There is a lesson to be learned from Charlie Munger’s increased bet on Alibaba

Munger, also vice president of Berkshire Hathaway BRK.B,
+ 0.97%,
Now owns around 18% of the Daily Journal’s portfolio in Alibaba, on a basis of between $ 180 and $ 200 per share, said Tom Hayes, chairman and managing member of Great Hill Capital, which has also invested in Alibaba. Alibaba closed at $ 156 on Thursday.

Hayes says there are key lessons to be learned from Munger’s investment. “For starters, successful people do what unsuccessful people won’t. He is willing to endure short term pain for long term gain. Not on the basis of wishes or hopes, but on the basis of facts and data, ”says Hayes.

True, yes, Alibaba has been fined for monopoly practices, and China has aggressively sought to tame its big companies. Efforts are also being made by the Securities and Exchange Commission to delist Chinese companies, although Hayes points out that Alibaba’s auditor is PwC, and he doesn’t believe China’s lists with the Big Four auditors will be removed.

Alibaba has increased revenue and cash flow is expected to more than double over the next few years. You can now pay less for Alibaba than it was when the company was less than a third of its current size, says Hayes. And it will be difficult to find a billion users elsewhere. “And that’s why Buffett and Munger are the best investors in the world,” Hayes said.

Table

The spread between the yield on the 10-year Treasury bill and that on the 3-month bill has the highest correlation with one-year gross domestic product growth of all yield curve indicators. And, at the current gap, the economy will grow 2.3% next year, a far cry from the 3.8% the Federal Reserve is forecasting. “While the yield curve may not be able to give an exact estimate of future economic activity, it can certainly give an indication of the general direction of growth. And for now, what the curve says, c ‘is that growth will be well below what the consensus and the Fed expect it to be, leaving enough room for disappointment, ”said David Rosenberg, chief economist and strategist at Rosenberg Research .

The buzz

The big event of the day is the employment in Canada report. No, just kidding, it’s the US non-farm payroll report, which is expected to show an increase of 500,000 jobs and an unemployment rate down to 5.1%. Federal Reserve officials have set the bar low to make this report clear in order to launch the bond reduction program, with President Jerome Powell saying it only has to be “reasonably good.”

Bank of America strategists point out that 10 of the last 12 payroll reports have triggered risky behavior in the markets.

US ES00 equity futures contracts,
+ 0.10%

NQ00,
+ 0.07%
were slightly higher before the report, while the 10-year Treasury yield TMUBMUSD10Y,
1.586%
climbed to 1.58%.

The Senate voted Thursday night to lift the $ 480 billion debt ceiling, moving legislation to the House, which is expected to do the same.

Tesla TSLA electric car maker,
+ 1.39%
announced that it is moving its headquarters to Texas from California.

Oshkosh OSK,
+ 1.16%
warned that supply chain and logistics disruptions were hurting its ability to manufacture and ship units as it lowered its forecast for its fiscal fourth quarter.

The 2021 Nobel Peace Prize was awarded to journalists Maria Ressa from the Philippines and Dmitry Muratov from Russia for their fight for freedom of expression.

Random readings

WMT from Walmart,
+ 1.18%
Sam’s Club is offering larger turkeys this year. Here’s why.

Six-year-old is Georgia’s youngest certified farmer.

A remote stun gun style device is used to calm dancing grannies in China.

Need to Know starts early and is updated until the opening bell, but sign up here to receive it once in your inbox. The emailed version will be sent at approximately 7:30 a.m. Eastern Time.

Want more for the day ahead? Sign up for Barron’s Daily, a morning investor briefing, featuring exclusive commentary from the editors at Barron’s and MarketWatch.