저자: DavidTepper · 외국인
요약 보기
자막 기준 영상은 David Tepper가 CNBC에서 중국 주식 강세를 주장한 발언을 소개하며, 연준 금리 인하와 중국 1조 위안 부양책이 중국 증시 상승의 배경이라고 설명한다. 알리바바가 주요 베팅이며 PDD와 중국 기술 ETF FXI도 언급된다. 알리바바는 현금 약 550억 달러, 잉여현금흐름 약 200억 달러로 평가가 낮고, 자사주 매입과 창업자 매입이 긍정 요인으로 제시된다. 진행자는 중국 규제 위험을 들어 직접 베팅은 하지 않는다고 밝힌다. 영상 후반부는 유료 구독 광고가 섞여 있다.
다듬은 글
Billionaire investor David Theerer of the Appaloosa Fund is betting big on Chinese stocks. He just talked about it this morning on CNBC, saying he would suggest buying anything related to Chinese stock futures. He talks about stocks, commodities, everything. And this isn't the first time he's drawn this conclusion about everything.
He had previously concluded that everything was still in 2010 after the Federal Reserve intervened in the markets. He thought everything would grow. This was a surprising conclusion from David Theerer, and perhaps his conclusion worked for the next decade. He bet big on banks, preferred bonds, and he pretended to be a gangster, cementing his billionaire status.
And so, over time, he achieved extraordinary success. So what is he looking at now? Most recently, Jerome Powell cut the Federal Reserve rate by half a percentage point last week. This gave China the opportunity to also ease the rate, because if they ease the rate while the US tightens monetary policy, it could lead to a weakening of the Chinese currency, which would exacerbate potential inflation concerns in that country.
So, now that the US is loosening monetary policy, it gives China cover to do the same . And, as David Ter said, that meant bringing in the big guns, including a 1 trillion yuan stimulus by cutting the People's Bank of China's reserve requirements. So it's a big deal, as David Ther said, bringing in the big artillery for their economy.
And that's why you've seen a sharp rise in various Chinese stocks over the past few months. You know, they had a trend of growth, but then a sharp, you know, sharp spike. And you could see how Tencent, Alibaba, JD, some of the three most famous tech companies in China, grew by almost 50% in the last 6 months.
However, it is important to step back a bit, showing that it has been a very painful journey over the past 5 years , demonstrating a huge decline. So this could be the start of a new multi-year bull market for Chinese stocks. And you can see that in the last 5 years, a lot of these names, you know, they're underwater.
Alibaba is still down about 40% despite this rise in the last few days, in terms of overall returns, and maybe over the last 5 years some of those returns just aren't very compelling. But could this be the start of something bigger? As you can see from App A's Appaloosa Holdings example, Alibaba is its main bet.
During this morning's conversation, he talked about expanding the scope of the exposure, which he would be confident with. He said he would like to have some kind of pullback so that he could increase his exposure, and he talked about his limits being about 20 to 25% of his portfolio, which is up from about 10 to 15% before.
So this is a big, I would say this is a big bet on China, and he says this is potentially the start of a long and drawn-out growth, so we'll look at why he might see that in a second. Let's first figure out what exactly he placed some bets on, because he, he said it all. But you might ask, " Okay, what chips exactly is he betting on, you know ?" What is he looking at?
So he says Alibaba—that's the top position, and he says he later added PDD to it, and also an ETF, a Chinese, uh, technology ETF, FXI, it looks like. And so on, and he's talking about it being close to his limit now in terms of rates. I've done a video about PDD before, if you're interested. Overall, my conclusion was that this is an extremely fast-growing e-commerce in China.
They also have a global brand, Teimu, which is clearly taking market share and, you know, destroying, maybe destroying some dollar stores. And I also made a video about Dollar General. And so my main takeaway from PDD is that given their growth, if you believe their numbers and if you're willing to accept Chinese stocks having their struggles, uh, it was n't expensive.
