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the monger family has invested in china's and i did it because i respected the man who was going to do the investing and it all looked inexpensive to me and the companies looked very strong to me badass investor and billionaire second in command to warren buffett charlie munger has been vice german at berkshire hathaway a 355 billion conglomerate since 1978.
the daily journal chairman has a chunky portfolio of his own and has always shown interest in chinese stocks and is doubling down on alibaba as revealed in a recent filing with the securities and exchange commission while others were scurrying away after baba shares stumbled 32 percent manga doubled down and according to the filing report increased his take by 83 in just the last quarter daily journal owned 602 060 shares of alibaba as of the end of 2021 a stake worth 71.5 million dollars that's almost double its holdings as of the prior quarter when daily journal owned 302 060 alibaba shares valued at the time at 44.7 million dollars it seems that china is just too big to be ignored welcome to wall street winners let's discuss the reason why manga is doubling down on alibaba stocks while the world is rushing for the exit according to the 98 year old billionaire the best chinese companies are much cheaper than the best american companies and the reason investors are aversive to the chinese market is that they don't know much about them and are just generally afraid of china shares of alibaba plunged to 20 during the fourth quarter of last year after losing nearly half their value in 2020 but this hasn't stopped manga who has bet even more on alibaba as its stock continues to fall due to concerns about a crackdown on big tech firms from beijing as well as worries about slowing earnings growth and alibaba alibaba is by far the biggest player in china's e-commerce industry but its shares are down almost 50 percent over the past year that's in sharp contrast with the performance of its north american peers over the same period amazon is up five percent shopify has risen 12 and ebay has risen by 28 alibaba basically peaked in late october 2020 and has been sliding ever since then it hit 317.14 per adr or american depository receipt on october 27 2020 and also had an interim peak of 217.83 on february 17 2021.
however by january 10th 2022 it was down to 127.65 it even had a trough price of 112.09 on december 29th 2021. this means that the stock is now down almost 60 from its peak in october 2020 from its mini peak of 217.82 dollars in early february 2021 baba stock is still down just over 41 percent at 127.65 so why does manga not stop and what draws him to baba stock well baba stock is historically cheap for example right now analysts estimate that the company will earn 8.39 in earnings per share eps in 2022 and 9.51 in 2023 so at january 10th price baba stock is at 15.2 times 2022 earnings and 13.4 times this is a cheap valuation situation on an absolute basis but on historical basis these metrics are also cheap relative to past pe ratios for example morningstar shows that the average forward be for the past five years has been 25.7 times that is well over 15x and 13x a significant portion of baba's future growth will come from cloud services and e-commerce both of these sectors are expected to witness significant growth over the next decade for the first time worldwide cloud infrastructure services expenditures exceeded 50 billion dollars in a single quarter in q4 of 2021.
the new spending record in q4 2021 reached 53.5 billion dollars growing y o y by 13.6 billion dollars that's 34 in 2021 the total cloud infrastructure services spend increased by 49.7 billion dollars to 191.7 billion dollars globally while q4 set records and grew 34 percent year on year cloud infrastructure services expenditures grew 35 year-on-year the global cloud computing market is expected to reach four point nine four 1554.94 us dollars by 2030 registering a cagr of 15.7 according to a new study conducted by grand view research incorporated in 2022 e-commerce is expected to break the 20 barrier of total retail sales for the first time in 2024 e-commerce is expected to only generate 22.5 percent of total retail sales many people think physical retail is on its last legs and brick and mortar locations are on their way out there's a chance e-commerce doesn't even account for 30 of total retail sales in 2030.
over the next four years e-commerce is expected to grow by 2.35 trillion dollars or 49.67 in 2022 e-commerce is projected to grow by 604 billion dollars or 12.23 then by 609 billion dollars in 2023 10.99 616 billion dollars 10.1 percent in 2024 and by another 624 billion dollars point two two percent in 2025 it's not just e-commerce that'll grow retail sales in general will grow from 26.03 trillion to 31.27 trillion dollars over the next four years as well baba's global annual active consumers reached 1.28 billion due to a quarterly net increase of 43 million customers this includes 979 million consumers in china and 301 million consumers overseas in the ttm baba's china commerce businesses had approximately 882 million annual active consumers in december 2021 baba's international commerce retail business grew strongly and achieved about 301 million annual active consumers in the ttm in q3 baba's international commerce wholesale business grew roughly 50 yoy driven by export growth why oh why baba has seen 29 revenue growth in its international commerce wholesale business baba's cloud revenue has been consistently growing in q3 cloud generated 4.15 billion dollars which was an increase of 19 yoy baba is recognizing significant growth from the financial and telecommunications industries alibaba clouds revenue is becoming more diversified with revenue contribution from non-internet industries is steadily increasing revenue from non-internet industries accounted for 52 of alibaba cloud's post intersegment elimination revenue for the quarter ended december 31st 2021 baba is making a push into data centers as two have been added one in south korea and one in thailand alibaba cloud offers computing services in 25 regions globally including malaysia singapore indonesia japan germany and dubai the 2021 solution scorecard for integrated iaas paas published in november 2021 recognized alibaba cloud's combined iaas and baas offerings as the third highest scoring solution among all global vendors evaluated while baba is generating over 100 billion dollars in revenue the risks have never been greater the geopolitical climate has escalated due to the war in ukraine and there is speculation that china may invade taiwan there is no way to know what the ramifications would be if this occurred but based on the past week the geopolitical climate could get drastically worse the risk that china invades taiwan remains and the counter measures if this occurs could result in baba's external growth coming to a screeching halt there are always good reasons for a stock to be cheap if the company's not going out of business has a lot of free cash flow and little debt which is the case here there is usually not too much to worry about even the listing issue is not much of an issue since it would likely trade on a foreign exchange that should never deter you from buying a stock that is cheap the company has a good cash debt ratio a comfortable level of interest coverage and a robust ultimate z-score of 3.83 indicating it's in a good standing the return on invested capital also eclipses the weighted average cost of capital indicating good value creation is occurring as the company grows the company's profitability fared a bit better with an 8 out of 10 rating although the operating margin is in decline alibaba has strong returns on equity assets and capital that outperform the majority of competitors as well as a moderate biotroski f score of 5 meaning conditions are typical for a stable company despite recording consistent earnings and revenue growth the predictability rank of 3 out of 5 stars is on watch companies with this rank return an average of 8.2 annually over a 10-year period as long as there isn't a super scandal with barbara's financials this company is dramatically undervalued it's now trading at its 2017 levels and is significantly cheap looking at its valuation baba operates in two of the largest growth segments and should continue to capture a significant amount of new revenue as the world progresses geopolitical events are causing some major headwinds and there are large risks in the near term manga's bet on alibaba is particularly noteworthy because he has made numerous controversial comments in the past year praising china for how it has handled criticism from tech moguls such as alibaba's jack ma although daily journal bought more alibaba shares in the fourth quarter it did not change its positions in four other investments financial giants bank of america bac u.s bangkok usb and wells fargo wfc as well as south korean steel maker bosco bkx so if you can afford to copy manga you'll probably do well in the long term at the end of the day only time will tell how alibaba and the chinese economy will fare do you think charlie munger is right are you someone who will follow his strategy comment below and that's all for today thank you for watching if you enjoyed our video please like share and subscribe to our channel for 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