Sell Another Quarter of Alibaba Group Holding (BABA)
I’m recommending that we sell another one-quarter position in Alibaba Group Holding (BABA).
We took our first one-quarter profit in BABA on September 17 after the stock hit our initial upside target of 90. The stock has since gone on to rally by an additional 15% and now stands at 104 as of early Thursday.
Recent fiscal and central bank intervention in China has been responsible for the stock’s strength. Earlier this summer, China’s central bank reduced its seven-day repo rate (the rate that commercial banks pay to borrow from the central bank) from 1.8% to 1.7%, which increased the country’s financial market liquidity. More recently, China’s government announced stimulus measures that include “living allowances” and cash handouts to the poor ahead of the 75th anniversary of Communist rule. The moves have been catalysts behind the latest strength in BABA and other Chinese ADRs.
With our latest move, we still own a one-half position in the stock as we wish to maintain some exposure to the powerful bull market in China. SELL A QUARTER
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