And that was a few weeks ago. This was after a 30% drop. So it wouldn't surprise me if PDD performs very well over time, given their track record of significant, you know, generating significant market share, rapid growth. I used to own a PDD. I made over 100% on it. Uh, at some point he grew a lot.
So I look at it from the perspective of someone who has had experience with some of these companies before, and now I look at a mega-super-smart bull like David Ther, and it makes me think: Okay, what is he looking at? What is he thinking, you know, looking at this? For example, let's think about Alibaba.
Why is he buying stocks? First of all, to be completely frank, this is not financial advice. Also, Michael, I recently subscribed to Unrivaled Investing. He wrote: “ So far, this subscription has paid for itself in three months. I look forward to the future. Visit unrivaledinvesting.com to find exciting ideas.
By the way, prices will rise soon. So now is the time to lock in favorable rates. And by the way, when you record them , you record them for the future. So now is the time to capture them. And every year I plan to raise prices, largely because I believe that the service, particularly the premium service, is at a significant discount compared to market prices.” Looking at the AI chat, the AI chat believes that by using the forecasting function, Alibaba has a view that coincides with David Thera's, who thinks of a growth potential of 100 to 200% over time.
Not assuming a sharp 5 to 10% growth, assuming some margin improvement, but largely some valuation improvement over time. By the way, thanks to artificial intelligence chat, chat is now completely free. So just go to chat with artificial intelligence. You can talk to any of the companies we serve, which is the vast majority of US companies.” companies.
And so you can communicate with artificial intelligence, using it to assist in your analysis process. By the way, we're also going to update AI forecasting, hopefully in the near future, adding some really cool new impressive AI models. So I'm really excited about where we're going. What does David Ther see with Alibaba?
First, cash. They have about 400 billion R &B, about 55 billion US dollars, as of the last quarter, June 2024. Even after the stock jumped 9% today, its market cap is still only about $250 billion . So, over $55 billion in cash, $ 250 billion market cap, what you're looking at is a company, a giant in China, one of the dominant e-commerce platforms , where about a fifth of it is in cash.
That's one of the reasons David Ther says, "Hey, I sleep well at night when I know that money is there." "Here, you know, you might say, 'Well, wait a second.' Is this China, where there is really cash? “The other aspect is that not only is there cash on their balance sheet , but they generate a lot of free cash flow.
And you can see about 156 billion R&B of free cash flow, about 20 billion+ of free cash flow. So again, you not only have, let's say, you know, 1/5 of the cash, you have, you know, 20 billion against, you know, a market cap of 250 billion. So you're saying it's about a teenage multiple for this business, even low teens, very low teens, when you factor in cash, looking at free cash flow, um, for a dominant e-commerce player in China.
So this is an extremely important indicator. You have a lot of cash, a low initial valuation, and by the way, their free cash flow includes the huge investments they're making in their international operations, where maybe they're not winning compared to some of the other players, which is what I talk about, uh, with my subscribers on Unrival Investing.
And they also make significant, you … ” You know, losing investments in their local services, digital media and other bets, you know. So, free cash flow is approximately $20 billion per year. So maybe it's closer to $30 billion. You know, if you think about it , wait a second, they're still making huge investments in their businesses that are unprofitable.
And they take this free cash flow of theirs and return it to shareholders. You can see that $5.8 billion came back during the last quarter. $5 billion was returned in the previous quarter. This is a huge step in share buybacks. And you can see how the number of shares has also decreased significantly from about 2.6 billion to about 2.3-2.4 billion.
David Ther made a very interesting point here. This is something I was a little skeptical about before, but he made a really valid point. He said that the CCP, which is in charge of the process, the Communist Party of China, they can encourage share buybacks to help keep capital in China, supporting the yawn, reducing the outflow of currency and stabilizing its value in times of economic uncertainty.
