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The Daily Journal, of which Charlie Munger is chairman, bought more Alibaba shares in the third quarter, when they were in free fall.
Johannes Eisele / AFP via Getty Images
Warren Buffett’s longtime partner Charlie Munger has revealed that a company he chairs has nearly doubled its investment in the Chinese internet giant.
Alibaba Holding Group
.
Munger, vice president of
Berkshire Hathaway
(teleprinter:
BRKb
), is also president of
Daily newspaper
(ticker: DJCO), and provides the company with investment expertise. Daily Journal publishes newspapers and websites covering California and Arizona, and produces news services; he also has significant equity stakes, with a portfolio valued at $ 225 million as of September 30.
The Daily Journal revealed last week in a Securities and Exchange Commission file that it held 302,060 U.S. certificates of deposit from Alibaba at the end of September, which means it bought 136,740 ADR in the third quarter.
Munger declined to comment on the additional ADR purchases.
The Daily Journal bought more ADR from Alibaba during a period of weakness; they fell 35% in the third quarter, while the
S&P 500 Index
was flat. Chinese regulators announced new rules during the period, baffling investors. Alibaba has invested in a stand-alone start-up. We also recently spoke with an investor about the opportunities in China.
Alibaba’s ADRs surged last week, possibly due to a wider rally of relief. So far in the fourth quarter, stocks are up 9.1%, compared to the S&P 500’s 2% rise.
The Daily Journal initiated a position in Alibaba by buying 165,320 ADR Alibaba in the first quarter. Munger told us that the Daily Journal bought shares of Alibaba with cash equivalents that would typically be invested in Treasuries, but bond yields are “now so low.” “[U]Unless its long-term outlook looks good, “noted Munger,” a common stock is not considered a good cash equivalent.
Alibaba’s ADRs are not performing well in the short term, falling short of the S&P 500 every full quarter this year, and are down 31% so far in 2021. The index is up 17%. % since the beginning of the year.
Alibaba was the Daily Journal’s third investment position in terms of value as of September 30.
Bank of America
(BAC) and Wells Fargo (WFC) are its two largest, and banks are up 46% and 59%, respectively, since the start of the year.
Inside Scoop is a regular Barron column that covers the stock transactions of corporate executives and board members (called insiders), as well as major shareholders, politicians and other prominent figures. Due to their insider status, these investors are required to disclose stock transactions to the Securities and Exchange Commission or other regulatory bodies.
Write to Ed Lin at [email protected] and follow @BarronsEdLin.
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