Q3 Hedge Fund Spotlight: Philip Hempleman Dials Down BABA; Boosts AMZN
Philip Hempleman is the Founder, Managing Partner, Chief Investment Officer, and Portfolio Manager of Ardsley Advisory Partners. According to the most recent 13-F filings, Hempleman slashed position in Chinese e-commerce giant Alibaba Group Holding Ltd (BABA), while initiating a new position in the heavyweight, Amazon.com, Inc. (AMZN).
Philip Jay Hempleman started his career at Banker’s Trust and has professionally managed assets for more than 40 years. Hempleman managed portfolios at Oppenheimer and TCW before launching Ardsley Partners in 1987. He holds an MBA from New York University and a BA from Indiana University.
Ardsley is a long/short equity hedge fund with approximately $751.91 million under management. As per TipRanks, the hedge fund has a 3 years annualized return of 1.46% and 12-months average return of 11.35%. Ardsley focuses on value stocks that are growth oriented and offers four separate strategies under its banner. They are a long-biased long-short equity strategy, a renewable energy/clean tech long-short equity strategy, a global technology long-short equity strategy, and a healthcare long-short equity strategy.
Let us now take a look at Hempleman’s key Q3 moves in the services sector.
Sells Alibaba Group Holding Ltd (BABA)
Hempleman trimmed down his firm’s holding in Chinese e-commerce operator Alibaba by 14.55%. The remaining shares translate to approximately 1.08% of the total portfolio and are worth close to $8 million today. However, since the last SEC filing, these shares have gained a little over 10.7% in value.
China’s leading online marketplace operator had a record-breaking annual Single’s day (Guanggun Jie) sale of $25.3 billion this year. This is a 40 percent jump from last year’s figures. To put it in perspective, this one-day event has nearly double the sales from Black Friday and Cyber Monday in the US combined.
Single’s day, celebrated on November 11th (11/11), is an entertainment festival famous among young Mainland Chinese people to celebrate the fact that they are proud of being single. This festival reportedly originated in Chinese universities in the 1990s. Today, it has become the largest offline and online shopping day in the world.
Alibaba operates online marketplaces with nearly 550 million active mobile users per month, dwarfing Amazon and eBay. Alibaba has a cloud-services business, called Alibaba Cloud, with 99% year-over-year growth reported and is also investing in hybrid online-offline stores in China, such as its Hema Supermarket brand. The company is said to be on track for 50% revenue growth in fiscal 2018.
SunTrust Robinson analyst Youssef Squali forecasts that BABA’s China Retail revenue will grow 45% year-over-year, experiencing overall revenue gains of 44% compared to the 54% seen in the third fiscal quarter of the year before. Squali notes, “Strong Chinese consumer buying, 4x growth in global brands, strength in cross-border trade, rise of New Retail and ubiquity of mobile drove this outsized performance, and bode well for the company’s Dec. quarter.”
Needham analyst Kerry Rice is also positive regarding the stock. He raised his price target on Alibaba to $215 and kept his Buy rating after another “strong” quarter that showed EBITDA and user adds exceeding expectations. Rice says the synergies between online and offline retail, Taobao/Tmall and Lazada, e-commerce and digital media and entertainment are yet to be fully realized.
Hempleman’s sentiment on the company is the opposite from analysts, as all the 15 analysts who have rated the company in the past 3 months are bullish. According to these analysts, the average 12-month price target for the stock is $208.69, marking a 9.15% upside from where shares last closed.
Buys Amazon.com, Inc. (AMZN)
In Q3, Ardsley initiated a position in the e-commerce and cloud computing giant Amazon with the purchase of shares valued at close to $1.94 million. This is a move that proved savvy as AMZN has gained a whopping 23.37% since the last filing.
From groceries to streaming, to its original business of retail, Amazon seems to succeed at everything it does and this is clearly reflected in its stock prices. Amazon stock is up by a massive 55.37% so far this year and is currently trading at its all-time-high levels. As a result, Amazon CEO Jeff Bezos’ net worth has now crossed $100 billion!
Although Amazon’s operating margin had fallen to 3-year low of 0.8 percent in the last quarter due to the company’s continued investment, the e-commerce king still remains as one of Wall Street’s best-loved stocks. As a matter of fact, banking giant Barclays thinks that Amazon may be the most realistic contender to become the first $1 trillion company.
According to the latest reports, Amazon’s Black Friday sales and promotions have helped the company claim between 45% and 50% of all online Black Friday sales. This points to nearly $1 billion worth sales for Amazon.
We can see that AMZN continues to exhibit as a Strong Buy on TipRanks analytics, with 31 buy ratings and 1 hold rating in the last three months. The stock has an average price target of $1257.72 which translates to over 6% upside potential from the current share price.
Disclaimer: TipRanks is an independent cloud based service that measures and ranks digitally published financial advice. TipRanks' natural language processing (NLP) algorithms aggregate and ...
more