvalued as Tesla.
Some readers may remember that I made a video comparing the two.
I said that if I had to choose, I would invest in Alibaba and not Tesla.
Well, Mr. Market went on a Tesla buying spree and ended his short run with Alibaba.
Anyway, what made me change my mind?
More precisely, the one that made me change my mind.
I had a conversation with a friend who is an investor in Alibaba.
He knows my position on Alibaba and agrees that there are political risks.
China is not a free market economy.
Many of the methods we traditionally use to value stocks are unable to assign a numerical or monetary value to these risks.
However, he is willing to take the risk because Alibaba seems relatively cheap, a point I agree with.
When he saw me, he smiled and asked me:
“Do you think I’m Kum Gong?”
I laughed at that because he had obviously seen the video I produced in which a fellow YouTuber called me that for buying DBS shares at higher prices.
He went on to say that if I was willing to buy Bitcoin after I was convinced that the digital currency had value, why wouldn’t I buy some Alibaba shares?
The important thing is to invest an amount of money similar to what you used to buy Bitcoin.
Or do not invest more than I feel I am willing to lose if Alibaba is shut down by the Chinese Communist Party.
I came home and gave it some thought.
Alibaba is not something I should buy but I like the idea of investing in a fundamentally strong company which Mr. Market hates.
Like Warren Buffett said before,
“Be greedy when others are fearful.”
Well, I’m not going to be greedy here but I wouldn’t mind getting a sample.
So, thanks to my friend, I’m a new Alibaba shareholder now that Alibaba is back to HK$80 per share.
It is useful that we can buy Alibaba shares in the form of SDRs or Singapore Depositary Receipts on SGX now.
I like to keep things simple.
I think this will be my last video of the year, but of course never say never.
If the AKP can do it, so can you!