So if China...they're going to stimulate money printing, lower interest rates, they don't want the capital flow to leave China. So they say, "Hey, take your capital and instead of any international ventures, just buy back your shares, you know, your own companies' shares, ideally list them on local exchanges." Personally, if I were considering buying, you know, whether it's an ADR or a local stock, given the U.S.
relationship with China, I think I would prefer to buy local market stocks, and that's what I've done in the past. I use Interactive Brokers, so see the link below. Uh, I would buy Hong Kong stocks instead of ADRs, simply because if there were any problems, increased friction in US-China relations, and the US would say, "Hey, you can't own these ADRs." I don't think it will come to that, but, you know, it depends on who the president is; it depends on what policy is adopted.
So, that's an important aspect to consider, and, you know, David Ter feels good about owning ADRs, partly because they can be converted into Hong Kong stocks. So, on top of that , you also see the founders, co-founders, Jackmaw, Josai buying back Alibaba shares for themselves earlier this year. So they're betting on it.
And I think that's the last element that can really potentially create a multi-year perspective is the fact that you now have this listing on the Shanghai Hong Kong Stock Exchange, where you can now have eligible mainland investors. Thus, local Chinese residents have direct access to investing in the shares of these companies.
So before, if you had Western investors and they got burned, the CCP would be ready for it. When you turn this into a local type of issuance, and if you have hundreds of millions of Chinese investors putting their money into these companies, and then , by the way, their stocks don't perform, then it turns into a PDA issuance.
So now, perhaps the consistency has improved with these events. So, this is another very positive moment when you think about these Chinese tech stocks , and the CCP now wants to make sure that their investors get adequate returns over time, especially if they are considering investing in stocks of companies like Alibaba, Tencent, or JD.
Personally, I don't bet. I am not making a direct bet on any of these companies. What I did a while ago is when Chinese stocks plummeted in a day because there was a video of a senior official actually being kicked out of Congress, and I thought, "Oh my God, this is terrible." At that moment, I came to the conclusion that I was not going to bet big on China, like David Ter personally.
But I added to my bet that I was indirectly betting on China. It is actually traded in Europe, has a huge stake in a Chinese holding company, and trades at a significant discount to the value of the publicly traded shares of its Chinese assets. So that was my way of, you know, mentally working around the situation, like if there was a direct problem between China and the US, it's unlikely that these European holdings that indirectly own these Chinese stocks would actually fail.
That's how I thought about it. Since then, the buyback stock has gone up more than 100 %, I believe, at least the last time, based on the last buy, just to be clear. But that's really my only Chinese experience. This is a top 10 position, but it's my only Chinese experience. I look at China and I asked artificial intelligence to create an image of a skeptical bull, and then I thought: make it even more skeptical.
And this is the bull you see here. And I think it's appropriate because it was n't that long ago, literally September 3, 2021. Although literally, you know, a couple of years ago, 3 years ago, Chinese tech giants were actually being forced into her vision of shared prosperity. So it's important to understand, if you're going to consider making Chinese stocks part of your own investment journey, that it's quite different from most other markets, and that you can have this kind of arm-twisting where, maybe, if earnings exceed a certain margin or stocks go up a certain [] here, you can have them say, "Hey, you know, you did so well.
It's time for you, you know, to make sure that everyone benefits as well ." And that's the kind of development I don't like when you're faced with that kind of uncertainty. And that's one of the reasons why I already pointed out that it will never happen, or at least I don't plan on making it a big part of my journey.
I have one small separate pond. I probably won't touch this. I'll just leave it for later. I don't...I don't think about adding to that. But this is how I think about this bet on China. But now I've shared my thoughts on why David Ther is so optimistic about this. Low grades. I mean, PDD was an example of something like, "Wow, you have incredible growth , and you're trading at this low valuation." Yes, that could definitely work.
Alibaba trades at a low free cash flow multiple of 10, considering their significant cash balance. So, looking at these strong competitive positions, you have alignment. You have an insider buying note, you have buybacks, and now the CCP can say, "Hey, we're encouraging you to do these buybacks because we want to make sure you know the money is staying in our country." So I look at it and I say, "Okay, no wonder he's optimistic about this." I don't think it's appropriate for my personal journey.
I would n't be surprised if this would be a multi-year period. We'll see. I would be happy to hear your thoughts below in the comments. Thank you very much for joining Unrivaled Investing.
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