Alibaba Group Holdings (BABA) Fell on Imposing ~50% Tariff on Chinese goods

Patient Capital Management, a value investing firm, released its “Patient Capital Opportunity Equity Strategy” second-quarter 2025 investor letter. A copy of the letter can be downloaded here. The strategy generated a total return of 15.3% net of fees in the quarter compared to the strategy’s unmanaged benchmark, the S&P 500 Index’s 10.9% return. According to a three-factor performance attribution model, the selection effect contributed positively to the portfolio’s performance, which was partially offset by allocation and interaction effects. In addition, you can check the fund’s top 5 holdings to know its best picks in 2025.

In its second quarter 2025 investor letter, Patient Capital Opportunity Equity Strategy highlighted stocks such as Alibaba Group Holding Limited (NYSE:BABA). Alibaba Group Holding Limited (NYSE:BABA) provides technology infrastructure and marketing reach. The one-month return of Alibaba Group Holding Limited (NYSE:BABA) was 3.80%, and its shares gained 55.84% of their value over the last 52 weeks. On July 17, 2025, Alibaba Group Holding Limited (NYSE:BABA) stock closed at $117.30 per share, with a market capitalization of $279.874 billion.

Patient Capital Opportunity Equity Strategy stated the following regarding Alibaba Group Holding Limited (NYSE:BABA) in its second quarter 2025 investor letter:

"Alibaba Group Holding Limited (NYSE:BABA) sold off early in the quarter following President Trump’s “Liberation Day” tariff announcement, which imposed ~50% tariffs on Chinese goods. As the US and China moved toward tentative agreements, the stock began to recover. Fundamentally, we continue to see an attractive setup. Alibaba is benefiting from accelerating AI initiatives, renewed momentum in its Tmall platform, and rapid growth in instant shopping and local services. These trends support a broader turnaround in core commerce and digital services. Despite these tailwinds, the company trades at just 11.2x earnings, well below historical averages, and continues to return capital to shareholders through a 1% dividend yield and a robust buyback program. We believe Alibaba remains significantly undervalued relative to its sum-of-the-parts, and see meaningful upside as fundamentals stabilize and sentiment improves."

Alibaba Group Holding Limited (NYSE:BABA) is in 17th position on our list of 30 Most Popular Stocks Among Hedge Funds. As per our database, 125 hedge fund portfolios held Alibaba Group Holding Limited (NYSE:BABA) at the end of the first quarter, which was 107 in the previous quarter. While we acknowledge the potential of BABA as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

In another article, we covered Alibaba Group Holding Limited (NYSE:BABA) and shared the list of top e-commerce stocks with long-term potential. In addition, please check out our hedge fund investor letters Q2 2025 page for more investor letters from hedge funds and other leading investors.

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Disclosure: None. This article is originally published at Insider Monkey.